Here is an excerpt from another “classic” article written by John Seely Brown and John Hagel III for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
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A typical large company can no longer rely solely on its own resources. Creation networks are a promising way to move beyond them.
Thanks to the many books on open innovation and to the prominence of open-source software projects such as Linux, most executives have at least a passing familiarity with the subject. Its central idea is that when companies look outside their own boundaries, they can gain better access to ideas, knowledge, and technology than they would have if they relied solely on their own resources.
Some executives may even be familiar with the many variants of open innovation, a number of which stray a considerable distance from traditional “closed” models of innovation management. Despite the familiarity of these ideas, persistent doubts and misunderstandings often make it hard to generate value from them. At one extreme, many people ask whether distributed models of innovation aren’t notoriously hard to control, manage, and commercialize. At the other extreme, open innovation may seem to be mostly about narrowly defined joint ventures or transactions to acquire intellectual property created by others. If so, what’s all the fuss about?
In truth, except for narrowly scoped forays (such as the licensing of technology) outside the confines of the enterprise, few top executives believe that they understand how best to create value with the open model of innovation. This uncertainty prevents many of them from taking advantage of the very real opportunities it presents.
The lack of confidence is understandable: although the roots of open innovation go back at least as far as the Italian Renaissance—when networks of apparel businesses in Piedmont and Tuscany were responsible for rapid innovation in techniques for producing silk and cotton fabric—today’s variants on the model are anything but mainstream. That’s why companies must visit the peripheries of today’s commercial and scientific worlds to recognize the patterns that emerge across very diverse domains.
Such patterns reveal intriguingly promising “networks of creation” (or “creation nets”), where hundreds and even thousands of participants from diverse institutional settings collaborate to create new knowledge, to learn from one another, and to appropriate and build on one another’s work—all under the guidance of a network organizer. These diverse participants often work in parallel and then fight and learn among themselves when the time comes to integrate their individual efforts into a broader offering. The most widely publicized example may be the development of the Linux kernel by the open-source software movement. But creation nets are also visible in more unexpected fields and places, from the development of motorcycles in China and of consumer electronics products in Taiwan to the world’s big-wave surfing beaches, where networks of sports enthusiasts push the technology and techniques required to ride 60-foot-plus waves, and the places around the globe where thousands of amateur astronomers operate telescopes tied together by the Internet to find and monitor celestial events.These examples of open innovation are not undiscovered. Yet few if any observers have pulled back from individual examples or stories to analyze the broader principles and mechanisms underlying the success of creation networks. Those principles and mechanisms, once understood, suggest specific moves that companies can make to profit from this ambitious form of open innovation and to create greater value than more conventional models of innovation can.
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Here is a direct link to the complete article.
John Seely Brown, the former head of Xerox’s Palo Alto Research Center and chief scientist at Xerox, can be reached at jsb@johnseelybrown.com; John Hagel, an alumnus of McKinsey’s Silicon Valley office, is now an adviser to McKinsey and can be reached at john@johnhagel.com.
Their most recent book is The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization, Boston: Harvard Business School Press.
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