Open Services Innovation

While “open innovation” has had a tremendous impact on the practice of innovation since it originated in Henry Chesbrough’s 2003 book, most of the research on and practice of open innovation has focused on products. Meanwhile, services are a major portion of the economies of the US and other developed countries, and are witnessing explosive growth even in Big Emerging Markets such as China and India.

Improving and innovating services is critical for businesses aiming to foster growth in today’s evolving and dynamic economy. The old dichotomy between products and services has dramatically diminished in recent years, with products commanding an increasingly smaller share of the economic pie. Companies and industries are beginning to shift to a more customer-centric and services-first orientation. In today’s increasingly services-based economy, openness – and its ability to deliver improved choices for customers and healthier bottom lines for corporations – is a path that can turn companies into trailblazers and help them avoid the trap of commoditization.

Chesbrough explores this in his upcoming book “Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era” (Jossey-Bass, January 2011). Starting from fundamental concepts of value creation, Chesbrough shows how a customer-centric view offers opportunities for innovation and services that are obscured by the traditional value chain model. He shows how greater specialization enables win-win scenarios for both companies and their customers, as firms better understand their customer needs while leveraging economies of scale and scope to meet those needs better than customers themselves can do so.