You are previewing Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era.
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Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era

Book Description

The father of "open innovation" is back with his most significant book yet. Henry Chesbrough's acclaimed book Open Innovation described a new paradigm for management in the 21st century. Open Services Innovation offers a new approach that demonstrates how open innovation combined with a services approach to business is an effective and powerful way to grow and compete in our increasingly services-driven economy. Chesbrough shows how companies in any industry can make the critical shift from product- to service-centric thinking, from closed to open innovation where co-creating with customers enables sustainable business models that drive continuous value creation for customers. He maps out a strategic approach and proven framework that any individual, business unit, company, or industry can put to work for renewed growth and profits. The book includes guidance and compelling examples for small and large companies, services businesses, and emerging economies, as well as a path forward for the innovation industry.

"Whether you are managing a product or a service, your business needs to become more open and more inclusive in order to be more innovative. Open Services Innovation will be an invaluable guide to intrepid managers who commit to making that journey."

—GARY HAMEL, visiting professor, London Business School; director, Management Lab; and author, The Future of Management

"I tore out page after page to share with my leaders. Chesbrough has pioneered an entire rethink of business innovation that's rich in concept, deeply explained, with tools ready to use in every industry."

—SCOTT COOK, founder and chairman of the executive committee, Intuit

"Focusing on core competence often tempts managers to keep continuing what succeeded in the past. A far more important question is what capabilities are critical in the future, and Chesbrough shows how to ask and answer these issues."

—CLAYTON CHRISTENSEN, Robert & Jane Cizik Professor of Business Administration, Harvard Business School, and author, The Innovator's Dilemma

"To thrive, businesses will need to master the lessons of open service innovation. Here is their one-stop guidebook with important lessons clearly and compellingly presented."

—JAMES C. SPOHRER, director, IBM University Programs World-Wide

"Open Innovation pioneer Henry Chesbrough breaks new ground with Open Services Innovation, a persuasive argument for the power of co-creation in the world of services."

—TOM KELLEY, general manager, IDEO, and author, The Ten Faces of Innovation, The Art of Innovation

"With his trademark style of beautifully explained examples, Henry Chesbrough shows how open service innovation and new business models can help you escape this product commodity trap and bring you to the next level of competition."

—ALEX OSTERWALDER, author, Business Model Generation

"Open Services Innovation shows how a business can redefine itself as a service organisation and tap into faster growth through shared innovation."

—SIR TERRY LEAHY, chief executive, Tesco

"Chesbrough shows how innovating openly with a services mindset can make you a market leader."

