Unused ideas abound in many companies.  When Procter & Gamble surveyed all of the patents it owned, it determined that about 10% of them were in active use in at least one P&G business, and that many of the remaining 90% of patents had no business value of any kind to P&G (Sakkab, 2002). Yes, not letting these patents go to the market would prevent the cost of false positives but why not let these test with different business models? Taking these remaining patents to the outside might cause a lot of internal resistance but the costs of letting them remain unused are even higher.

There are subtle business models that have emerged in the “creative commons” arena.  One example of such a model is when companies voluntarily choose to donate portions of their intellectual property to a “commons”, so that they and others can practice their technologies freely without fear of being sued for patent infringement. This would boost the amount of innovative activity in the area, and effectively lower the cost of producing useful output for customers of this activity. Intel has boosted innovation by creating “lablets” that work closely with universities to collaborate on research that will be published, and not owned by Intel.   IBM recently created a powerful example of this in their decision to transfer 500 software patents to a nonprofit foundation in the open source community. Instead of having to pay Microsoft or another company for a proprietary operatinOpen Business Models g system, open source guarantees a cheaper alternative that will work well with IBM’s products and services.

Whether you are in a large organization or a small one, chances are you need to open up your innovation processes.  But in order to do this effectively, you must connect your business model to your innovation process.  Companies that are large typically enjoy strong business models but It is harder for them to change their business models, in order to exploit open innovation opportunities.  Small companies, on the other hand, lack the strong business model and resources to enable them to exploit the opportunities of open innovation without fear of being copied by a larger foe.  IP protection can only be one of many tools in their business model to strive to reach success.


For more information, see Ch. 2 Open Business Models by Henry Chesbrough