Henry Chesbrough is a professor at the Haas Business School (Garwood Center for Corporate Innovation), UC Berkeley, and executive director for The Center for Open Innovation. Dr. Chesbrough recently launched and actively contributes to, Open Innovation Community a portal where innovators meet for the latest news, research, discussions and applications of open innovation. Professor Chesbrough spoke to ExecEd about ways to innovate at Apple and Google.
ExecEd: We've spent a lot of time talking about openness and open innovation. Let's switch gears for a second. How about closed innovation? How about Apple? Can you talk to me about ... There's an example of a heavily guarded ... They don't have openness. It's all of their own secrets, and they've been very successful in that way. How can we explain that kind of success compared to what you're talking about in terms of open innovation?
Henry Chesbrough: It's a very good question. I think as we speak now Apple may be the world's most valuable company by stock market valuation so enormously successful and, as you say, quite secretive. Not only secretive to the outside world, even secretive inside their own company. They will often give multiple projects names for the same project precisely so they can trace a leak back to a particular group within the company if and when something leaks out before they're ready to have it leak. There's no question the mentality here is not that of openness and sharing and all the rest. So why are they so successful?
One thing you have to give them credit for is they truly, deeply understand and care about users and user experiences. They are one of the world's best at applying design thinking in deep user understanding, and through their coordination of many different pieces, they can deliver an end-to-end experience that's wonderful for users. We really have to acknowledge the great benefit of that.
A second thing I would point out is that there have been moments in the company's history where the company did open up and had a great success in doing so. An early example would be when the iPhone first came out, Steve Jobs was quoted in the New York Times saying, "Yeah, you can get a few of these apps on the iPhone, but most of what you're going to need is already on the phone. It's not going to be like a Windows PC where the thing crashes and you have to keep rebooting."
Happily for Apple, the company got all these third party developers writing apps that they did not expect. Initially, Jobs resisted letting all these people onto the platform, but his own team convinced him that this would actually be good for the product and they could control the user experience and make sure you didn't have to keep rebooting. So the application environment exploded. The iPhone sales exploded. Even in a company as closed as Apple, there have been critical moments where the company has really benefited from opening up.
Innovation, in many ways, is about introducing variation into a process. You want highs and lows, ups and downs, max and min, so there's a real tension between practicing quality and bringing in innovation. If we're going to bring innovation into a culture of a company the way quality has been brought into the culture of a company, there's a lot of work to do there. Some companies used to keep them very, very separate. We were talking about Apple as a potential example of somebody that really has done a good job managing the quality of their products. Well, their whole operations group is pretty separate from their innovation activities. Indeed, most of the manufacturing is done outside of Apple, so it's really separate from the innovation group.
That's one strategy to manage the tension between those. Other companies are trying to broaden the mindsets of the people in the organization so that they can be, what's called, ambidextrous and do both, both doing a fine job on the current business for quality but also thinking about the next business where these sources of variability and variation can actually be insightful and useful.
ExecEd: Wouldn't that be Google Alphabet, or is that ...?
Henry Chesbrough: Sure. Well, Google, they do have a separation because the reason Google separated from Alphabet ...
ExecEd: To let them have ...
Henry Chesbrough: ... was to let Google be Google. They continue to do a lot of innovative things around their search business but to have these other so-called moonshot and other activities that might go off in widely different areas. That's, again, more, in part, a separation strategy. Anybody who's been through the interview process at Google knows that innovation's a core value of the company. They're a company that's really trying to keep this as part of the culture, whether it's in Google or the Alphabet parent.