General Electric design executive Lou Lenzi, who works in the company’s appliance division, shared the thinking behind a new initiative the company unveiled this summer, FirstBuild. It’s an online community and real-world space in Louisville, Kentucky intended to attract inventors, entrepreneurs, and students interested in “co-creating” new kinds of products for the home, with an assist from GE. The space is quite interesting, involving not just the latest design and prototyping tools, but also a “micro-factory” — and the FirstBuild model even includes royalties for people involved in creating the new products that reach the market.
Lenzi explained why GE started FirstBuild, and the expected benefits, at the DMI Design Leadership Conference in Boston earlier this month.
- GE has been investing in its appliance division in a major way: about $1 billion within the last three years, including seven new factories at its Appliance Park site in Louisville, and more than 20 new product development labs there.
- But much of GE’s internal innovation and new product development efforts focus “on known markets, customers, and well-understood value propositions,” Lenzi says. “They build on our core strengths.” Developing entirely new products is very capital intensive, Lenzi adds. The company rigorously measures I & E — the investment and expense — of everything it does.
- As a result, GE felt it “needed to rethink the innovation process,” and create a “way to take little bets, do things fast, using a small amount of money, materials and resources,” Lenzi says. Eventually, some of those little bets may develop into something that can be integrated into “the big beast” and its products, while others may be licensed or spun off.
- This slide shows how FirstBuild focuses on (light blue area), relative to the traditional GE product development process (at bottom).
- To develop the business model of FirstBuild, GE partnered with Local Motors, an Arizona startup that has experience creating online communities of designers and inventors — and that sells physical products, like GE. The company “is a pioneer of open innovation and innovative manufacturing techniques,” Lenzi says.
- Exploring new distribution channels is an important component of FirstBuild. “We are traditionally trained to sell to the retail buyer, like Target, or to a builder/architect,” Lenzi says. “We don’t go direct to consumers, but FirstBuild allows us to unlock that capability, and play with different distribution strategies.”
- The slide below shows how GE hopes to have the FirstBuild community cultivate new ideas, make them in small quantities, and test them in new kinds of distribution channels.
- GE drafter a dozen “community leaders” from its appliance group to join FirstBuild. “They’re hand-selected for their ability to coach and mentor with the community,” Lenzi says.
- Anyone can get free access to FirstBuild’s “maker space,” which is full of high-end equipment and software like welding gear or a waterjet cutter from Flow. “We wanted to reduce the number of barriers or excuses for not joining. Members can work on personal projects or FirstBuild projects,” he says. For personal projects, you need to bring your own materials. And everyone has to post about what they’re doing on the FirstBuild website.
- FirstBuild members who come up with or contribute to an idea that makes it to the market are entitled to one percent of the net sales of that product, for the first four years it is on the market. Lenzi says that can turn into a very big number. There are also idea challenges that FirstBuild runs, like designing a functional “micro-kitchen” for a very small apartment, which have cash prizes.
- Lenzi said some of the guiding principles behind FirstBuild are “speed beats control” and “lead, don’t manage.”
- Lenzi says he has been asked whether GE is worried about competitors going on the FirstBuild website and seeing all of the ideas being developed. “It’s really about how quickly we get to market, identify best ideas, and build on them,” he says.The next challenge with FirstBuild, Lenzi says, is “socializing it” more and getting more of GE’s 57,000 employees engaged.
- FirstBuild is located on the campus of the University of Louisville, and has already attracted about 3000 members. Here’s a look at three of the ideas that have already come out of FirstBuild: