Outside In Innovation at GE

by Paul Hobcraft

Outside In Innovation at GEIn the past few months I have been getting interested in GE and how it is managing innovation. Often you read a number of negative reports on GE but is this just the big guy being picked upon by more nimble observers that have a limited insight into what is going on behind the walls of GE?

What is under the innovation hood at GE?

There does seems an awful lot going on in GE around innovation on what we can observe from outside looking in. Of course you would expect this in an organization the size of GE employing 300,000 people across 100 countries and generating $150 billion dollars in revenue.

In Jeffrey Immelts (Chair and CEO) own words “the toughest years of my life were 2008 to 2009”.To drop 31 billion dollars in revenue in two years is tough to manage through, and to see net earnings drop by nearly $6 billion dollars in this period to where it is today, of $11.6 billion dollars, must have been very hard.

GE seems though on a path of recovery after these very tough years. Is innovation leading that recovery? It is hard to really tell from the outside, trying to read behind the hype as you can’t see so much under that innovation bonnet as you would ideally like. It needs greater transparency and ease of clarity, well certainly for me.

We see much activity outside-in but not enough of what is going on ‘inside’

Clearly the ‘flagship’ of innovation, publicity wise, has been the imagination themes for GE, with two stated growth pillars. These are open innovation activities for the outside –in. Let me summarize these:

The Ecomagination was GE’s open challenge commitment to imagine and build innovative solutions that solve today’s environmental challenges and benefit customers and society at large. There has been two ‘biggies’ in challenges that have opened up as a call to action from the outside of GE with the promise of the winner achieving a commercial relationship with GE and the “bait’ of having funds of $200 million as a capital pledge within this area to award. The two challenges so far have been “Powering the Grid” and presently “Powering your Home”.

The other open challenge is healthymagination. This is again an external idea challenge focusing on three critical criteria: lowering costs, touching more people and improving quality with the aim of providing 100 new innovations by 2015. Healthymagination is an investment by GE of $6 billion over six years to develop innovations that measurably improve quality, access and cost by up to 15% with a focus on lower-cost technology, more IT, expanding access, and consumer-driven health. There seems to be more winners in
this one.

These tell me that the innovation ideas are flowing into the organization and clearly swirling around being explored, evaluated and worked upon. I worry over the level of disappointment by the many that don’t get to the reward stage. How sustainable is this approach? Certainly it is fueling much to encourage more of these challenges but with a real need to increasingly establishing pathways for multiple winners either in commercial relationships with GE or directed to others to commercialize if GE decide not to. There must be some brilliant ideas that can’t simply fit within the ‘appetite’ of GE’s quest for innovations on a large scale, likely to be at least offering the potential of $1 billion annual sales.

Researching to understand innovation in the world

We also can see GE has been growing in its understanding of innovation in the outside world with GE releasing their first-of-its-kind “Global Innovation Barometer” at the end of January 2011. It is focusing on identifying the changing landscape for innovation in the 21st century.

This report follows a previous one that came out in July 2010 that was a European survey, again sponsored by GE, on the current barriers and the current state of innovation policies within the EU.

These tell me they are actively curious about the world of innovation.

The questions for me though are far more about the inside workings of GE for innovation?

The global research centers for GE provide some solid indicators of what research is being conducted. Research has been doubled in recent years and GE spends $4.4 billion on this area. By the way this sum is getting close to the magical figure of 3% of revenue that the EU wants each country in the EU to commit to innovation research to maintain and progress.

GE employees 3,000 technologists and they are promoting their Engineers and Scientists as the modern day “Edisons” and feature a different person each day to show who they are, and what they are working upon. Nice touch I feel, to get them to form as an innovation research community with a real face.

Corralling from the top the best and brightest

I also gather at the top they have a Corporate approach to corralling the top 100 big ideas as protected and guide these through the GE innovation pipeline, providing they keep hurdling the different ‘stage gates’ required to make progress through the system and the ones that don’t make it through the next gate get moved out the coral and others come in to inject fresh innovation ‘big growth blood stock’.

