Taking the Open Services Innovation Road.

I have been looking forward to this book; it addresses one of the most important areas of innovation that we have, the service sector. In this last week I have been reading Professor Henry Chesbrough’s new book “Open Services Innovation: Rethinking your business to grow and compete in a new era”, published by Jossey-Bass, released last week on 18th January.

Services are critical to understand and focus upon, for our continued economic growth, for the ability to offer often distinct and unique competitive advantage, as well as provide much of our future employment opportunities, especially crucial in the Western economies. Services today comprise roughly 80% of economic activity in the United States, and 60% of economic activity in the top forty economies of the world (source OECD).

Mixed Emotions

After reading this book a couple of times I must admit I had a set of very mixed emotions.

His argument and business case for services is certainly compelling. He outlines a four key conceptual framework which can serve as a broad roadmap in thinking how to tackle services in a more open way but, and it is a big but he leaves an awful lot of ‘open’ questions to fill in and this is where the book disappoints.

His four foundational concepts that drive his framework

The four foundational concepts are bold and certainly radical in their strategic implications, although on first glance they may not seem that way.

  1. Think of your business as an open services business in order to create and sustain differentiation in a commodity trap world
  2. Invite customers to co-create innovation to generate (new) experiences they will value and reward
  3. Use open innovation to help you turn your business into a platform for others to build on.
  4. Transform your business model with Open Services Innovation to profit from building a platform business model so you can gain from others’ innovation activities as well.

The escape from the commodity trap is one of his biggest arguments for change

He talks a lot about escaping the commodity trap. I’m not sure I buy this argument yet. I feel too many organization don’t differentiate enough, do not recognize their often unique position. They spend far too much in time, effort and money on benchmarking others, copying and mimicking best practice. This is often the easy route and eventually it can take you to commoditization but the case for opening up your thinking to new ways of service needs exploring more before many are really at todays point of being ‘trapped’. It is more the present fixed mental mindset than being already at the commodity trap.

He ‘hits’ the right area of focus in Service Innovation

I can accept all the arguments put forward in the book about service innovation and one could certainly add even a few more to support the business case.  I agree throwing open your innovation thinking to engage with the customer as central is absolutely right but does this conceptual framework go deep enough in exploring this and explaining the consequences?

The Shift to catch more ‘open innovation’ winds.

Are Services the next natural step of open innovation or does this book simply float a balloon to gauge the existing and future winds and the ‘open movement’ is just catching the winds that already are in force? We are at risk that the lack of necessary detail within this book to support this fundamental framework will allow for more ‘hot air’ and expanding the gases that surround open innovation already?

In my view we should be tackling existing problems before we move on and introduce another layer of open complexity. It certainly will throw open the debate about how open can an organization become with its stakeholders and especially its customers.

Open questions abound

There are many, I mean many, open questions that Professor Chesbrough introduces that are within themselves significant concepts. These are for me, dealt with in a ‘light’ way and do not have the detailed examination I would expect.

Let me provide a couple of examples where there was a need of greater depth and structure to tackle these

1)       The Customers Experience

Just engaging with customers to provide them with more complete experiences has a huge body of existing work behind that in its impact, strategic needs and what is required to do this correctly yet these are not really discussed in the difficulties, risks or rewards. A ‘complete experience’ is seemingly dangled there.  Much is left to be investigated. Equally co-creating with customers as part of your development process is seismic in managing this sort of change at all levels of any organization.

This move to engage the customer and provide her with a complete experience is such a strategic decision, perhaps no different from opening up the R&D to outsiders, but I would have expected more on the problems this might entail for any debate the board and organizational will need to conduct to understand the implication for such a  changes as this. The level of structural, process and relationship change this would bring is huge.

2)       Understanding Tacit Knowledge

Another example where you really wanted more was the level of explanations around tacit knowledge. Tacit knowledge is very difficult to capture. I felt it was dealt with in a very light manner.

Professor Chesbrough is right, knowing more about your customers than anyone else does offer a potential strategic advantage, you can potentially get closer to tacit knowledge but is this for the few who can invest in this sort of information database (ie Amazon) or for the many that simply can’t make this type of database or research related investment?

Tacit knowledge of clients’ experiences is still a major challenge to capture and interpret but I certainly didn’t get as much help here in this book on how to go about it yet it is stressed that it is most important going forward for this framework.

One insight on tacit knowledge really worth sharing for our thinking.

There is one wonderful insight on this though, that I found excellent and must share- “the ability to manage tacit information effectively can create competitive advantage….as the globe moves ever faster…it is precisely the knowledge that doesn’t move fast –the tacit knowledge- that becomes increasingly valuable”. I loved that observation.

The risk of non-adoption in organization is higher when you lack the necessary detail.

The success of this book will be in its adoption; the taking up of this conceptual thinking and how it prompts ‘reactions’ and seen by different organizations that are facing service challenges, for it to resonate with them. Will “Open Service Innovation” be recognised as essential to adopt for the required growth and improvement needed to stay competitive will determine whether this book has the same impact as his first one, “Open Innovation”?

It will be a tough sell to this opening up of services to C-Level executives for many, that I’m sure, it will be difficult on just this book ‘s conceptual approach and limited guidance.

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