The 2015 Lean Startup Conference

GE Powers up a New Generation of Corporate Innovation

The company formerly known as General Electric (GE) is synonymous with technological advances such as the light bulb, TV and nuclear power but until recently its innovation processes that were forged in the industrial revolution had not kept pace.

Speaking at the Lean Start-up conference here in San Francisco, GE leaders lamented on how development on some products had slowed to a glacial rate – and customers and its 300,000 employees were noticing. The company founded by Thomas Edison in 1892 is one of the world’s biggest corporations with revenue of nearly US$150 billion last year. Many of its divisions such as aviation (US$20 billion), power and water (US$28 billion) and oil and gas (US$15 billion) are leaders in their sectors.

The temptation would be to sit back and be an order-taker but GE is obsessed with staying relevant, so three years ago they initiated an innovation programme it calls FastWorks. Based on Lean Start-up principles, it seeks to speed innovation through the business to develop solutions tied to customer needs. By embracing the strengths of start-up culture—customer-focus, frugality, speed—GE hopes to transform its business for a digital and industrial future.

It hasn’t been easy. Early efforts had patchy outcomes. Employees were confused about expectations and strategy. There were naysayers and plenty of pushback from often-influential quarters.

Sounds familiar?

But there was enough faith and a glimmer of hope in the early stages for the evangelists to gain the support of senior decision-makers including the CEO, Jeffrey Immelt.

GE is now on a path to roll out its FastWorks corporate strategy into a day-to-day approach for its 170,000 professionals in 175 countries to help them execute faster for customers. This new business approach could be summed: “Does what you’re doing right now really matter? If it won’t have a tangible outcome, should you be doing something else that will have impact?”

This is something that start-ups with limited resources ask themselves. Will that 50-slide PowerPoint generate business? No. Then get out and talk to a customer. This is the essence of bottom-up transformation – thinking like a start-up doesn’t start and finish in the corporate suite with a major project; it should be something everyone does every day.

GE scaled its FastWorks programme, training 500 business leaders in its methodology. It now has 150 coaches trained in Lean Start-up principles to advise managers around the world. And there are hundreds of projects underway in sectors as diverse as healthcare and power and water that are underpinned by FastWorks’ Lean Start-up principles.

Here’s how GE turned itself around:

Move from prescription to discovery

GE always knew the answer to customer problems – or at least it thought it did. It was a major change to listen to customers. “We spent a lot of years on detailed customer requirements and not enough time on customer validation,” GE chief technology officer Mark Little said. GE aims to first listen to what customers need before developing solutions for them.

Move from command and control to empower and inspire

Without sacrificing rigour, GE had to learn to trust its employees. This “letting go” devolved decision-making to the employee who was interfacing with the customer. Ideally, GE leaders now spend their days coaching instead of checking.

Focus on activities and impact

GE no longer defines a successful project as one that comes in on time, on budget and within scope. Moving from an ‘activity’ definition of success to one that privileges ‘impact’ was a major change in how GE defined whether its projects were successful. Mark Little says that before FastWorks, GE “spent a lot of time with thinly spread teams that didn’t have much work. And we spent a lot of time on activities rather than things that are most important – to learn and take us forward.”

Shift from perfection to iteration

As a ‘Six-Sigma’ organisation, GE was process-oriented – as you would expect from a company that makes critical infrastructure. But in many cases, this was too much rigour for other parts of the business. Now it employs the FastWorks Lean Start-up methodology in areas of high uncertainty or where it must move quickly. It is now more comfortable with ‘failure’ and allowing its people to test and learn.

The takeaway from GE’s experience is if one of the world’s biggest and oldest corporations can transform itself, anyone can. So there are no excuses for delaying your organisation’s transformation journey a day longer.

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Jeffrey Tobias’ career in the application of information technology, strategy and innovation has spanned academia, consulting, big and small business, government, research and entrepreneurship. He is Director of The Strategy Group, delivering strategic advice on Innovation, Design Thinking, Lean Startup, Ideation, Collaboration and Globalisation to corporations and governments, and is an active Angel Investor in the technology space.