Two Flavors of Open Innovation

Henry Chesbrough defined open innovation as breaking down the boundaries of the corporation so that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company, as well. Chesbrough's work encouraged companies to create porous innovation pipelines and to become more aggressive about licensing, working with start-up companies, spinning out concepts that don't fit with the core business, and partnering with other organizations to produce innovations. Open-source innovation requires three large changes in corporate innovation thinking, each of which is difficult. First, it requires that firms take a modified view of IP, trading patent control for other sources of competitive advantage. Second, an open-source mindset requires shifting the locus of control of new product directions closer to the user community. Finally, open-source approaches to innovation require business models that can survive in a more open world.