All these tell me that on innovation they indicate the huge strides GE are making for an organization to open up and make innovation as part of ‘coursing’ through the GE blood. Or does it? GE have opened up; they are certainly ‘open’ for external ideas (providing they are big enough to survive within GE) but what really is under the GE innovation bonnet within its culture to innovate? What makes the innovation activity tick, too promote it, to sustain it, to instill it in every persons thinking, working for GE?

So has transformation arrived or where are they on their innovation journey actually?

This is my difficulty to fully understand. Apart from the usual “innovation is a constant journey” stuff, I find the GE story is not so open for all to see on its journey point from what I can see. I’d love that to change to understand and value. We read governance reports, we get enthralled in big projects, we see the end result in new innovations but has the inside really changed or just added the outside-in?

There is a real pressing need for GE I can only assume it is grappling with. The fact the sums involved in often these ‘winner takes all’ imagination competitions must only give a limited ‘lift’ to GE more in the judging, evaluating and assessing of external ideas. This intensity of activities has the danger that it is only a short term effect on building an internal culture for innovation unless the benefits can be ‘touched and felt’ throughout the organization, not just simply read about, blogged with pride and interest.

The rules of innovation are changing at GE or are they?

Beth Comstock (SVP & CMO) has mentioned in recent interviews “the rules of innovation are changing”. She was talking far more admittedly about what GE have been learning through their market research and in these big engagements with the outside world. I am sure she is bringing that learning into the organization.

She also offers two other themes that resonated with me:“Doing well by doing good” and “Makes good in people’s lives”. Again these were more in the external context of where GE is heading. I would suggest this is equally where the inside should be going as well, making their lives feel good by given the chance to make their personal contribution to building a sustaining culture of innovation across GE.

For me, innovation should always have a social result, as it is first and foremost, a people engagement activity. It is not just a bottom line result, and I would feel running a challenge internally that uses those two themes might give such a personal identification and sense of engagement and significantly advance the adoption of innovation as part of the every day job.

How about an internal imagination challenge on similar scale to the others?

GE needs to translate this external engagement within perhaps a matching inside engagement. Something as highly visible and as big in its challenge: to transform the culture of GE to a lasting innovating one.

Perhaps an inner-imagination set of challenges, to embed a greater innovation culture more within GE. In other words they spend a similar appropriate sum of money internally but not for one ‘big’ idea but for the thousands of small ideas resident in the employee’s minds that effect their everyday work and then allow them the time to pull down the resources to translate them, wherever they reside, not just in the research lab, but across all 300,000 people working for GE. Let innovation cascade throughout the organization.

Most would compare equally with the existing healthymagination goals of reduce costs, increase access (to innovation), improve engagement and quality, and most importantly opening up minds, sparking conversations and exploring all the possibilities that innovation touches within an organization.

I quote from a recent article “the term innovation now acts as the proxy for strategic renewal and market disruption- what we really need is to uncloak it and recognize the breadth of change enterprises face”.

They always say the biggest challenge lies within, not just a reliance on simply bringing in the outside-in perspective, it can deflect from the potential that is within and also that can go more inside-out. Innovation is certainly changing and what it means, and how we are going to manage it going forward. GE needs a new inner culture to innovate far more, to manage greater growth ambitions across a complex array of business sectors tackling substantial societal problems , and to achieve this I’d like to see more openness under their innovation bonnet and have a fully visible commitment to changing the culture so it is made up of many innovators across the whole organization, not just selected parts of it. Now that is a big imagination challenge.


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Paul HobcraftPaul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.

No comments

  1. your very poor grammar makes this unreadable

  2. Hi Paul: Well written post. I always am concerned about challenges that don’t payout sufficiently to keep folks motivated. Some of these challenges are starting to resemble lotteries. If one extends this analogy, lotteries often have a big prize, as well as smaller ones to keep the masses incentivized to keep playing. Challenge sponsors and promoters should consider this approach, too, if they haven’t already. Not all submissions are worthy of winning, but as you point out, they are hardly worth-less.

    Best regards,

    Michael

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