Time to first economic exchange, meaning someone pays something
Number of significant pivots based on new customer insights
Number of projects canceled and resulting money and time saved. (This became a surprising hit and was a sign that FastWorks was working, as more people sought to kill ideas earlier to redeploy funding on ideas that worked.)
Challenge yourself to see if any of these concepts can be adapted for your team.
Another team from Legal found ways to reduce the length of their contracts, in one case cutting two hundred pages down to five, thus shaving weeks off a process. And another, my favorite, was Mike Mahan’s Monogram refrigerator team in Appliances. Mike was such a rebel that after the Appliances leadership rejected his project—a French-door refrigerator with no plastic parts—he took it underground. With a team of volunteers who continued to do their day jobs, he decided that they were going to make sixty new fridges to test, using 3-D printed hinges. That project went through eighteen iterations as customers repeatedly rejected it for reasons that ranged from poor lighting to ugly colors. But eventually Mike made enough progress, and the execs were under enough scrutiny to show they were on board with FastWorks, that the fridge was reintroduced as an official project.
There was one commonality among all the participants on the first eight teams—their reaction: “Wow, this is really hard.” But it wasn’t because of the lean methods; rather, time after time, when they went back into their business, the new ideas were rejected or expelled.
It wasn’t any easier at the top of GE. The only thing that was mandated from FastWorks company-wide was that every GE business leadership team had to do a daylong introductory session to it. Eric was on hand for most of those sessions, speaking to teams of GE businesses at Crotonville’s “Barn.” At one of these, an Appliances executive turned his chair 180 degrees away from the podium and looked out the window to show he wasn’t listening. His thought bubble was clear: “Please, not another dopey corporate initiative. We don’t have any interest.”
It was becoming clear to me that GE needed to redefine and articulate that it was safe for our employees to think and act differently—to iterate, to have hypotheses, to move faster. The focus had to be on how to create the culture that would support this new way of working. We had to rediscover our original entrepreneur’s mentality. We were once a start-up. Was it possible to turn GE once again into a 120-plus-year-old start-up?
Until then, the corporate machinery would continue killing ideas—and itself.
What If? (or How to Ask Better Questions)
The best thing to come out of FastWorks was that we brought forward a new way of questioning. Questions that seek to learn, not show how smart the person asking them is. Questions that uncover truths faster. Here are some of my favorite questions that we worked hard to get our leaders to ask.
Who is the customer and what is the need that you are trying to solve for them?
What is our strength—i.e., What do we do better than most; our unfair advantage? And if we don’t have one, why do we have a shot at winning?
What did we learn from the experiments we ran?
What is the business model—i.e., How will we get paid?
Would you bet your career on this idea/solution/business?
Why now?
Where have you failed? What will you do differently because of it?
What can I do to help? (This question forces humility as opposed to assuming you already have the answer.)
Refounding
One year later, twelve months after the Series X first training session, Eric was again called into the annual corporate officers meeting, this time to present our progress with FastWorks.
While FastWorks was sending up green shoots of innovation, Jeff was increasingly impatient. The pressure from investors after years of change and a lethargic stock price was frustrating. He wanted quick results from the initiatives GE was experimenting with—especially one with Fast in its name. In the rollout, we had suffered from a shortage of examples to win people over. The more people were familiar with the concepts—MVP was the one to get the most attention—the more people wanted to engage. But with FastWorks still so small, too many people looked for excuses not to attempt it; I remember one debate with an aviation employee who dismissed the idea by saying, “We don’t want our jet engines to be MVP.” Fair enough, and rest assured, those engines are honed to top-tier perfection. But certainly you have process and business models beyond the big engines that we can improve, I said.
Eric was taking questions from the audience, offering an honest assessment of our progress and weaknesses, when suddenly Jeff cut him off. “We’ve got to make this change,” he barked. “These problems—our slowness, our checkers checking checkers, our ridiculous development costs—are outrageous and they have to be solved. Now.”
He asked for a plan to roll FastWorks out to the entire company. We—FastWorks was now led by a team of marketing and HR—debated him on how systematic to make it. The mandatory Six Sigma training we had everyone go through was still etched in the memories of many. We believed that this time a top-down approach wouldn’t work. Employees at the “grassroots” level were aching for more freedom, to test things and move faster. We wanted to change people’s mind-sets as much as change the process. So we designed Phase 2 in a more emergent, distributed framework. Sure, we’d go out and train CEOs and senior leaders, but for the most part, we spread this like a virus, building a network of coaches, some from outside GE, but most of them GE managers who had credibility with their peers. They would coach projects and share wins at a local level. What I really was looking for was scalable learning.
Our solution was an internal coaching program that taps into the existing core of people whom the network (not the official GE hierarchy) had already identified as hubs of influence and expertise, people who, following the first initial phase of FastWorks, had already expressed a passion and desire for learning and enacting the new way of working. We would seed the organization with FastWorks, not drown it with our old style of forced indoctrination.
“But just to be clear, the rollout might take two years,” I said.
