03 Sep Creating Open Platforms of Solutions
In this post, I’ll share with you an interesting talk by Henry Chesbrough, the “father” of Open Innovation, at ESADE. After three books on the subject, he discusses the importance for companies to create platforms that connect all their services and products into systems and solutions able to involve external partners and provide the best choice for customers. He also talks about a change of paradigm when talking about the importance of services in relation to products in companies’ income, and about how customers are increasingly seeking for the whole experience that services or a product can provide. According to this author, companies, whether they make products or provide services, must rethink of themselves as a service business, and innovate in their business model.
As Chesbrough points out, services were not traditionally the main focus of innovation efforts or the top priorities within companies. They were mainly seen as a marketing advantage at the end of a product value chain or something that keeps it from coming back to the company, in the last step of its launching to the market. However, there is an increasing agreement on the fact that while most of the innovation efforts and resources are invested in new product research, a large part of the profits come from services, as Chesbrough exemplifies through IBM. On the contrary, at the center of what a company does, it must be the customer experience so companies have to think differently when regarding services, he asserts.
On the other side, technology broke new ground in realizing product manufacturing. Companies no longer need to dispose of the entire technology, production centers, or process to provide useful solutions to their customers. They can collaborate with other partners, as it occurs with TSMC, to provide them the best solution. This model proves that the design of new products and their production can come separately from different partners.
Finally, another good point of the talk is the importance of collaboration in the design of new and innovative products. Collaboration allows for a better understanding of a partner difficulties and is a way to generate new solutions for their problems. Collaboration allows, for instance, to take technologies for an industry and use them in another, as El Bulli did with chemistry applications to create molecular gastronomy.
Chesbrough closes the talk with three lessons or questions for companies to resolve in order to create the perfect open platform of solutions, and innovate in business model:
1. Think on how important services are in your business.
2. Look for assets where you don’t have to pay 100% of the production costs of your new technologies, opening ways to spread those costs into more transactions and people to make it cheaper for everybody.
3. Create a platform to connect services and products into systems and solutions that delight your customers.