Open source and open innovation

by Rowan Wilson on 6 July 2010 , last updated


‘Open innovation’ is a term coined by Professor of Business Henry Chesbrough in his 2003 book Open Innovation: The New Imperative for Creating and Profiting from Technology. In the years since its publication, Chesbrough’s ideas on how technology should be managed and exploited have become extremely influential. Over the same period, the public profile of free and open source software (FOSS) has risen. This document explores open innovation and examines the areas of agreement and difference between the notions of ‘open innovation’ and ‘free and open source software’.

So what is open innovation?

Many people confuse innovation with invention. However, innovation is not invention. Invention focuses on the creation of something new without necessarily realising economic benefit. Innovation, on the other hand, is the application of inventions to generate economic benefit. You can’t have innovation without invention.

Open innovation is a specific form of innovation. Simply put, open innovation is a practice involving:

  • seeking useful inventions and innovative technologies outside your organisation
  • making your own internally developed inventions and innovative technologies as widely available to others as possible
  • working collaboratively with external partners wherever it is advantageous

Underlying Chesbrough’s promotion of the sharing of inventions across organisational boundaries is the conviction that - in an increasingly complex technological world - no individual organisation can command a monopoly of top talent. Given this, previous ‘vertical’ models of technological development (in which a single organisation invents and develops every aspect of its products) are no longer optimal, or in some cases even possible. Proponents of open innovation argue that organisations must avoid what has become known as the ‘not invented here’ phenomenon, in which external technologies are treated as inferior simply because they come from outside.

OSS Watch organises events, such as Open Source Junction, which form a collaboration catalyst for partners in industry and academia interested in codeveloping and exploiting software using open innovation practices.

Open innovation and universities

It is interesting to note that - in comparison to more commercial entities - universities have been eager ‘open innovators’ for a long time. The traditional technological exploitation vehicle employed by universities is the spin-out company. A spin-out company will generally be a separate legal entity created to own and exploit an intellectual property resource. The university that creates the spin-out will retain a certain degree of control over the company and a stake in its fortunes. However, the spin-out’s separate identity makes raising investment capital easier and allows the university to be insulated from risks of legal action and bankruptcy. Often university spin-outs will be primarily engaged in technology licensing, rather than the creation and marketing of specific products; they work with third-party companies to provide specific solutions that feed into the creation of products by that third party. Frequently, the main asset of a spin-out company will be a patent or suite of patents covering processes in the physical or life sciences.

So because universities tend to spawn separate legal entities to contain and exploit their technological innovations - essentially because technological exploitation is not their primary expertise - they can be seen as trailblazers in the territory of open innovation. In turn, as commercial organisations become more open to externally developed innovation, the market for university-spawned innovation becomes wider.

How does that relate to FOSS?

On the face of it, Chesbrough’s appeal to ‘open’ access to technological innovation seems to have a lot in common with the principles behind free and open source software. Rough analogies can be drawn between Chesbrough’s criticisms of closed, vertical organisations and Eric Raymond’s criticisms of ‘cathedrals’ in his seminal essay ‘The Cathedral and the Bazaar’. Both tend to favour internal expertise over external, and both are potentially losing the advantages that access to a wider market of ideas could bring. Chesbrough also heavily promotes the collaboration between internal and external technologists as a mutually beneficial measure. This could be compared to the open development collaborative methodology that so closely accompanies the FOSS ideology.

It’s not quite as simple as that, however. Chesbrough’s examples of exchanges of technology are largely based around patentable processes and their paid licensing to selected external organisations. This is only natural, as patents are the form of intellectual property best suited to protecting all embodiments of an innovative technological process, and selective paid licensing is a traditional mode of patent exploitation. However, FOSS relies upon universally granted copyright licences to facilitate its model, with either implicit or explicit universal patent grants accompanying them.


So exactly how closely related are open innovation and FOSS? Put simply, FOSS is an example of open innovation in software. The universal availability of source code and accompanying embodied patents provides a vast resource for organisations looking to collaborate and share expertise. FOSS provides an environment in which competing technology firms can nevertheless collaborate on certain levels of software functionality; a prime example of this would be the numerous and competing large technology players who contribute code to the Linux kernel. However, there are other software exploitation strategies that are not based on FOSS but are nevertheless easy to identify as open innovation. The practice of obtaining and licensing out software patents is one such strategy. This strategy is anything but open according to the definition of openness that goes with the FOSS ideology, but it fits neatly into the definition of openness we can derive from Chesbrough’s writings on open innovation. The lesson is, perhaps, that commentators on openness are not always talking about the same thing. Ideas of openness remain open to interpretation.

Further reading


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