In Open Innovation: The New Imperative for Creating and Profiting from Technology (2003) and then in Open Business Models: How to Thrive in the New Innovation Landscape (2006), Henry Chesbrough explains that a business model “performs two important functions: it creates value and it captures a portion of that value. It creates value by defining a series of activities from raw materials through to the final consumer that will yield a new product or service with value being added throughout the various activities. The business model captures value by establishing a unique resource, asset, or position within that series of activities, where the firm enjoys a competitive advantage.”

Having thus established a frame-of-reference, Chesbrough continues: “An open business model uses this new division of innovation labor – both in the creation of value and in the capture of a portion of that value. Open models create value by leveraging many more ideas, due to their inclusion of a variety of external concepts. Open models can also enable greater value capture, by using a key asset, resource, or position not only in the company’s own business model but also in other companies businesses.”

Here is an excerpt from an article by Geoffrey Moore for LinkedIn during which he shares his own insights concerning open innovation. To read the complete article, please click here.

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In a prior century, high-tech innovation was largely a top-down affair, simply because the price of entry was so high, it was hard for individuals, and even for start-ups, to amass the capital needed. At the turn of the century, however, the rise of consumer technology, open source technology, and the cloud infrastructure needed to support open development have all reversed this dynamic. Today technology innovation is more likely to come from the edge than from the core, bottoms up rather than top down. Still, to complete the loop, to scale, and to monetize, eventually the top and the bottom must connect. Let’s sort out how this best unfolds.

Start at the Bottom

All the neat stuff comes out of nowhere. Where is nowhere? At the bottom, out of sight. So what is going on down there anyway? As a partner in a venture capital firm, Mohr Davidow Ventures, I get to see a fair amount of bottoms-up innovation as I engage with the entrepreneurs who pitch us and whom we fund. Here are [the first two of] five things that I think characterize the most successful teams:

o They are engaged with a technology that has cool properties. Cool is an extremely important concept in high tech as it signals potential to create value heretofore unseen. You don’t yet know what the value is, but you do sense that it is there to be released. If it is not there, keep looking. Without cool, this thing is not going far.

o They are attracted to interesting problems. Interesting problems live on a frontier between straightforward problems (largely the domain of sustaining innovation applied to existing systems) and world hunger (essentially unsolvable, at least within the frame they are currently scoped). Interesting problems are not only unsolved, it is not obvious how they could be solved, but they do have “openings”—places where they might be attacked. When one of these problem openings matches up to one of your technology’s cool properties, things start to get exciting.

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To read the complete article, please click here.

Geoffrey Moore is an author, speaker and business advisor to many of the leading companies in the high-tech sector, including Cisco, Cognizant, Compuware, HP, Microsoft, SAP, and Yahoo!. He divides his time between consulting on strategy and transformation challenges with senior executives and speaking internationally on those same topics. His latest book, Escape Velocity: Free Your Company’s Future from the Pull of the Past, keeps this intent in mind and is the result of his years of experience working with large enterprises.

His first book, Crossing the Chasm, which addresses the challenges of gaining initial adoption for disruptive innovations, continues to be a best seller and required reading in business schools and entrepreneurship curricula. Moore wrote four subsequent books which addressed the challenges faced by management when competing in hyper-growth markets (Inside the Tornado) and those faced by investors when managing a high-tech stock portfolio (The Gorilla Game). The two additional books both address the organizational challenges faced by established enterprises, in one case posed by the volatility of the technology sector overall (Living on the Fault Line), in the other by the need to reignite innovation in mature franchises (Dealing with Darwin). Escape Velocity rounds out these efforts in service to established enterprises by laying out a comprehensive program for engaging with next-generation trends while maintaining their core franchises.

He has a bachelor’s degree from Stanford and a doctorate from the University of Washington, both in English Literature.