—CHARLENE LI, author, Open Leadership, and founder, Altimeter Group

Table of Contents

  1. Copyright
  2. ACKNOWLEDGMENTS
  3. OPEN SERVICES AND INNOVATION
    1. KEY CONCEPTS
    2. ESCAPING THE COMMODITY TRAP
    3. ABOUT THIS BOOK
  4. 1. THE CASE FOR OPEN SERVICES INNOVATION
    1. 1.1. THE COMMODITY TRAP
    2. 1.2. THE WAY OUT OF THIS MESS
    3. 1.3. THE LIMITS OF PRODUCT-FOCUSED INNOVATION FOR COMPANIES
    4. 1.4. GROWTH AND COMPETITIVE ADVANTAGE THROUGH SERVICES
    5. 1.5. THE CHALLENGE OF DIFFERING BUSINESS MODELS
    6. 1.6. SERVICES BUSINESS MODEL INNOVATIONS: THE PACKAGE SHIPMENT INDUSTRY
    7. 1.7. OPEN SERVICES INNOVATION: THE FRAMEWORK
      1. 1.7.1. Concept 1: Think of Your Business as a Services Business
        1. 1.7.1.1. Customization Versus Standardization: A Tension in Services Innovation
        2. 1.7.1.2. Your Organizational Structure for Services Innovation
      2. 1.7.2. Concept 2: Innovators Must Co-Create with Customers
      3. 1.7.3. Concept 3: Open Innovation Accelerates and Deepens Services Innovation
      4. 1.7.4. Concept 4: Business Models Are Transformed by Services Innovation
      5. 1.7.5. Combining the Four Concepts for Success
    8. 1.8. RUNNING YOUR OWN RACE: OVERCOMING THE COMMODITY TRAP
  5. I. A FRAMEWORK TO SPUR INNOVATION AND GROWTH
    1. 2. THINK OF YOUR BUSINESS AS A SERVICES BUSINESS
      1. 2.1. DEFINING SERVICES
      2. 2.2. DEFINING YOUR BUSINESS
      3. 2.3. THE UTILIZATION DIFFERENTIAL
      4. 2.4. A PRODUCTS VERSUS SERVICES APPROACH
        1. 2.4.1. The Food Industry
          1. 2.4.1.1. The Product-Focused Grocery Business
          2. 2.4.1.2. The Services Approach in the Food Business
          3. 2.4.1.3. The Business Model in Services Versus Product Approaches
          4. 2.4.1.4. El Bulli: The Restaurant as a Platform
        2. 2.4.2. Services in the Semiconductor Industry
    2. 3. CO-CREATE WITH YOUR CUSTOMERS
      1. 3.1. THE CHANGING ROLE OF CUSTOMERS IN SERVICES
      2. 3.2. TACIT KNOWLEDGE
        1. 3.2.1. Examples of Tacit Knowledge
        2. 3.2.2. The Strategic Advantage of Tacit Information
      3. 3.3. DESIGNING EXPERIENCE POINTS TO FOCUS ON CUSTOMERS
      4. 3.4. LESSONS FROM THE MUSIC INDUSTRY
        1. 3.4.1. Co-Creation: An Alternative Vision for Music
        2. 3.4.2. Tastemakers: Co-Creating the Promotion of the Music
    3. 4. EXTEND SERVICES INNOVATION OUTSIDE YOUR ORGANIZATION
      1. 4.1. OPEN INNOVATION IN BRIEF
      2. 4.2. SPECIALIZATION AND GROWING MARKETS
        1. 4.2.1. Paychex: A Specialized Payroll Processor
      3. 4.3. SERVICES AS A SET OF PROCESSES
      4. 4.4. SPECIALIZATION AND ECONOMIES OF SCALE AND SCOPE
        1. 4.4.1. Economies of Scale
        2. 4.4.2. Economies of Scope
        3. 4.4.3. Building Service Platforms from Economies of Scope
      5. 4.5. OPEN INNOVATION AND SPECIALIZATION
        1. 4.5.1. Leveraging Outside-In Openness for Economies of Scope
        2. 4.5.2. Exploiting Inside-Out Openness for Economies of Scale
      6. 4.6. OPEN INNOVATION AND SERVICES INNOVATION
    4. 5. TRANSFORM YOUR BUSINESS MODEL WITH SERVICES
      1. 5.1. DEFINING THE BUSINESS MODEL
      2. 5.2. BUSINESS MODELS FOR SERVICES INNOVATION
        1. 5.2.1. Coordinating the Various Activities in Business Models
        2. 5.2.2. The Inertia of a Successful Business Model
