The Dynamics of Open Strategy: From Adoption to Reversion

• Published in: Long range planning 2017-06, Vol.50 (3), p.310-321
• Main Authors: Appleyard, Melissa M., Chesbrough, Henry W.
• Format: Article
• Language: English
• ISSN: 0024-6301; 1873-1872
• DOI: 10.1016/j.lrp.2016.07.004

Innovation has become more open in recent years. Yet the decision to become more open and the challenge of sustaining that openness are not well understood. This is the concern of the “content” branch of Open Strategy, defined as the branch that addresses an organization’s open innovation strategy. We examine the initial motivations to adopt an open strategy, and then consider when organizations choose to maintain that open strategy or revert to a more proprietary approach. Similarly, we examine motivations to open up a previously proprietary strategy. We find that these dynamics depend on the organization’s desire to either foster greater growth (which favors a more open strategy) or secure greater control and profit directly from the innovation (which favors a more proprietary strategy). Crucially, these choices can shift over the life cycle of a market and are dependent on the competencies amassed by the organization. In early phases, when there are relatively few legacy customers and many new arrivals, open strategies attract customers at a faster rate. In later phases, as the market matures and new arrivals have slowed, there are few new customers to attract with an open strategy and reversion to a more proprietary strategy becomes quite attractive. This suggests that the longevity of open initiatives might be curtailed as organizations opt for value capture over cooperative value creation.