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Different Approaches to Open Innovation

(26:31)

In this podcast, Dr. David Tennenhouse, a partner at New Venture Partners, a venture capital firm focused on corporate spinoffs, talks about different approaches to open innovation. New Venture Partners practices what Tennenhouse calls inside-outside open innovation.

Partners and other staff members at New Venture Partners, a venture capital firm with about $700 million under management, do not spend their time slogging over business plans looking for the next Amazon.com or Google.com. Instead, New Venture Partners works with global companies to spin off prospective new product ventures residing in research labs and business units. To date, the firm has invested in more than 50 spinoff ventures from companies such as British Telecom, Philips Electronics, and Freescale Semiconductor. A spinoff from Lucent, New Venture Partners became a stand-alone venture capital firm in 1997. The firm has its roots in Bell Labs, where it incubated new projects and then created new ventures from them.

David Tennenhouse, a partner at New Venture Partners, calls his firm’s approach to investing an inside-outside form of open innovation. He says, “The companies we work with practice open innovation in two ways. First, they have an inside component where they input knowledge into the company. Second, they use an inside-outside component to use external vehicles, such as venture capital firms, to create spinoff ventures. Open collaboration becomes the way we work together to amplify the dissemination of a company’s internal research and to enable it to influence the surrounding ecosystem.”

Tennenhouse has had much hands-on experience practicing inside-outside open innovation. He was previously a director of research at Intel. He says, “Many of Intel’s corporate research projects made a successful transition to existing business units. Some projects created new business units, which is the gold standard for a research director. Many projects, however, did not have a natural home within the company. That situation allowed me to undertake the mission to spinoff the project or engage in inside-outside open innovation. The job included taking the benefits of the company’s learning about the prospective product and influencing the ecosystem around us. The difficulty was to do this while knowing we were not going to make and market the product.”

In this podcast, Tennenhouse talks about the need for companies to turn to open innovation, the way open collaboration enhanced open innovation at Intel and other organizations, the emergence of innovation that venture capital firms are seeing, and the takeaways CIOs need to be aware of it they want to promote innovation and open innovation.

Bio
Dr. David Tennenhouse is a partner in New Venture Partners. He joined the firm from Amazon.com where he was vice president of platform strategy and chief executive officer of its A9.com subsidiary. Before Amazon/Z9, Tennenhouse was director of research at Intel Corporation. He also worked as a chief scientist at the U.S. Defense Advanced Research Project Agency.

Tennenhouse is a member of the Association for Computing Machinery and a Fellow of the IEEE. He is also an advisor to Carnegie Mellon University’s School of Computer Science and to the Mechanical Engineering Department at UC Berkeley. Tennenhouse holds a B.A.Sc. and M.A.Sc. in Electrical Engineering from the University of Toronto and obtained his Ph.D. at the Computer Laboratory of the University of Cambridge.

Resources
Verizon Leads 4G Investment Group, The New York Times
http://dealbook.blogs.nytimes.com/2009/10/06/verizon-launches-13-billion-4g-investment-group/

New Venture Partners Looks to Find the Next Big Thing, Fox Business
http://www.foxbusiness.com/story/markets/innovation/new-venture-partners-looks-start-ups-corporations/

Innovation in Stormy Markets, National Venture Capital Association
http://nvcatoday.nvca.org/index.php/current-issue/112-innovation-in-stormy-markets.html

CTOs Embrace Open Innovation, Computerworld
http://www.computerworld.com.au/article/127254/ctos_embrace_open_innovation?fp=16&fpid=0

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer

Audio Editing by Doug Marcis

Different Approaches to Open Innovation