New Management Initiative of General Electric - FastWorks
GE Appliance’s first attempt to apply FastWorks has been to create a refrigerator with French doors (doors that open from the middle) for their high end “Monogram” line. In January 2013, Chip Blankenship, CEO of GE Appliances formed a new product development team and told them to come with a working product in 3 months and production product in 11 or 12 months. The cross-functional team sat in a room together. They became a tight group as they went down to the factory floor and built products together and looked at market research together. Customers were involved throughout. Having the team hear customer feedback firsthand was a big change, especially for the engineers. At their training center in Louisville, they interacted with retail salespeople who came for training. They also went to Monogram design centers in New York and Chicago to discuss and test products with other designers.
In January 2013 itself, the team came out with a “minimum viable product.” But the customers didn’t like it. The feedback was that the stainless steel finish of the body was too dark. So it was changed to a lighter shade of silver. Then the lighting tested poorly. They revised it. They cycled through several design iterations using quick customer feedback. By August 2013, they had version 5, for which customers gave positive feedback. 75 units of version 6 were made in January 2014 and more customer test marketing was done. . Version 8 was approved for production in October, and version 9 and 10 are in pipeline.
FastWorks initiative is based on Eric Ries's Book "The Lean Startup."
GE has provided thousands of copies of Eric Ries’s book "The Lean Startup" and entrepreneur David Kidder’s "The Startup Playbook" to its employees
GE Ventures & healthymagination CEO Sue Siegel discusses FastWorks as she gives parting thoughts at CVIP Conference.
Corporate Venturing and Innovation Partnering upload
Summary - Important Points of Lean Startup by Eric Ries
Innovation factory: A company´s only sustainable path to long-term economic growth is to
build an “innovation factory” that uses lean startup techniques to create disruptive
innovations on a continuous basis.
Culture and systems: It’s moving leaders from playing Caesar with their thumbs up and
down on every idea to – instead – putting in a culture and the systems so that teams can
move and innovate at the speed of the experimentation system.
Validated learning is the process of
demonstrating empirically that a team has discovered valuable truths about a startups
present and future business prospects. It is more concrete, more accurate, and faster than
market forecasting or classical business planning.
Validated learning is backed up by empirical data collected from real customers.
True startup productivity: systematically figuring out the right things to build. In the lean
startup, every product, every feature, every marketing campaign – everything a startup does
– is understood to be an experiment designed to achieve validated learning.
Lean New Product thinking: Lean thinking defines value as providing benefit to the customer, anything else is waste. In a new product as well as startup, who the customer is and what the
customer might find valuable are unknown, part of the very uncertainty that is an essential
part of the definition of a new product or startup.
The experiment phase: It begins with a clear hypothesis that makes predictions about what
is supposed to happen. Startup experimentation is guided by the startups vision. The goal of
every startup experiment is to discover how to build a sustainable business around that
vision. Even when experiments produce a negative result, those failures prove instructive
and can influence strategy. In the lean startup model, an experiment is more than just a
theoretical inquiry; it is also a first product.
The two most important assumptions entrepreneurs make are:
The value hypothesis – test whether a product or service really delivers value to
customers once using it.
The growth hypothesis – test how new customers will discover a product or service.
Answer 4 questions:
1. Do consumers recognize that they have the problem you are trying to solve?
2. If there was a solution, would they buy it?
3. Would they buy it from us?
4. Can we build a solution for that problem?
“Go and see for yourself”. Means that business should be based on deep
firsthand knowledge. Until you have seen something for yourself firsthand you cannot be
sure you really understand any part of the business problem.
External customer data: The facts that we need to gather about customer exist only outside
Before new products can be sold successfully to the mass market, they have to be sold to
early adopters. These people are a special breed of customer. They accept – in fact prefer – an
80 percent solution; you don’t need a perfect solution to capture their interest. Early adopters
use their imagination to fill in what a product is missing. They prefer that state of affairs,
because what they care about above all is being the first to use or adopt a new product or
technology. Early adopters are suspicious of something that is too polished; if it’s ready for
everyone to adopt, how much advantage can one get by being early?
Innovation accounting: Only 5 % of entrepreneurship is the big idea, the business model, the whiteboard strategising, and the splitting up of the spoils. The other 95 % is the gritty work that is measured by innovation accounting: product prioritizing decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback.
Once you have found success with early adopters, you want to sell to mainstream customers.
Mainstream customers have different requirements and are much more demanding.
Zoom-in pivot: What preciously was considered a single feature in a product
becomes the whole product.
Zoom-out pivot: What was considered as the whole product becomes a single feature
of a much larger product.
Customer segment pivot: The product hypothesis is partially confirmed, solving the
right problem, but for a different customer than originally anticipated.
Customer need pivot: The product hypothesis is partially confirmed: the target
customer has a problem worth solving, just not the one that was originally
Platform pivot: Refers to a change from an application to a platform or vice versa.
Business architecture pivot: For example when a startup goes from high margin/low
volume to mass market or vice versa.
Value capture pivot: how do companies capture value?
Engine of growth pivot: A company changes its growth strategy to seek faster or
more profitable growth.
Channel pivot: Is the recognition that the same basic solution could be delivered
through a different channel with greater effectiveness.
Technology pivot: When discovering a technology to achieve the same solution by
using a completely different technology.
Satisfied customers grow your business.
There are four primary ways past customers drive sustainable growth:
1. Word of mouth. Embedded in most products is a natural level of growth that is
caused by satisfied customer’s enthusiasm for the products.
2. As a side effect of products usage. Fashion or status, such as luxury goods products,
drive awareness of themselves whenever they are used.
3. Through funded advertising. As long as the cost of acquiring a new customer
(marginal cost) is less than he revenue that customers generates (marginal revenue),
the excess (marginal profit) can be used to acquire more customers. The more
marginal profit, the faster the growth.
4. Through repeat purchase or use. Like subscriptions or voluntary repurchases.
GE Team Experience Sharing at Lean Startup Conference 2013 - 12/9/2013
FastWorks - Simple Explanation by a GE Insider
FastWorks means getting to market now with something that may not be a 100% solution but that allows your customer to provide real feedback. Eric Ries calls this process the build-measure-learn feedback loop. The feedback from these first thrusts into a new market, product, service or process allow you to validate your critical hypotheses about what customers want and what they’re willing to pay for. The feedback also gives idea on things left unaddressed. With this information, leaders can then decide to persevere on their previous course towards a final product—or they can pivot, changing their road map and heading in a new direction. Sometimes, pivoting may mean abandoning the effort altogether.
It does not mean any compromise on quality or capability. It only means engaging customers in experiments with new products in demo configurations before doing a full-up build or getting feedback from the market on a product we could build, but haven’t yet. The customers are given an opportunity to give critical insight into what the end product should look like.
FastWorks is going to be integral to the way we work. We are going to get to the market faster, with more new ideas, and rely on market feedback to shape the direction of those innovations at every step in the process. It will mean spending even more time talking to and understanding our customers…for whose benefit products are being developed.
By Todd Stiefler
Todd joined GE from the world of Washington politics and manages business development for the services of GE including the Proficy SmartSignal predictive analytics software.