Open Innovation, page 30
vertical integration for R&D
Zschau, Ed
About the Author
HENRY CHESBROUGH is currently a professor at Harvard Business School with appointments in both the technology and entrepreneurship departments. He holds a B.A. from Yale University, an M.B.A.from Stanford University, and a Ph.D. from the University of California, Berkeley. Before joining academia, Chesbrough worked for more than a decade in the computer disk-drive industry, first as a senior executive at Quantum and later as an industry consultant. Previously, he worked at Bain & Company. His work combines academic theory with industry experience in the areas of technology management and innovation. He frequently presents to and advises innovative companies in the information technology, life science, and financial services industries. His research has been published widely in academic journals such as Research Policy, Industrial and Corporate Change, Business History Review, and the Journal of Evolutionary Economics. He has also published articlesfor managers in the Harvard Business Review, California Management Review, and Sloan Management Review. He is a founder of NeuroTherapy Ventures, an early-stage venture fund targeting epilepsy and related neurological disorders. He and his family divide their time between the San Francisco Bay Area and Boston. He can be reached at henry@chesbrough.com.
In a bountiful knowledge landscape, a company organizes its internal R&D for the following reasons:
To identify, understand, select from, and connect to the wealth of available external knowledge
To fill in the missing pieces of knowledge not being externally developed
To integrate internal and external knowledge to form more complex combinations of knowledge, to create new systems and architectures
To generate additional revenues and profits from selling research outputs to other firms for use in their own systems
The company will also need technologies that its internal research organization will not create. Research takes a long time to deliver useful outcomes, and company strategies change at a far faster rate than the rhythm of basic research. In the new paradigm, the company’s businesses cannot (and should not) wait for the internal technologies to arrive; instead, they should access what they need, as soon as they need it—either from inside the company’s own research labs or from the knowledge created in someone else’s lab.
Henry W. Chesbrough, Open Innovation
