I just finished reading Open Innovation by Henry Chesbrough. This is a nonfiction book about how over the last 20 years the ecosystem around innovation has changed; and how businesses need to adapt to that change in order to survive.
Chesbrough's premise is that throughout the industrial revolution and most of the 20th century, innovation was about creating a new idea or new technology and creating the means to take it to market yourself. He argues that this was sustained by the relative difficulty and inefficiency in sharing information broadly. But today he proposes that we are in a "knowledge economy" where we can no longer expect that a company can invent in-house all of the innovation that they need to sustain a healthy competitive advantage.
There are two outcomes of accepting that proposal. First, companies need to be prepared to look outside their own walls for new technology. Second, since every other company is in the same boat, a company needs to be prepared to license its technology (or spin it out) rather than take it to market (or in addition to taking it to market) in order to fully capitalize on the business opportunity.
This book is much longer, and much preachier, than it needs to be. But there are some good nuggets in there. One: while we tend to think of intellectual property as having intrinsic value, it only has value within the context of a particular business opportunity.
Two: a clear working definition of a business model and its component parts. It's actually a very good one, that tends to match my thinking, and I wish more people would use a definition like this to compose their business models. The definition and its component parts written in about half a page (with several more pages of drill-down) and I won't repeat it here because it's the author's hard work and people ought to buy his book to reap the benefits of his thinking.
The book contains many anecdotes from the history of IBM, Intel, Xerox, and several other companies that have struggled with the closed vs. open innovation models. It conveniently omits some other companies, and you can imagine that I found it quite aggravating that the author seems oblivious to the existence of Microsoft Research. I also wish that he had spent some more time talking about open inovation in Europe, where it seems to be embraced even more fervently than in the U.S. and with some unique twists of its own.
Overall, a pretty useful read, particularly if you're willing to skim some of the repetitive parts.
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