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Case Analysis: With Reference to Chez Panisse

Over time, industries and firms have manifested the trend of moving their research and development (R&D) from closed to open systems. A critical underlying motivation pushing this phenomenon entails the benefits of utilizing external ideas, which include less costly and more agile, than relying on in-house R&D, especially in the contemporary rapidly evolving business situations. Through the effective and efficient application of the open innovation concept, Chez Panisse became exceptionally successful since business commencement in 1971, while the average failure rate for most new restaurants is 2.5 years.

Characteristics that Led to the Chez Panisse Great Success

Effective utilization of open innovation R&D is a significant feature contributing to Chez Panisse’s extreme success. Coined by Professor Chesbrough, the open innovation concept denotes the paradigm arguing that businesses should utilize both external and internal ideas and paths to market into the process of expanding their technological aspect (Chesbrough et al., 2014). Through these lines, Chez Panisse became a home for diverse prominent chefs, suppliers, alumni-spin offs, culinary artists, food educators, and other stakeholders, thereby facilitating extensive collaborations and innovations since launch.

Another essential characteristic that facilitated Chez Panisse’s great success is the effective leadership by the talented and determined founder, Alice Waters. Alice had no previous restaurant experience by the time she conceived of the idea. However, she was determined to re-create what she had recently experienced in her visit to France (Chesbrough et al., 2014). By this time, the American food system was full of fast and packaged foods, which were unhealthy. Waters then put her mind to introducing what she saw in France restaurants as charming spaces where people can meet and enjoy simple and fresh organic foods prepared from local ingredients (Chesbrough et al., 2014). Alice had a clear vision and mission, which eventually led to great success.

Participants in the Ecosystem and their Roles

In the entire Chez Panisse’s history, Alice Waters and other stakeholders or participants managed to successfully establish a local and then worldwide ecosystem through the open innovation strategy. In the participant ecosystem team, suppliers assisted in providing organic and high-quality products during the Chez Panisse commencement period. There was almost no network for suppliers and farmers that delivered organic produce in the area (Chesbrough et al., 2014). Over time, positioning a great network of suppliers who provided fresh fruits, fresh vegetables, meat, and others, radically evolved the business to a significant expansion.

Family and friends were also critical participants in Chez Panisse’s journey. During this era, businesses, especially restaurants, grew from the support of friends and family (Chesbrough et al., 2014). Indeed, Alice extensively relied on the family and friends’ internal support network to expand the restaurant staff. For instance, her father, a retired financial business person, supported her daughter with accounting tasks (Chesbrough et al., 2014). A sister to Alice and a brother-in-law also assisted until they launched their restaurant. Alice also initially employed related people and friends since she argued that their connection would make them do their best.

Other essential major players in Chez Panisse’s ecosystem included culinary artists, alumni spin-offs, food educators, food journalists, wine sellers, and last but not least, loyal customers (Chesbrough et al., 2014). The culinary artists and food educators allowed the expansion of the innovation strategy beyond the food and food chain. These stakeholders played a critical role in improving daily menus to reflect dining experiences for the client’s special days and events (Chesbrough et al., 2014). A loyal customers base is also a critical part of business success for various reasons. Food journalists are also essential in marketing and communicating clients’ needs and challenges.

Ecosystem Innovative Behavior, Vitals, and Interferences with Innovation

Various characteristics allowed the Chez Panisse ecosystem to nurture and develop its innovative behavior. For instance, this company had a clear mission vision right from the start. Alice Waters, the founder, had a clear vision of introducing organic and fresh foods instead of the junk foods that flooded the market. Another factor regards effective business strategy where Chez Panisse employed a unique and innovative approach, the downstairs and upstairs café (Chesbrough et al., 2014). The two sections served quality foods but targeted different customers. The restaurant also ensured the provision of high-quality foods but with the most reasonable prices to the clients. Operating in a warm and customer-friendly environment was another aspect that contributed to Chez Panisse’s success. Another element entails product and service innovation and employing staff who are ready to under minimal supervision. Last but not least, Chez Panisse ensured it maintained a good relationship with all its extensive stakeholders, including the farmers and suppliers, through its open culture and environment built on trust.

On the other hand, the vital characteristics of innovation include favorable geographic context, a culture of trust, utilization of practical innovation concept, teamwork, good leadership, collaboration, and availability of supplies, to mention a few. Chez Panisse was established in a favorable geographical setting full of fresh supplies and determined suppliers and farmers ready to provide the required produce (Chesbrough et al., 2014). The efficient leadership of the founder also enabled the restaurant to communicate its mission and vision to the stakeholders. Teamwork and an open culture of trust triggered all the partners to play their respective roles effectively, leading to great success.

However, there are some notable interfaces or challenges with the Chez Panisse innovation. For instance, the restaurant was initially faced with a lack of enough fresh and organic supplies. During the early days, there lacked an excellent supplier network to provide organic and fresh supplies in San Francisco. Farmers and markets were also lacking in these first days of the firm launch; as a result, some friends would bring produce from their garden (Chesbrough et al., 2014). The restaurant could sometimes source supplies from the Oakland produce market, but organic products were not available. There also lacked a clear management structure, a situation that remains a mystery as to how the business persisted for that long without that critical fiscal discipline (Chesbrough et al., 2014). Therefore, financial challenges, poor supplier infrastructure, and lack of high-quality produce interfered with Chez Panisse’s innovation in one way or the other.


The modern business world is characteristic of evolving business situations. That way, it is vital that industries employ an open innovation concept for them to succeed. Open innovation R&D structure is cheaper and more agile compared with the traditional closed concept. With the effective utilization of this concept, Chez Panisse succeeded despite some critical challenges it encountered from time to time, especially during the launch stages.


Chesbrough, H., Kim, S., & Agogino, A. (2014). Chez Panisse: Building an open innovation ecosystem. California management review56(4), 144-171. [PDF]


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