Yes, Thomas Edison invented the lightbulb; but he didn’t do it on his own. He and his team built on others’ discoveries. That’s the secret sauce in GE Appliances’ winning streak. They know innovation is a team sport and are refusing to make false trade-offs as they continually strengthen their culture, focused on innovation and also customer-centricity, collaboration and accountability.
Over its first 100 years Edison’s General Electric (GE) brought to market things like the first lightbulbs, electric home appliances, TVs, X-ray machines, electric locomotives, jet engines, and nuclear power plants. Over time, the home appliances became lower priorities. GE stopped manufacturing and selling small appliances in 1984 and sold its entire appliance business to Haier in 2016 for $5.4B. Since then, the business has doubled in size and its products are now found in over half of the homes in the USA.
While GE Appliances’ CEO, Kevin Nolan, is an innovator himself with over 29 patents to his name, his real strength is in enabling others to “turn ideas and insights into product innovation faster than ever before.” That’s a pretty good definition of design-focus.
GE Appliances chooses to win on design. They live in the design box. But they’re not making any false trade-offs.
Innovation
While innovation is their focus, giving its people “the freedom to explore, discover and build good things, together,” they also bring in customer-centricity, collaboration, and accountability.
Customer-centricity
They’ve taken customer-centricity to a whole new level with their “Zero Distance” approach. They strive to get “closer to our customers and owners so we can invent and make products that provide real-life solutions and exciting ownership experiences.”
Collaboration
I visited GE Appliances’ CoCREATE microfactory and community makerspace in Stamford, CT last week. As their Chief Commercial Officer, Rick Hasselbeck explained, it’s a “place for designers, customers and builders to meet, learn, and work together” to, wait for it, co-create. They run hackathons and design challenges and make small batch products for customers. Indeed, what their Communications Director, Julie Wood, described as their “make it here” mentality shows in every corner of the building from jury-rigged work tools, to work spaces, to the GE clock on the wall.
Accountability
They’ve combined Haier’s Rendanheyi and The Chelsea Hotel’s approaches to accountability and culture into the GE Appliances way. As Nolan says, “To unlock innovation, you need a culture that promotes and values curiosity.” He inspired my own curiosity by showing me the box of specialty baked goods he and others were trying to duplicate in one of the GE appliances the day I was at CoCREATE.
Kaihan Krippendorff’s excellent article on LinkedIn lays out Nolan’s approach to implementing the Rendanheyi Model. At a high level, the Rendanheyi Model breaks down the traditional structures of bureaucracy by dividing the organization into “microenterprises” (MEs) – small organizational units that are self-directed and place employees at zero distance from the customer with four fundamental characteristics:
- Set leading goals. GE Appliances set out to be number one in five years.
- Create a culture focused on customers and entrepreneurship.
- Structure the organization to encourage the culture. GE Appliances shifted from being functionally to microenterprise led, starting with Refrigeration, Cooking, Dishwasher and Laundry, and now expanded to 14 microenterprises each run as separate units. As Nolan put it, “Your leading goal always has to push you somewhere new. As the company gets bigger, we have to keep making it smaller.”
- Reward people who exhibit truly customer-focused behaviors.
Further, Molly Mitchell’s excellent article in the Darden Report, talks about how Nolan, and others, thought the Chelsea Hotel was “the most successful innovation lab that ever existed.” The people that lived and worked there including the likes of Madonna, Mark Twain and Jackson Pollack, generated “world-changing” creative work.
As Mitchell put it, this work “sprang from a great deal of intentional design underlying all the sex, drugs and rock ‘n roll for which it is primarily known.” The main ideas Nolan took away included the need for creation as a goal, diversity, leadership, “freedom to pursue anything,” continuous feedback and collaboration.
The implications for you are not to adopt Rendanheyi, the Chelsea Hotel or the GE Appliances’ way, but to remember that you’re going to win or lose based on your culture. Do think through all the elements of a BRAVE culture and the Core Focus model. Do focus. But do it your way with no false trade-offs.
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