General Electric Automatic Iron Box (Photo credit: Marion Doss)
GE is getting anxious and it is beginning to show. A few days back the company announced its new "Wink" project, an attempt to reproduce what Apple did in smartphones - create an ecosystem of dedicated app developers who can do the innovation for the giant conglomerate.
However, GE has a lot less of the essential ingredients in place to make it work. To do this well it needs to reinvent Apple's platform and ecosystem model - is that likely?
The reason for GE's angst is that Korean competition is beginning to burn its feet. Japanese competitors such as Hitachi have entered a revival phase and emerging market companies have distinct cost advantages.
Meanwhile GE's reverse innovation initiatives have won friends but it's not clear how much cash they are putting in the bank. They are part of a complex trade off the company has found itself in while operating simultaneously in advanced and emerging markets:
GE badly needs innovations.... not only to expand beyond high-end segments in places like China and India but also to preempt local companies in those countries—the emerging giants—from creating similar products and then using them to disrupt GE in rich countries.
So reverse innovation is a form of preemptive disruption.
GE has decided now that it wants to go large with crowdsourcing - with a chunk of apps ecosystem thrown in. They want to crowdsource inventions around their patent portfolio and appeal to a developer community to come forward with apps-dependent product ideas.
The new GE initiative will run on the Quirky product platform.
Here's Quirky with some details:
The partnership will consist of two parts: a groundbreaking platform where GE will open thousands of its most promising patents and technologies to the Quirky community for the development of new consumer products; and a co-branded initiative to build a full line of app-enabled devices for the home, revolutionizing fields such as health, security, water and air through GE’s advanced manufacturing tools and technologies.
And they call it a partnership that will change invention forever. I doubt it, though GE's track record in crowd-related activity is exceptional. Ecomagination and healthymagination are the precedents. With healthymagination GE set out to create a new ecosystem around cancer diagnoses, care and cure.
Healthymagination is a great project but it has no platform in the background and so there is little in the way of an ecosystem evolving. Ecosystems need a key product platform - .Net for Microsoft, iTunes and App Store for Apple, Play for Google.
Modern business ecosystems congregate around such a platform and the platform offers the ecosystem a few critical ingredients.
Internally GE is struggling to convert its culture to a more dynamic, agile and entrepreneurial one, especially in energy where there is abundant apps-related opportunity as the smart grid grows.
Nonetheless this is a direction that key staff want to see the company go in - using the crowd rather than relying on internal resources. And it is a populist move, no question.
The problem lies in the lack of understanding of what the platform and ecosystem route entails. Nick Vitalari and I spelled it out in The Elastic Enterprise.
Would Apple have generated a huge ecosystem if it had not offered a seamless commerce engine behind the App Store, as part of its platform? No. Same with Google and Play.
Would growth have been so spectacular if the platform did not eliminate almost all of the friction in building business partnerships? Unlikely.
GE has no commerce engine other than its sales force. Apple and Google's can handle millions of transactions a month without a single sales person being involved. The great feat of the App Store and Play is seamless commerce and automated transactions on a huge scale.
Would BlackBerry have accrued 70,000 apps prior to the launch of the Z10 if the CEO had not embarked on a grueling roadshow touting the benefits of the new OS?
GE is no Apple, that's clear, but platform and ecosystem strategies are important. GE though is laying off responsibility for the strategy to platform site Quirky, which means key relationships are at one removed. Could Apple outsource iTunes? The idea is ludicrous.
Clearly the Quirky platform can reduce business friction and get people signed up to partnerships with GE without complex negotiations. And the patent reveal could spur innovation. But that is likely to be a three, five, ten year cycle as the content of those patents becomes public, and as the right inventors discover the promising information and negotiate the deals. Business friction will come in through this back door.
The more likely scope for agility comes in the ideation part, where people pitch GE with app-enabled product ideas. But for that to work, and work fast, GE needs to be totally transparent with its commerce engine, be able to deliver revenues back to partners very quickly (i.e in months), have a rapid ingest system for finished product, and be comfortable in the role of innovation maven.
It also means GE knowing which developer communities they want to target. And Jeff Immelt or Beth Comstock has to go on the road and adopt a much more peer-like executive demeanor. That latter is perhaps most critical. People will, in theory, put their IP in jeopardy for the opportunity GE presents to them, but they are far more likely to do it if they think of Immelt or Comtock as one of their own.
All these lessons are there to be had by looking at Apple, and to a degree at Amazon and Google. But you have to know what you are looking for, and the Apple of today is different from that of 2008/2009 when it created the apps revolution. Apple is in sustaining mode. GE needs a revolution.
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