COURSE NUMBER: MBA290K.1

COURSE TITLE: Innovation in Services and Business Models

UNITS OF CREDIT: 2

INSTRUCTOR: Henry Chesbrough

E-MAIL ADDRESS: chesbrou@haas.berkeley.edu

PREREQUISITE(S): None.

CLASS FORMAT: The class will have both cases and lectures

REQUIRED READINGS: We will use a course reader, plus articles from the web.

BASIS FOR FINAL GRADE: Mixture of class participation, final paper, possibly a smaller midterm project.

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

This is a new course, not only within Haas, but within academic campuses around the world. This course is an experiment to address a burning issue in business today: most of the economic activity in developed economies is services-based. Yet most of our knowledge about innovation is based upon products, not services. A recent survey by the National Academies of Engineering found that “the academic research enterprise has not focused on or been organized to meet the needs of service businesses”.

This is not an abstract concern for Berkeley students. More than 60% of the graduating class from Haas took jobs in knowledge-intensive, service businesses. Looking further on in one’s career, more than 63% of the INC. 500 companies in are services businesses. Service businesses represent the future for the vast majority of Haas and MOT students.

Our course will examine services innovation. It will also focus upon the business model in creating and managing innovation in services businesses. We will also consider how product-based businesses can - or cannot - transition to service-based businesses. During the course, we will have outside visitors from companies involved in services innovation. Here are some of the themes for the course:

1) Innovation in services is not the same process as innovation in products. Services are intangible. They often are consumed as they are delivered. In fact, the customer often co-creates the service experience with the supplier.

2) Technology can enable new models of services businesses. Information is both the key input and the key output for many services businesses. Little wonder that more than 70% of information technology sold in the United States is purchased by service firms. The selection, deployment and management of technology in services is thus a critical element for business success.

3) Business models are a key enabler and a key differentiator for services businesses. We will be quite precise about defining a business model, and explore a variety of methods for articulating, designing, and managing business models in services. Technologies are emerging to help model business processes in useful ways. They can enable a richer exploration of alternative business models that might differentiate the business from competitors.

4) Standards, architectures, and platforms are essential tools to create leverage and scalability for services businesses. When services businesses are largely people-based, their ability to grow depends on the ability to hire and retain sufficiently talented people. If, however, a firm can incorporate its knowledge so that others can build upon it via standards, architectures and platforms, the services business can grow beyond the constraints of its internal personnel.

BIOGRAPHICAL SKETCH: A popular Haas and MOT professor, Henry Chesbrough is the author of Open Innovation: The New Imperative for Creating and Profiting from Technology, published in 2003 by Harvard Business School Press, which was named "One of the Best Business Books of 2003" by Strategy & Business Magazine. Since publishing this landmark work, Chesbrough has written two additional books: Open Business Models (HBS Press, 2006), which received BusinessWeek’s award of one of the 10 best books of the year, and Open Services Innovation (Jossey Bass, 2011), which extends open innovation into services. He received his Ph.D. from Haas. Before joining academia, he worked for ten years as a senior executive at Quantum Corporation in the disk drive industry. Chesbrough's work examines the management of innovation, with particular attention to new models of industrial R&D, business model innovation, technology spin-offs, licensing in and licensing out technology, corporate entrepreneurship, and corporate venture capital. His academic research has been published in Research Policy, Industrial and Corporate Change, Business History Review, and the Journal of Evolutionary Economics. He has also published managerial articles in the Harvard Business Review, California Management Review, and Sloan Management Review.