COURSE NUMBER: MBA 290T.2

COURSE TITLE: Managing Innovation and Change

UNITS OF CREDIT: 2

INSTRUCTOR: Henry Chesbrough

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

CLASS WEB PAGE LOCATION: http://bspace.berkeley.edu

MEETING DAY(S)/TIME: Monday, 2:00 – 4:00PM

PREREQUISITE(S): None

CLASS FORMAT: This course will be taught through a combination of case discussion and more occasional lectures. Because of this style of teaching, regular class attendance is mandatory.

REQUIRED READINGS: There are two books required for the course: 1) Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, 2003), and 2) Open Business Models: How to Thrive in the New Innovation Landscape (Harvard Business School Press, 2006). Full disclosure: I wrote both of these books. There is also a Course Reader.

BASIS FOR FINAL GRADE: Part of the grade will be determined by Class Participation, part will be determined by the final Paper, and part will be determined by module review papers.

FACULTY AUDIO CLIP: Click here to listen to the instructor giving a brief overview the course.

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:

Most innovations fail. Yet companies that don’t innovate die. Managing innovation thus constitutes one of the most difficult and critical tasks facing a manager. Nor is this solely the concern of high tech companies – companies in traditionally “low tech” businesses such as consumer packaged goods (like Procter & Gamble) find that innovation translates directly into growth in new businesses, and better profits in existing businesses.

The course adopts a capabilities-based view of the firm, drawing from economic, organizational, and engineering perspectives. The goal of the course is to identify the sources of innovative success and failure inside corporations, and how companies can develop and sustain a capability to innovate.

Managing Innovation is divided into five modules:

The first module is understanding disruptive technology, a theory of why great companies fail in managing certain types of technological change. This theory was introduced by Clayton Christensen in his book, “The Innovator’s Dilemma”. I taught with Clay for 6 years while at Harvard Business School.

The second module is about Innovation and the Business Model. The sources of failure for great companies lie in what they do very well. The business model that has created great success, is a barrier to change, as well as a source of advantage. Disruptive Technologies fundamentally challenge the company’s current business model – which is why they are so disruptive.

The third module examines Sources of Innovative Ideas. Once we understand the barriers to change, we must then find out how companies can overcome their disabilities, and where to look for new ideas. We will examine university research, military research, individual inventors, and corporate discovery processes.

The fourth module considers Creating Innovation Capabilities. These are alternative ways that companies have tried to escape the limits of their current business. We will examine these experiments, and look for processes and structures (including incubators, spin-offs, corporate venture capital) that attempt to sustain a company’s success.

The fifth and final module discusses Business Model Innovation. The first four modules took the business model as essentially fixed. In this last module, we relax this assumption, and then examine ways companies can experiment with their business model. We will also discuss limits on companies’ abilities to do this, and how those might be overcome.

BIOGRAPHICAL SKETCH:

http://www.haas.berkeley.edu/faculty/chesbrough.html