General Electric is 120 years old. As a company, it is tied into the invention of electricity itself. GE has over 300,000 employees and 2013 revenue that was greater than the GDP of New Zealand. It is the opposite of lean. It has no rights to even claim to be agile. But as Stephen Liguori, Executive Director of Global Innovation and New Models explains, a driving fixation internally over the last decade has been how to meld GE’s overwhelming organizational heft with a sense of innovation, speed, and customer focus.
(What follows is a Q&A between Liquori and Pando, which has been lightly edited for clarity.)
GE was founded by Thomas Edison. That’s a lofty standard of innovation to try and live up to.
We’re one of the originals. One of the first stakes that Jeff Immelt put in the ground when he started 12 years ago as CEO was that we have to get GE back to its roots around innovation and organic growth, trying new products and new things.
There’s no one who can say they came from Thomas Edison. People will say the same thing about Steve Jobs in 100 years. It is an incredible legacy, but with success comes unintended consequences: matrix charts, systems, checks and balances. The GE leadership has done a pretty good job at realizing that the things that made us strong, also had the unintended consequence of sucking out the ability for risk.
Where was it that you see GE having drifted to 12 years ago when Jeff Immelt started as CEO?
It is not that it drifted, but more that we became so good at simply focusing on technological prowess. There were a couple of things at the heart of what made Thomas Edison and GE initially so successful. Edison was a great inventor in-and-of-himself. We have posters all over GE with a picture of him and his words, “I look for what the world needs and I perceive to invent it.”
With the light bulb, the world needed a way to see at night. We have followed that, we’ve developed power generators, home appliances, jet engines, and medical equipment. That’s not drifting. We emphasise technology and invention. We will spend six billion dollars on product development at GE this year.
But the other part of what made Thomas Edison successful was that he was a business model innovator. He saw that if I come up with a light bulb, I also need to generate, distribute, and sell electricity. So the way we have talked about it is that while we have been practicing technologically-backed thinking and focusing on how we build the next best mousetrap, we need to bring back market-backed thinking.
We can build the next generation machine and get our engineers to make things bigger, stronger, and better and add all the features in, but what’s better than that is going to customers and understanding how their needs have evolved and changed.
How do you focus that attempt to innovate in an organization so big that its almost functionally invisible to the average consumer?
We’ve organized ourselves better now. Most people would say we’re incredibly complex still, but we’ve streamlined our organization into basic industries. The focus we then have has two parts: what can we do to work with customers in each of these verticals and how do we go with them and create those solutions?
It’s not just how do we go with them and create solutions by making physical assets better.
It’s about how we help customers run their enterprise better, to match supply and demand. One of our newest products puts physical tags on every piece of equipment that can moves in a hospital and helps track them. The average hospital has 10,000 pieces of mobile equipment. The physical logistics of keeping track of that cost the average technician one hour every day. We’ve done the math. That’s a $ 60 billion efficiency loss in the global health care industry.
How do you even begin to get GE to move at a greater pace?
Jeff Immelt has endorsed and introduced a big initiative in the last couple of years around simplification and looking at how GE can operate more like a startup. We have literally contracted with successful entrepreneurs. We bought in Eric Ries, author of The Lean Startup and David Kidder, who wrote The Startup Playbook. We’re coaching executives and specific teams on how to use these principles. We have GE Ventures and we’re literally building startups inside GE, run through venture capital boards. Looking at how we can operate on the outside like a startup but using our internal scale, within the culture of running that huge corporate complex monster is one of our biggest preoccupations as a company.
Is it difficult even with that focus to get things to market quickly?
Yes. Previously, we used to run many new products through an internal process designed to make sure the technology works. But what inadvertently happens, is we’d be introducing new or updated products and we’d not get the sales traction. What you’re finding out too late there is that you didn’t hit the market need.
If you bring in market backed thinking from day one you make customers literally part of the process. Making new medical equipment, or new oil field equipment, we’ve got guys that have gone out with their minimum viable products, talked to customers and said “if we were to build this, would you buy it and how would you pay for it?” It is a whole different discussion than going into the labs, designing and building something and then throwing it out there with the price tag you want people to pay for it.
Do you get resistance to change? Do some people not want to do it these new ways?
The answer is yes and yes. You do run into people who are resistant to the change. But you work with people and persistence pays off. We took anywhere between 800 and 1,000 of our top managers through a full two day immersion into our Fast Works program. We said lets explain to you what we’re trying to do with you, lets get a plan going for your business so we can try it. Is it perfect? No. We’re a huge organization. But this still going to be our primary focus.
Things have changed. There’s an article on Wired.com where I talked about how we’re using crowdsourcing. Ten years ago, if we would have mentioned crowdsourcing, putting our IP on the web, people would’ve shot us. Now it’s like, wow.
[Note: The “Dancing Giants” series is being sponsored by Atlassian, so you’ll only see their ads around these pieces. But the series was conceived, commissioned and edited entirely by Pando. Atlassian had no input whatsoever in the editorial. For more on our policy towards single sponsor series like this one, see here.]
[image via wikimedia]