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 / Summer 2003 / Issue 31(originally published by Booz & Company)


R&D Through Open Innovation

Contrast that process with the one followed by video-game developers, which routinely look outside for ideas. Some successful games are based on popular brands, such as John Madden Football or Star Wars. Developers hunt for hot properties to license and turn into new games. Other successful titles, such as the Grand Theft Auto series, were coded by small groups of developers (such as Rockstar Games) that were later acquired by larger companies (such as Take-Two Interactive Software Inc.) that could provide distribution and marketing.

As the toy industry illustrates, the principle of open innovation isn’t limited to high-tech industries. In fact, any company spending 5 percent of sales on R&D and looking to get higher revenue growth would likely benefit from shifting its R&D to a more open stance.

But the key to change isn’t simply finding partners; it is embracing a management philosophy that reorients an enterprise’s innovation activities away from the search for “Eureka!” moments. Instead of building R&D laboratories far away from others to protect the ideas inside, innovators today are locating new facilities next door to universities to gain faster access to ideas. The winners create value when they combine their ideas with those of others, and when others use their ideas.

Henry Chesbrough, [email protected]
Henry Chesbrough is an assistant professor and the Class of 1961 Fellow at the Harvard Business School. He is the author of Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, April 2003).
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