      3. 5.3. TOOLS TO TRANSFORM YOUR BUSINESS MODEL
        1. 5.3.1. From Maps to Alternative Business Models
        2. 5.3.2. A Bias for Action
        3. 5.3.3. Leading the Business Model Change
      4. 5.4. REORGANIZING FOR A SERVICES BUSINESS MODEL
        1. 5.4.1. Setting Up the Organization for Economies of Scale and Scope
        2. 5.4.2. Nurturing the Platform for Your Business Model
        3. 5.4.3. Opening Up to Build a Platform
        4. 5.4.4. Assembling the Open Services Innovation Concept Map
  6. II. OPEN SERVICES INNOVATION IN PRACTICE
    1. 6. OPEN SERVICES INNOVATION IN LARGER COMPANIES
      1. 6.1. XEROX
      2. 6.2. GE AVIATION
      3. 6.3. KLM ROYAL DUTCH AIRLINES
      4. 6.4. MERRILL LYNCH
      5. 6.5. LESSONS FROM SERVICES INNOVATION IN LARGE COMPANIES
    2. 7. OPEN SERVICES INNOVATION IN SMALLER COMPANIES
      1. 7.1. FIGURING OUT WHERE YOUR BUSINESS FITS
      2. 7.2. NICHE BUSINESSES
        1. 7.2.1. The Olympic Circle Sailing Club
        2. 7.2.2. Lessons for Services Firms in Niche Businesses
      3. 7.3. BREAKOUT BUSINESSES
        1. 7.3.1. NetBase
        2. 7.3.2. Lessons for Services Firms in Breakout Businesses
      4. 7.4. SPECIALIST SERVICE BUSINESSES
        1. 7.4.1. Computers and Structures
        2. 7.4.2. Lessons for Services Firms in Specialist Businesses
      5. 7.5. DOMINANT SERVICES BUSINESSES
        1. 7.5.1. MTV Networks
        2. 7.5.2. Lessons for Services Firms in Dominant Businesses
      6. 7.6. THE ADVANTAGES OF OPEN INNOVATION FOR SMALLER SERVICE FIRMS
    3. 8. OPEN SERVICES INNOVATION FOR SERVICES BUSINESSES
      1. 8.1. GETTING SMARTER ABOUT YOUR CUSTOMERS
      2. 8.2. CONSTRUCTING A PLATFORM FROM YOUR CUSTOMERS' EXPERIENCES
        1. 8.2.1. Directly Observing Customers
        2. 8.2.2. Online Observation of Customers
      3. 8.3. BUILDING A PLATFORM OUT OF YOUR SERVICES
      4. 8.4. AMAZON: A PLATFORM LEADER THAT IS STILL EVOLVING
        1. 8.4.1. Investing in the Platform
        2. 8.4.2. Opening Up the Platform
        3. 8.4.3. Lessons from Amazon for Open Services Innovation
    4. 9. OPEN SERVICES INNOVATION IN EMERGING ECONOMIES
      1. 9.1. ASIAN PAINTS: OPEN SERVICES INNOVATION IN A TRADITIONAL PRODUCT INDUSTRY
        1. 9.1.1. The Challenge of Commoditization
        2. 9.1.2. Touching the Customer More Directly
        3. 9.1.3. From Customer Help to Services Innovation
        4. 9.1.4. A Virtual Back Office for Channel Partners
        5. 9.1.5. Using Services Innovation to Escape the Commoditization Pressure
      2. 9.2. SHANGHAI SILICON IP EXCHANGE
      3. 9.3. SHAANGU: A PRODUCT-BASED COMPANY MOVES INTO SERVICES
        1. 9.3.1. Adopting an Open Services Innovation Focus
        2. 9.3.2. A New Business Model for ShaanGu
        3. 9.3.3. Initial Results
      4. 9.4. OPEN SERVICES INNOVATION IN EMERGING ECONOMIES
        1. 9.4.1. Lessons Learned
        2. 9.4.2. Differences from Advanced Economies
      5. 9.5. SUMMING UP
    5. 10. OPEN SERVICES INNOVATION: THE WAY FORWARD
      1. 10.1. INNOVATION IN HISTORIC CONTEXT
      2. 10.2. ISSUES IN SERVICES INNOVATION
        1. 10.2.1. A Need for Services Innovation Research
        2. 10.2.2. Transcending the Boundaries of Services Silos
        3. 10.2.3. Integration in Services
      3. 10.3. THE WAY FORWARD
  7. NOTES
  8. THE AUTHOR