Open models

Open business models that enable organisations to be more effective at creating as well as capturing value are more widely used because of two new trends: the high cost of technology and the shorter life cycle of new products.

by MIT Sloan Management Review
Last Updated: 23 Jul 2013

Today, an Intel semiconductor fabrication (fab) plant would cost about $3 billion to build; 20 years ago it would have cost a fraction of that amount.

To bring Pringles Print (where words and images are printed on to one side of a Pringles crisp) alive, Procter & Gamble (P&G) adapted a technology used by an Italian bakery, and made the product at a much lower cost and brought it to market in half the expected time.

The lessons of some companies (IBM, P&G, Air Products) reveal that this kind of change in the business model is often sparked by a crisis (for instance, P&G's share price had fallen by half).

The new business model must also be able to cope with significant volume and be supported by senior management within the organisation before it is rolled out.

Why companies should have open business models
Henry W Chesbrough
MIT Sloan Management Review, Winter 2007

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