Open Services Innovation: A book review by Henry Chesbrough

Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era
Henry Chesbrough
Jossey-Bass/John Wiley & Sons (2011)

How to grow, compete, and succeed in a services era

In his previous articles and books (notably Open Innovation and Open Business Models), Henry Chesbrough has a great deal of value to say about results-driven, multi-dimensional collaboration/co-creation within and beyond any organization, whatever its size and nature may be. Given the current economy and, especially, ever-increasing commoditization, his latest book is especially valuable because he thoroughly explains in it how to deliver better products and services for any business’ customers “that will allow it to grow and compete in a services era, ultimately escaping the commodity trap and that treacherous treadmill.”

Chesbrough makes the case for open services innovation in Chapter 1. I was especially interested in what he has to say about “The Commodity Trap,” one that reveals three business realities. Here’s the challenge: How to avoid or escape from that trap? That’s the focus of Part 1 (Chapters 1-5) in which he provides and discusses a framework to spur innovation and growth. This framework is based on four concepts and practices:

1. Think of your business as a service business
2. Innovators must co-create with customers
3. Open innovation accelerates and deepens service innovation
4. Business models are transformed by services innovation

Chesbrough observes, “By transforming products into platforms that incorporate internal and external innovations and surrounding these platforms with a variety of value-added services, companies can obtain some breathing space from relentless price and cost pressures.”

In Part 2, (Chapters 6-9) he describes a full range of applications and examples of Open Services Innovation (OSI) in a variety of industries, geographies, and contexts. More specifically, in larger companies (e.g. Xerox and GE), smaller companies (e.g. MTV Networks and NetBase), service businesses (e.g. Amazon), and in emerging economies (e.g. Asian Paints, SSIPEX, and ShaanGu). Then in the final chapter, Chesbrough explores “the larger context in which the shift toward services innovation is taking place.” More specifically, he discusses that shift in historic context, addresses especially important issues in service innovation, and then shares what are obviously heart–felt as well as highly-rational convictions about “the way forward” into an uncertain future that is certain to consist of both major perils and major opportunities. “It is high time to get started on the journey” and, I presume to add, this book would be an invaluable travel guide.

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