Thanks to the many books on open innovation1 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....