Executive Director, Center for Open Innovation at Haas School of Business
Henry Chesbrough is the Executive Director of the Center for Open Innovation at the Haas School of Business at UC Berkeley. He teaches in the Management of Technology Program at Haas, which is a joint program with Berkeley’s graduate College of Engineering. Previously, he was an assistant professor of business administration, and the Class of 1961 Fellow at the Harvard Business School. He holds a Ph.D. in Business Administration from the University of California-Berkeley, an MBA from Stanford University, and a BA from Yale University, summa cum laude. Chesbrough's books "Open Innovation: The New Imperative for Creating And Profiting from Technology" and "Open Business Models: How to Thrive in the New Innovation Landscape" looked at the ways that businesses were adapting to and benefitting from open innovation methodologies. His upcoming book, "Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era", focuses on the services industry.
Last week, Nokia's new CEO Steven Elop wrote a scathing memo to his team at Nokia, describing the company's declining market position in mobile phones as a "burning platform". Such direct and blunt language is unusual in most corporate settings, and shows how seriously Elop views Nokia's troubles.
But Nokia will not arrest its deterioration until it properly diagnoses the cause of its position in the market. I believe that Nokia has fallen into a "commodity trap" in mobile phones. In this trap, it is not enough to accelerate innovation or increase the number of new products one offers. Instead, Nokia needs to rethink the nature of its business. For Nokia is no longer in a product business, it is now in a service business. And it will need to innovate differently in order to get out of the commodity trap.
A commodity trap is a subtle trap. Companies that differentiate their products by building them to be smaller, faster, more powerful and cheaper begin to find that others quickly imitate every new feature that they introduce. The length of time that any given product is attractive in the market begins to decline, as even newer...