Jeff shook his head. “Sounds like a great plan, guys,” he said. “Only change is, I want it done by the end of this year.”
It was already August. To make his impatience clear, Jeff demanded that he be given an ongoing scorecard that showed who hadn’t completed the required training. We had a lot of work to do.
There were a lot of problematic projects that could have piqued Jeff’s impatience and ire, but there was one that was particularly on his mind: the Durathon battery.
In 2007, we bought a company called Beta R&D, which had a sodium battery that was more durable and could withstand higher temperatures than the current industry standard. And it was longer lasting—five times as long as traditional lithium batteries.
Durathon was reimagined as a storage battery that could replace or supplement backup generators in places with spotty connections, like isolated telecom towers. And that, we learned, would be a huge market: in 2009, when the business group pitched this as an Imagination Breakthrough, they saw the market opportunity at $6 billion by 2020.
So Jeff signed off on it.
“Build it big,” Jeff said. “It’s like when I was in plastics. The orders will come.”
That’s why we found ourselves in Schenectady, New York, in July 2012, unveiling a shiny new $100 million Durathon factory, with the promise of a further $70 million investment. To me, it was one of those events that made strikingly clear the GE mentality that anything worth doing was worth doing big, as in really big.
We gave tours of the huge factory, showing people how batteries were made and that
the factory had plenty of room to grow as this amazing new market developed. But our celebratory demeanor was barely papering over substantial cracks in our plans. A year before, as we had started scouring the world for customers, we realized—oops—that we needed to produce a massive amount of batteries to make this factory economically viable. The problem was, there was no single market segment big enough to accommodate all those batteries. Even in telecom, we had problems. We had failed to consider how long it would take to break the relationships telecom folks had with their old suppliers, even if our technology was superior. They wanted to buy small batches and test, but with our massively scaled factory, small batches weren’t economically feasible.
While GE was focused on getting the technology right, we had skipped the larger picture—the system integration, the market, everything—and focused just on our technology. We had invested more than a hundred million dollars thinking the product would solve the problem.
As my concerns spiked, I knew I needed to get outside eyes on Durathon. That’s where David Kidder came in. I wanted to get his thoughts over a working lunch of sandwiches and tea. He told me he had been struggling with the bureaucracy of his data-marketing start-up’s biggest customer—another hundred-year-old, top-tier company, like GE.
“I could teach big companies a thing or two about doing it the start-up way,” he said.
“David, we need what you have. We need a founder’s perspective inside GE. We need someone whose first impulse is seeing and proving an opportunity, not executing to scale,” I said.
I penciled out a business plan for him to launch a forum to bring start-up wisdom into GE. David wasn’t ready to leave his firm, so I managed to sign him up as a coach to help reimagine our operating system, our OS, to be more entrepreneurial. David became Durathon founder Prescott Logan’s coach and an advisor to Jeff, Mark Little, and me.
“We should have started smaller—we scaled too much too fast,” I said during one of our first Durathon crisis meetings, as David and I huddled with Mark Little and Jeff.
David said out loud, “Premature scaling.”
Premature scaling was a common cause of failure at GE. Instead of testing one battery first with one customer to get the use case right, as we had with the Series X, we built a $170 million factory. Worse, we did so on a Beta R&D manufacturing system that had never been operated at scale. It soon broke down, producing defective batteries that underperformed or failed in the field. As Eric Ries often said, you have to “nail it, then scale it.” Instead, we went after multiple applications with multiple customers. We had never nailed it with a single customer.
“Don’t underestimate our ability to make it right,” Jeff said, plainly irritated. “I’ve been doing this a long time. This is just like when I was in plastics—it’s following a similar path. We would build a big factory and then figure out ways to fill it. We can do it.”
“But that’s the wrong goal,” David argued. “The idea isn’t to say here’s the battery market; we’ll take 5 percent of it. A founder has a different view of the world, which is ‘How big is the problem?’ not ‘How big is the market?’ Total addressable problem (TAP), not total addressable market (TAM). When you shift a mind-set from TAM to TAP, you’re not looking for 5 percent of the marketplace anymore; you want all of it. That’s why Uber does so well: They didn’t say, ‘Can we grab 10 percent of the taxi market?’ They said, ‘People want an easy way to get things done while they get around.’ They saw a mobility and time problem and solved it. Does anyone here actually know what problem the Durathon is supposed to solve?”
David Kidder has a talent for coining catchy terminology. Total addressable problem is a powerful way to describe the customer-centric viewpoint I was trying to inculcate inside GE. This was the work of new marketing that I had been pushing for years. Thinking of the problem that needs solving inherently means thinking from the customer’s point of view.
“I know the tech is better than anything out there, but do people need these batteries?” I said. “I mean, companies are made of people—and they buy based on what they need.”
“Like, are the batteries vitamins or painkillers?” David added. “Because if you have to explain why something might help them in the future, it’s just a vitamin. Vitamins are nice to have: ‘Wouldn’t it be great if our customer read our business plan and behaved the way we want them to?’ It doesn’t happen. But if it stops a pain, if it’s a painkiller, that’s hugely powerful. That’s what they need. And that’s what they’ll buy.”
