The document discusses the concept of open innovation and strategy based on an article by Chesbrough and Appleyard. It notes that companies are experimenting with new business models based on open innovation that allow for expanded collective value creation using pooled knowledge. However, sustaining an open strategy requires balancing value creation with value capture. Traditional business strategy theories are not sufficient to explain this new phenomenon of openness. The challenges for companies include how to attract and sustain participation in open projects over time, how projects are led, and how to profit from open technologies that cannot be fully owned. An example of Linden Lab capturing value from its open virtual world Second Life is provided.

1. Topic 5: Recent Developments in Strategy Article Presentation: “Open Innovation and Strategy” (Chesbrough, H.C. & Appleyard, M.M.) Group 7a Erik Bengtson [email_address] Richard Gullberg [email_address] Gustaf Sundlöf [email_address] 2304 Media Management Bibliography: When nothing else is noted the presentation is based on: Chesbrough & Appleyard , Carlifornia Management Review, ”Open Innovation and Strategy”, 2007, vol. 50.

6. Source: Adapted and edited/changed picture, from Chesbrough & Appleyard, Carlifornia Management Review, ”Open Innovation and Strategy”, 2007, vol. 50. Open and closed innovation