How The Lean Startup turned Big Corporation into the Good Guy

By Kenneth James Studeny,

a member of the Daniels College of Business Entrepreneur Community. 25 June, 2013

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     Imagine for a moment you’re a massive corporation, among the top ten largest in the world. You’ve been around for generations, your business model has worked for decades, you provide products and services which are considered a necessity to people across the globe, and you employ tens of thousands of individuals across the United States. Massive revenues have been trickling in for many years and all is well until one day it all becomes…boring. Suddenly you’re sitting on a huge pile of cash and you begin to wonder how to reinvent current business models in order to explore new avenues of innovation. This is exactly the type of conundrum General Electric’s Beth Comstock (Senior Vice President and Chief Marketing Officer) was faced with in the first decade of the 21st century. “We’re looking for new models of innovation. We don’t have all the answers or all of the capabilities,” Comstock was quoted having said. So how does a massive corporation create new business models and enter new markets? The answer is, leave it up to the people.

            Comstock sought entering a market considered a high priority on a global scale: the environment and the many forces acting against it. Beth hypothesized this market was in desperate need of attention and that groups of creative thinkers probably weren’t getting the funding (let alone the attention) they needed to lift their projects off the ground. As concerns for the environment and its many challenges increased Beth needed a way for entrepreneurs to submit their ideas to GE in order for GE to accomplish its ultimate goal of investing in new technology- but how? Enter Eric Reis’s The Lean Startup.

            Three concepts are central to Eric Reis’s theory of the lean startup- developing hypotheses and engaging in experimentation, getting out of the building (presenting your product to the world and gaining feedback), and agile movement (sticking with your current design or pivoting towards alternatives). As entrepreneurs, we seek entering new fields of business and bringing to the public products or services that were previously unheard of. Rather than spend copious amounts of time, energy, and money developing a product we think consumers will want (a later discovering consumers are disinterested), The Lean Startup suggests we start with what’s know as a minimal viable product; and through many series of experiments and consumer feedback let the customer co-create the final product.  

     At General Electric Comstock first developed a hypothesis: the environment is important to people and anything to aid in is preservation is equally as important. She then went on to develop a theoretical service connecting General Electric and groups of innovative thinkers with one another to tackle the many challenges affecting energy consumption and sustainable infrastructure. In its pilot phase, Comstock’s open platform website (or forum) asked the public about their ideas related to ‘powering the grid,’ and, later on, ‘powering your home. “In just 12 months [the company] received an astonishing 5,000 business plans,” and went on to convert itself into a full-fledged business model. Beth’s forum helped lift her concerns about the environment up and out of the building and into the hands of innovative thinkers who presented ideas about how to solve these challenges.

     In reviewing the many business plans GE received (and by implementing executive decision making about the inventiveness and viability of many of those plans) a second business model was invented, General Electric’s Venture’s program- “leading the company’s efforts to partner with startups and entrepreneurs.” In regards to this mission Beth has written, “To compete in the global marketplace, companies like GE need an approach to innovation that supports open collaboration and partnership, especially when dealing with big issues like the environment or healthcare that are too complicated for any one entity to solve alone.” Sarah Milstein (author of the blog post and co-host of The Lean Startup Conference) puts it this way: “Between ecomagination and healthymagination, Comstock has tried to go far beyond traditional corporate philanthropy. Her work takes global problems – ones that seem utterly resistant to any individual’s effort at change- and uses the power of a major corporation to leverage impact on behalf of innovative ideas.” Whether Beth Comstock picked up a copy of Eric Reis’s book The Lean Startup or not is beside the point. Fact is, Comstock developed an innovative business plan by developing a hypothesis, experimenting with her open forum concept, and eventually partnering with entrepreneurs to tackle environmental challenges. Comstock’s forum left product development up to the people and presented General Electric as an advocate for change.

 

 

Sources

 

“Bringing Lean Startup to Life at GE.” Startuplessonslearned.com. Guest post by Sarah Milstein, co-host of The Lean Startup Conference. November 2012

 “GE’s Eco-Innovation Platform.” Harvard Business Review Blog Network. By Andrew Winston. October 2011

The Lean Startup. Novel By Eric Reis

 “Why the Lean Start-Up Changes Everything.” Entrepreneur Magazine. By Steve Blank. May 2013

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One thought on “How The Lean Startup turned Big Corporation into the Good Guy

  1. Pingback: Lean startups and 4 hour work bodies: telling stories in the web | Biotechnology + Innovation

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