“How GE Stays Young & Relevant”: an “icon of global Management Best-Practices”| by: Brad Power | HBR

“GE (General Electric) is an icon of management best practices. Under CEO Jack Welch in the 1980’s & 1990’s, they adopted operational efficiency approaches (“Workout,” “Six Sigma,” and “Lean”) that reinforced their success and that many companies emulated”…

But, as befits a company that has been around for 130 years, GE is moving on. While Lean and Six Sigma continue to be important, the company is constantly looking for new ways to get better and faster for their customers. That includes learning from the outside and striving to adopt certain start-up practices, with a focus on THREE Key-Management processes :

  1. Resource Allocation that nurtures Future Businesses
  2. Faster-cycle Product Development
  3. Partnering with Start-ups. 

1. Resource Allocation – Incubating a protected class of ideas :

A fundamental challenge of any firm – especially a huge global company such as GE – is how to balance nurturing tomorrow’s future businesses, with the resource demands for running and improving today’s operations. You need to think like a portfolio manager, allocating resources both to innovate in your core and for the future. Knowing that today’s operations will almost always win the lion’s share of resources, you need to consciously create a protected class of innovative ideas to invest in, even if money is tight.

For example – GE incubated an energy storage company (“Durathon”), which has gone from the lab to a $100 million business in five years. In 2009, GE’s transportation unit developed a new sodium battery for a hybrid engine for locomotives. Chief Marketing Officer, told me they looked to see how they could take this battery technology to new markets. After first targeting backup power for data centers, they settled on providing backup power for cell phone towers in countries with unreliable electrical grids, such as in Africa and India. Says Comstock, “You have to believe that energy storage has a big future.” It took the financial backing and technical support of GE and the support of CEO Jeff Immelt, to nurture this business through numerous technical and business model changes. Marketing plays a catalyst role, providing growth funding. And after accumulating significant experience with this portfolio approach, GE is focusing today on fewer things that they’re incubating in a bigger way.

2. Product Development – Getting closer to Customers & Moving Faster :

Organic Growth depends on discovering breakthrough ideas, leveraging technology, and getting closer to customers. As it turns out, getting the breakthrough ideas is usually the easy part. The hard part is executing the idea to build a business, which takes a process that actually works.. In our current fast-paced environment of constant change, you need a product development approach that relies on many fast cycles of experimentation, reviewing prototypes early on with customers to learn what provides value, and being flexible if customer feedback suggests new directions.

As I described in a previous post, GE is working with Eric Ries, a Silicon Valley entrepreneur and author recognized for pioneering the Lean Startup movement. The “Lean Startup approach” is enabling GE to take “Agile” & “Lean” methods, which they had been using to improve operations, and apply them to starting businesses…

They have branded it “FastWorks.” And it has helped not only provide a new product development process, but a role model for a new culture based on a venture model. People in finance at GE, typically focused on return on investment and payback periods, love FastWorks because they get a better throughput of ideas.

3. Partnering – Getting ” ideas from Start-ups” :

Leading companies have been using “Open Innovation,” collaboration, and joint ventures for many years to get a shot of adrenaline, find new markets, and get to them faster…What’s new is Partnerships by large & successful companies with start-ups for joint incubation of innovative business ideas.

“Despite all their resources, big companies realize they can’t tackle big challenges alone”…They need to tap into young, entrepreneurial companies filled with brilliant data scientists, restless tinkerers, and passionate innovators. On the other hand, start-ups benefit from the resources, customer relationships, expertise, and scale of the established companies..!!

GE has actively created several “Eco-systems” with start-ups… For example :

  • In March the company formed a joint venture with Local Motors, a “co-creation company” that taps into an online community of car enthusiasts (engineers, mechanics, and industrial designers) to design new vehicles. GE intends to use Local Motors’ crowd-sourced workforce model to design new products, initially for GE Appliances.
  • GE has formed a partnership with Quirky, a crowd-sourced innovation platform, to invent connected products for the home: innovators submit ideas, which are voted on by Quirky’s community, and the promising ones are refined by Quirky’s designers and engineers.
  • Through Kaggle, another GE partner that is a community of data scientists, GE asked for algorithms to optimize airline flight paths and reduce delays – ultimately improving air travel overall.
  • In advanced manufacturing, GE turned to GrabCAD, asking their experts to help redesign a metal jet engine bracket with the goal of making it 30% lighter while preserving its integrity and mechanical properties like stiffness. Participants from 56 countries submitted nearly 700 bracket designs, and the winner was an engineer from Indonesia who reduced the weight of the bracket by 84%.
  • Finally, GE has created GE Ventures, a group in Silicon Valley that spends their time not just investing ($150 million annually), but forming technical and commercial collaborations with start-ups in energy, health, software, and advanced manufacturing.

