Implementing an open business model represents a significant cultural break from most corporate traditions. Indeed, it may even seem counterintuitive—especially for CIOs who work diligently to protect the information resources and intellectual property of their organizations.

Until recently, innovation was a function of tapping into internal intellectual resources and nurturing the business while protecting it from outside exposure or interference. Companies have fiercely guarded their patents, trade secrets, and other intellectual property to leverage the most value from their own innovative efforts. Open innovation, by contrast, calls for companies to make much greater use of external ideas and technologies while sharing their unused ideas with others. This requires each company to open up its business model to let more external ideas and technology flow in and more internal knowledge flow out.

By adopting these models, organizations can bring innovations to market more quickly and less expensively, thereby securing a competitive advantage in an increasingly dynamic global economy. It's critical for CIOs to understand these models' disruptive implications and provide the infrastructure necessary for their companies to thrive in the new landscape.

Generally speaking, a business model performs two important functions. First, it creates value by defining a series of activities that ultimately delivers a product or service to end users. Second, it captures value by maintaining unique resources, assets, or positions within that series of activities, allowing the seller to enjoy a competitive advantage. An open business model accomplishes both functions through what I call a division of innovation labor.

Qualcomm is an open business model in action. At one time, the company made its own cell phones and base stations. But as other strong players entered the extremely competitive field, it shifted to making chips and selling licenses to its technologies. Today, every phone using Qualcomm's technology is sold by one of its customers, not by the company itself.

To accomplish this shift, Qualcomm had to redefine its target of opportunity. The company identified new customers—organizations it might have previously regarded as competitors—and started to collaborate intensively with them. By exchanging ideas, Qualcomm deployed its chip technology in a way that enhanced the innovative elements of these customers' offerings. Sharing intellectual property led to the creation of new, shared innovation, which looped back into the open business model to create and capture more value more quickly.