COURSE NUMBER: MBA 290T.5

This class is cross-listed with the College of Engineering and the School of Information.

COURSE TITLE: Managing Innovation and Change (2-unit version)

UNITS OF CREDIT: 2

INSTRUCTOR: Henry Chesbrough

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

CLASS WEB PAGE LOCATION (HTTP URL):

MEETING DAY(S)/TIME: Mondays, 2:00 to 4:00 PM

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: 40% of the grade will be determined by Class Participation, 30% will be determined by the final Paper, and 30% will be determined by three 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 four 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 examines Sources of Innovative Ideas. This is a core concept in the Open Innovation book. companies typically suffer from the "not invented here" syndrome, and systematically under-utilize external ideas and technologies. We will examine university research, individual inventors, innovation intermediaries, and corporate discovery processes. Open source initiatives and user innovation will also be considered here.

The third 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. This is also part of the focus on Open Innovation. Understand business models enables managers to analyze their own model, models of key customers and suppliers, and also key competitors.

The fourth module considers Business Model Innovation. This is the territory of the Open Business Models book. Business model innovation requires developing alternative ways for companies to escape the limits of their current business model. 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. 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