GE’ s current Focus on ” innovation” and on these ” THREE Key Management processes” – which draw on the techniques and the energy of start-ups – represents the latest wave of improvement over a long and successful history. By working with and emulating start-ups, GE hopes to both grow their core offerings and disrupt their current way of doing business — and to keep an “Old” company “Young”.

And as one of the world’s largest and most respected companies, it’s easy to imagine that other large companies will soon be following suit….!!

“Big Data” :”Why Marketing Will Never Be The Same Again” | by: Bernard Marr | Advanced Performance Institute

” On paper, ‘Big-Data is any Marketer’s dream come true’ – thanks to the internet, if a business wants to know about its customers, more information is available to them than ever before”…

Companies have been collecting data on us for decades, but since we all went online – and in particular since we got social online – the amount we give away about ourselves and the number of ways a business can exploit that information, have exploded.

Of course this has been great for forward-thinking companies like “Target”,” Amazon” and “Wal-Mart” who have been developing the infrastructure for years in anticipation, but those slower on the uptake risk going the way of the dinosaur…

With Big-Data comes big challenges – collection, storage and analysis all take thought and resources, and must be done more efficiently than the competition is managing.

From the consumer’s point of view there are the ever-growing privacy concerns. People are becoming more accepting of the fact that they can get better prices and better service from companies in exchange for a limited amount of information about themselves. The younger generation in particular seems more receptive to this idea but we all have our own ideas of what is a reasonable amount of information to divulge…!!

Many may not be concerned about the example I’ve previously used of Wal-Mart bringing together weather, stock and customer data to target a promotion involving a barbecue cleaner to specific customers. But what about when it is insurance companies that want to dig around in the digital detritus we leave as we share, chat and organize our lives online ??

Big-Data is already causing massive change in the marketing industry – Last year a poll by market research firm GfK found that 62% of marketers said it had already “fundamentally changed their role” and 86% said it would continue to do so in the future…!!

Examples are rife – ” if you shop online” you will have “seen Big-Data Marketing in Action” :

  • “Amazon” were the Pioneers and still considered field leaders. They have recently announced they are investigating “anticipatory shipping” – using what they know about you to predict what you will buy and start sending it to you before you order it.
  • Online Ticket-Retailer ” StubHub “ also uses big data analysis to offer promotions to customers most likely to be interested. Some markets are particularly ripe for these strategies – sports fans for example, with their lifelong undying loyalties, make perfect targets, in the eyes of data marketers.
  • Last year ” eBay “ revamped the front page that customers see when they log in, to provide a more big data-driven experience. You can choose categories to follow, allowing them to log your interests and use them to work out what you might be interested in seeing.
  • ” Netflix “ developed its complex “ Personalised Genres ” system based on the way their customers watch just about every film or TV show ever produced, and categorizing them with hundreds of “tags”. This allows it to know that you particularly enjoy watching, say, foreign films with a dramatic twist at the end – and serve them up as suggestions.
  • In the Bricks-and-Mortar world, ” Super-Markets “ are experimenting with “ near field communication ” which allows them to send targeted messages to customers based on their previous purchases, as they walk past.

Those examples mainly rely on structured data – companies having access to lists of structured information such as your age, gender, location and purchases..

But by some estimates this accounts for just 20% of the information we share online – far more exists in the un-structured Facebook posts & tweets, and the mountain of blog posts, videos and sound recordings created each day..

Gathering, analysing and using that ethereal, un-structured data is a greater challenge but offers huge rewards to the companies that do it right…For example, Retailers can now send their CCTV video images to a cloud-based service provider that then use algorithms to understand who customers are (based on face recognition) as well as how they behave (how they walk through the store, what they pick up, whether and what they purchase, how long they stand in line at the check out, etc)…!!

Once again we turn to Wal-Mart for the best – OR depending on your point of view on the privacy debate – worst – example..

Its Social Genome Project involves what is termed “deep semantic analysis” of everything Facebook and Twitter to  Youtube and Blog-posts to build up individual profiles of its consumers – and sell to them…

Questions arise about the level of access they will get, and how it will differentiate between publicly-shared data and privately-shared data…??

The extent of access to customer data that Facebook allows its biggest corporate customers is not always clear. And paying Facebook a large chuck of its multi-billion advertising budget, Wal-Mart would certainly be considered a valued customer.

Whether you are optimistic or cautious about the way companies will market to us using Big-Data in the future, it will continue to evolve. Governments may see further legislation as necessary if public concern grows over the level of access corporations have to privately-shared data – as I think it is likely to…

But marketers will adapt, because that’s what they do…??  Have you been particularly impressed – OR shocked – by the way something has been marketed to you personally online ?? Would like to hear about it………..Please share your views…!!