On the campus of University of Louisville sits a building that houses FirstBuild, the independent innovation arm of General Electric (GE). Founded in 2014, FirstBuild is a clearly distinct entity from its globally known parent, a status that enables it to function with greater agility, risk, and innovative pursuits than would normally be possible for a global firm.
This status is purposeful. Large firms often struggle to innovate as well as small, quick start-ups, but to remain viable, they must find ways to be creative and devise new product and service offerings. To enjoy the benefits of a agile, small firm but the resources of a conglomerate, GE devised and organized FirstBuild strategically and with great care.
To begin, the company remains small and will not grow much beyond its current size. The full-time employees include a director, operations manager, marketing manager, and community manager. This latter role is responsible for recruiting a pool of engineers, industrial designers, and scientists who will contribute their expertise, according to an open community structure. Anyone with a new idea is likely to be heard by the small managerial staff, and contributors are free to pursue virtually any interest or ideas they prefer.
The open community structure has several other implications for FirstBuild’s innovation process as well. In stark contrast with the careful intellectual property protections that GE imposes on its conventional innovation methods and prototypes, visitors to the FirstBuild campus have free access to every project being undertaken. This approach helps the company draw more feedback, and it also necessitates rapid decision making about promising new ideas. If innovations are on display for anyone to copy, then making sure to be first to market becomes an even more pressing goal, thus motivating the company to move quickly and efficiently.
That quick movement is purposefully limited though, such that FirstBuild always begins with a small run of promising products. Once an idea has received approval, it enters into the rapid production process, which typically results in only about 1000 units of the new product. These items then are marketed on a “micro scale,” and if demand is strong enough, the idea may move on to broader production. The inventor receives a remuneration offer, equal to some percentage of the total sales revenues for the new product. Although the idea might be produced by GE, using its more conventional marketing and supply chain process, the inventor also retains the right to sell the idea to competitors, giving GE a strong incentive to offer good terms to FirstBuild’s most creative innovators.
Some of those innovators have come up with products that already appear in the market. The Monogram Pizza Oven is a new entry to GE Appliance’s product line, enabling consumers to make restaurant-quality pizzas at home that mimic the taste and texture of pies cooked in brick ovens. The ChillHub refrigerator is one of the smart appliances that GE is bringing to market, offering integrated wifi, various automatic sensors to check bacteria levels and water quality, and USB stations.
- How are GE and FirstBuild attempting to reinvent how they undertake the stages of the new product development process?
- Can other firms mimic this approach? Should they?
Source: Bharat Kapoor, Kevin Nolan, and Natarajan Venkatakrishnan, “How GE Appliances Built an Innovation Lab to Rapidly Prototype Products,” Harvard Business Review, July 18, 2017