Managing innovation over the next decade

Henry Chesbrough, author of Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business Press) and Open Services Innovation: Rethinking Your Business to Grow and Compete in New Era (Jossey-Bass) believes there will be significant changes in management innovation over the next decade which will involve three important factors:

Innovation management will become more collaborative. Opening up the innovation process will not stop with the accessing of external ideas and the sharing of internal ideas. Rather, it will evolve into more iterative, interactive process across the boundaries of companies, as communities of interested participants work together to create new innovations. Companies will increasingly compete on the breadth, depth, and quality of their communities that surround their activities. New technologies like agile software development will help companies interact more intensively – and more productively – with current and potential customers, elevating them to full partners in the innovation process.

Business model innovation will become as important as technological innovation. The business model is the predominant way business creates value for its customers and captures some piece of that value for itself. It is generally accepted that better business model can often beat better technology. Yet companies that spend many millions of dollars on R&D seldom invest much money or time in exploring alternative business models to commercialise those discoveries. We will learn how to design and improve business models in the coming decade. Companies will also need to learn how to manage multiple, sometimes even conflicting, business models at the same time in different parts of the world.

We will need to master the art and science of innovating in services-led economies. Most of what we know about managing innovation comes from the study of products and technologies. Yet the world’s top 40 advanced economies today derive most of their GDP from services rather than products. In order to preserve prosperity and high-wage employment in advanced economies, we will have to learn how innovation works in services, which requires different tactics than innovating products. If we incorporate the above two predictions as well, one can predict that the winning formula for managing innovation in the next decade will be an open-services innovation approach.

Focusing on service innovation, making customers central to the process, and opening up to other companies require embracing good deal of internal change for most companies, says Chesbrough. “Companies that rest on their laurels may do well for the moment, but it is safe to bet that the innovation process is changing, whether the company realises it or not. The best approach is to embrace the idea that innovation will continue to change, and that organisations that seek to profit from innovation must take on the challenge of changing with it.”

For more detail on how to go about managing innovation in changing business environment visit



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