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Management article
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Reference no. R0912F
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2009
Length: 16 pages

Abstract

A recession often forces you to cut R&D as you refocus on your core. But innovation need not go by the wayside. By placing certain assets and projects outside your walls, you can actually preserve opportunities for future growth while you shore up the fortress. Chesbrough, of Haas School of Business, and Garman, of New Venture Partners, identify five strategic moves that open the door to innovation by, ironically, letting it out of the house. Some inside-out moves permit outside firms to invest in and develop your projects; others call for spinning off projects as separate ventures that still allow you to retain some equity. Whatever the specific approach, you can meet the inherent cultural and organizational challenges of inside-out open innovation by approaching it holistically and placing it under the leadership of senior executives in strategic roles. Game-changing innovations are rare - always have been, always will be. But, as the stories in this HBR Spotlight demonstrate, the right organizational conditions can make a breakthrough more likely. Strong leadership helps (and innovative leaders behave differently from the rest of us). Breaking down the borders between ''inside'' and ''outside'' helps. Creating career paths for innovators makes a difference, as does using social media to pull your whole ecosystem into a creative conversation. Leaders who put all the pieces together will have a huge advantage.

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Abstract

A recession often forces you to cut R&D as you refocus on your core. But innovation need not go by the wayside. By placing certain assets and projects outside your walls, you can actually preserve opportunities for future growth while you shore up the fortress. Chesbrough, of Haas School of Business, and Garman, of New Venture Partners, identify five strategic moves that open the door to innovation by, ironically, letting it out of the house. Some inside-out moves permit outside firms to invest in and develop your projects; others call for spinning off projects as separate ventures that still allow you to retain some equity. Whatever the specific approach, you can meet the inherent cultural and organizational challenges of inside-out open innovation by approaching it holistically and placing it under the leadership of senior executives in strategic roles. Game-changing innovations are rare - always have been, always will be. But, as the stories in this HBR Spotlight demonstrate, the right organizational conditions can make a breakthrough more likely. Strong leadership helps (and innovative leaders behave differently from the rest of us). Breaking down the borders between ''inside'' and ''outside'' helps. Creating career paths for innovators makes a difference, as does using social media to pull your whole ecosystem into a creative conversation. Leaders who put all the pieces together will have a huge advantage.

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