In recent years, open innovation has been changing the way
many companies think about developing products. But open
innovation can — and should — apply to services, too.
BY HENRY CHESBROUGH
open innovation apply to
; Many open innovation concepts apply
readily to services.
; One way companies
can move toward
open innovation in
services is by working closely with
customers to develop new solutions.
organizational challenges in moving to
a greater emphasis
BACK IN 2004, I sat in Paul Horn’s office at
IBM. Horn was at the time IBM’s senior vice president of research, in charge of IBM’s 3,000 research
staff. We had a wonderful conversation about innovation, and the many successes IBM had
obtained from its research activities. At the end of
our time, I asked Horn a final question: What is
your biggest problem today?
Horn told me that his biggest problem was that
his research activities were geared to support a
company that made products: computer systems,
servers, mainframes and software. But most of
IBM’s revenues were coming from services, not
from its products. “I can’t sustain a significant research activity at IBM if our research is not relevant
to more than half of the company’s revenues going
forward,” Horn stated.
The challenge Horn articulated in that conversation was not unique to IBM. In fact, the challenge of
how to innovate in services is one that faces not just
individual companies but also entire countries. The
world’s developed economies are increasingly oriented around services: Services comprise more than
70% of aggregate gross domestic product and employment in the Organization for Economic
Cooperation and Development countries. 1 In countries such as the United States, products represent a
smaller and smaller share of the economic pie —
After LEGO A/S allowed customers to modify the software that came with the motors for some of its products, the results included a middle-school curriculum using LEGOS to teach children robotics.
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