“We have to sell our way out of this,” Jeff said. “Building on Beth’s thoughts about the business model, we could partner with that guy from South Africa we talked to. We deliver continuous power—an outcome. Can we charge more for that? Create a service around it?”
“You guys are missing the point,” David said, interrupting the discussion. He was able to press issues in a way an insider couldn’t. He didn’t care about saying the right thing to please the boss.
“We should do that, Jeff, but Durathon has all of its resources focused on selling more batteries,” he said. “They are racing to the finish line each quarter. What you are talking about takes time—to test it, get energy usage data, and find a willing customer. On this rapid path to scale, you are out of time.” David’s words hung in the air.
I knew he was right. We were reverting to the industrial age thinking that had propelled GE for so long.
“We’re looking for Durathon—a start-up business—to have the same metrics for success as a hundred-year-old power turbine,” I said. “So the team comes in with metrics that look good on paper but make no sense in reality. It’s like we’re playing at something new, but our roles are from GE’s old scripts for success.”
“Success theater,” David said slowly.
“What kind of theater?” Jeff asked.
“Success theater. Look at how this was set up, how all GE projects get set up,” David said, picking up speed. “Some engineer has a great idea. And they’re usually great, because GE engineers are the best. Then it goes to the business side, and they do a thousand surveys and make a market estimate. You put those two things together on a PowerPoint, and it becomes the Word of God.”
“Come on, it’s not that bad,” Jeff said.
“Seriously, it is,” David answered. “To say, ‘This is a failure’—that’s dangerous. That’s what Elon Musk means when he says that wishful thinking is the enemy.”
It was becoming clear as we talked: Success theater, the fear of being wrong, is why big companies like GE are afraid, at some level, to name things as they are. GE saw Durathon as a big business that could only get bigger, but in truth, it was an experimental start-up with significant risks. It was a very GE mentality: we made this commitment, so we have to do it, and if we build it they will come.
With his lean start-up mentality, Eric Ries had helped us create the front half of our new OS, the engineering process of build-measure-learn. But we needed a change in the jury box, in how we chose between freedom and the death penalty when it came to new ideas. It was here that David’s experience in the start-up and VC world was helpful, as was that of the venture capitalists I had begun to hire at GE.
During my earlier period of digital discovery, I scouted my way through Silicon Valley, meeting with start-up founders and VCs who might partner with us. VCs are disciplinarians, and I had come to appreciate their laser focus on what would make an idea break out. What I found inspired me to create GE Ventures, and the growth boards we developed to greenlight projects, as a strategic effort. It basically reimagined the VC process for big organizations. It was part venture capital—meaning we’d invest in start-ups to help us get to new ideas earlier—and part growth machine that would work to connect start-ups with the larger GE organization. I called it our scalerator, meaning we would be able to scale and accelerate new growth for start-ups, and for us. We used venture i
nvesting strategically to see things early and to “de-risk” GE’s future with early bets. Start-ups could get money from many sources, but they couldn’t get the access to customers and knowledge at the scale that GE had.
By the end of 2017, Ventures had one hundred start-ups in its portfolio, covering everything from software, energy, and health care to advanced manufacturing. Sue Siegel, who had been a venture partner in our Healthymagination open challenge for breast cancer, led and grew the Ventures business for me. She hired impressive VCs—people with experience in companies such as Kleiner Perkins and her old firm Mohr Davidow Ventures—to lead GE’s investments. She made sure no next-stage money was allocated before the technology was ready and the start-up leaders were capable of using it wisely to get to the next stage. With her partnership, we would go on to build the growth-acceleration machine I could only imagine in those early days of Imagination Breakthroughs. We would incubate a dozen businesses with outside founders—an immunotherapy business to deliver personalized cancer treatment, an inspection-by-drone business, a consumer-data health company—creating hundreds of millions of dollars of upside for GE. Our biggest leap would be to establish Ventures as market and model R&D. Increasingly, innovation and disruption comes in the form of new business models, not just as a result of new technology.
Sue stood as a strong testament to the value of hiring great, diverse people. For one thing, we rounded each other out. We were both wildly crazy about innovation, and while I tended to go wide in discovery, Sue grounded herself in disciplined questions. She is one of the clearest thinkers I know, and her approach resonated greatly with my GE business-leader colleagues. While I was dramatically imagining it forward, Sue was challenging convention with her questions and offering colleagues clear steps to make it happen. Sue’s network of investors and founders was strong in Silicon Valley, and mine was strong in new areas beyond. We worked hard to create incentives and payment structures that would attract entrepreneurs to join GE and to be rewarded for risk taking—giving them a percentage of ownership in a new business or milestone bonuses based on revenue growth. Women and minorities comprised over 60 percent of the staff of GE Ventures, a rare achievement in Silicon Valley and something of which I am very proud. I believed that part of my job was to flood GE with diverse talent, knowing it would not make us just more inventive, but that we would attract more talented people who could see alternate paths of success coming to work for GE.
Imagine It Forward Page 30
