GE embraces spirit of entrepreneurship
Speed has given General Electric a competitive edge. Inspired by today’s business climate, in which small innovators and entrepreneurs race ahead, the industrial giant has found a way to adapt the startup mentality to its development processes and way of working – and it is already seeing positive changes as a result.
Sandvik is always looking at other successful companies for inspiration and lessons to be learned. General Electric is a Sandvik customer and is setting an example to other industrial giants by proving that it is possible to modify the company culture in an organization that has been doing things the same way for generations. On its website it boldly states: “GE is transforming itself to become the world’s premier digital industrial company.”
By using the FastWorks approach, we’re able to get the product to the market two years ahead of our competition.
To operate more like a startup, with short product life cycles and rapid decision-making processes, GE has used aspects of the “Lean Startup” approach for new product introduction and process improvement. This approach includes “sprints,” or quick deliverables, along with rapid learning, to speed up the development process and mitigate threats. The thinking behind it is that rapid learning cycles with customers reduce the risk of building something that will ultimately not solve customers’ needs.
A customer-first approach
At GE, a version of Lean Startup known as “FastWorks” was introduced in 2012, testing a customer-first approach that would help cut development costs and increase GE’s competitive edge. The FastWorks framework seeks to get new products in front of the customer as quickly as possible. Instead of waiting for perfection, developers are encouraged to obtain early feedback from customers and act quickly and decisively if it points them in a different direction than what they expected.
The objectives of FastWorks include getting closer to the customer, which increases the likelihood of success and the speed to market, both of which make it easier to get things done. Process complexity is rejected in favor of simplicity, with dedicated teams and a clear focus on specific tasks.
FastWorks already has numerous success stories under its belt. For example, GE used it to develop and launch a new engine that complied with new environmental regulatory requirements.
Increasing speed to market
“By using the FastWorks approach, we’re able to get the product to the market two years ahead of our competition with significant cost savings to the company,” Janice Semper, Leader of GE Culture and co-founder of GE FastWorks, told Lean Startup Co. in 2015. “It also helped us to exceed the mandatory regulations that were there and get to an even better solution that was being regulated for our customers.”
Essentially our development costs were reduced by 60 percent.
Semper explained that these principles of FastWorks were used in the development of a new gas turbine. “This helped GE to deliver the most efficient, low-cost energy solution to our customers, and essentially our development costs were reduced by 60 percent,” she said.
In the meantime, GE has also successfully reduced the cost of earning customer validation by a massive 80 percent, according to Semper.
In the past, GE had tended to revise its products every five years, and, like most traditional manufacturers, it kept its new products strictly under wraps until they were unveiled.
In a case study from the Harvard Business Review, GE Lighting’s Vice President of Technology Kevin Nolan said speed has replaced confidentiality as a key success factor.
“With FastWorks we’re learning that speed is our competitive advantage,” he said. “How do we become much more open and collaborative with the customer base? You can’t do that if you want to be secretive.”