How open innovation can help you cope in lean times.

How open innovation can help you cope in lean times.

by Henry W Chesbrough, Andrew R Garman

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Harvard Business Review (2009)

Volume: 87, Issue: 12, Pages: 68-76, 128

PubMed: 19968058

Available from www.ncbi.nlm.nih.gov

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Abstract

A recession often forces you to cut R&D as you refocus on your core. But innovation need not go by the wayside. By placing certain assets and projects outside your walls, you can actually preserve opportunities for future growth while you shore up the fortress. Chesbrough, of Haas School of Business, and Garman, of New Venture Partners, identify five strategic moves that open the door to innovation by, ironically, letting it out of the house. Some inside-out moves permit outside firms to invest in and develop your projects; others call for spinning off projects as separate ventures that still allow you to retain some equity. Whatever the specific approach, you can meet the inherent cultural and organizational challenges of inside-out open innovation by approaching it holistically and placing it under the leadership of senior executives in strategic roles.

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How open innovation can help you ...

68 Harvard Business Review | December 2009 | hbr.org Peter Crowther HISTORY SHOWS THAT the companies that continue to invest in their innovative capabilities during tough economic times are those that fare best when growth returns. That��s how the U.S. chemicals industry overtook Britain��s aft er World War I, how Sears surpassed Montgomery Ward as the leading U.S. retailer aft er World War II, and how Japanese semiconduc- tor makers outpaced U.S. companies aft er the downturn of the early 1980s. In a challenging business climate, focus is crucial. But com- panies face a real dilemma: how to maintain that focus and manage costs tightly while keeping growth options alive for the future. Deferring or canceling less promising initiatives that might have been pursued in good times allows a busi- ness to survive and eventually thrive again. Many companies give attention and resources only to the projects that are most These strategic moves can reduce the costs of R&D today without sacrifi cing tomorrow��s growth. | by Henry W. Chesbrough and Andrew R. Garman InnovationONSPOTLIGHT INNOVATION Can Help You Cope in Lean Times How Open Innovation 1692 Dec09 Chesbrough layout.indd 68 1692 Dec09 Chesbrough layout.indd 68 11/2/09 1:40:10 PM 11/2/09 1:40:10 PM

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1692 Dec09 Chesbrough layout.indd 69 1692 Dec09 Chesbrough layout.indd 69 11/2/09 1:40:19 PM 11/2/09 1:40:19 PM