A Success Story of How GE Innovated Itself to #1
Market Leadership, Stock Value, Employee Engagement, Revenue Enhancement/Cost Reduction
According to Wikipedia, the term innovation derives from the Latin word innovatus, which is the noun form of innovare “to renew or change,” stemming from in-”into” + novus-”new”. Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas.
The History & Roots of Innovation:
At GE, an innovation program was developed during the late 1980’s called “Work-Out” as part of Jack Welch’s drive for better productivity, efficiency and greater innovation. Initially, GE’s Work-Out program was intended to identify and eliminate unneeded processes and tasks that were left over from previous years that became inefficient, as Jack put it, riding ourselves of meaningless tasks “Just because that’s the way we always did things”. After the restructuring identified via Work-Out, many GE groups accomplished their goals with fewer people and with reduced cycle time which drove ever higher levels of increased revenues, reduced costs and greater customer satisfaction & delivery.
The Innovation Process:
The aptly named GE Work-Out process involved identifying an area in need of improvement and assembling a cross-functional team of people together from all aspects of the business (design, marketing, production, sales, manufacturing, software, etc.) to identify a better process, method, strategy, etc. The task for GE Work-Out teams was to meet outside of its normal work environment (and occasionally outside normal working hours) to discuss business inefficiencies and to develop business improvement recommendations.
The Path to Innovation:
As Work-Out unfolded, Jack Welch began to recognize that employees were an important source of new and creative ideas that would drive overall corporate innovation. Jack then drove to create a sustainable innovation environment that pushed towards a relentless, endless and companywide search for a “finding a better way, every day.” The Work-Out program was then evolved into a methodology that was created to reduce bureaucracy and to empower every employee, from managers to janitorial staff, an opportunity to improve and innovate on GE’s operations.
From a corporate perspective, the goal of the Work-Out program was to streamline GE and to make workers more productive and processes simpler and more straightforward. From an employee perspective, Work-Out was an empowering program that enabled everyone to contribute suggestions, innovative ideas and corporate efficiency perspectives to make their jobs easier/better and enabled them to deliver higher value to customers and to the company/stockholders. Employees, in short, considered the program ‘liberating’ and a way to shape their own work-place destiny.
The Recipe and Ingredients for Innovation:
Due to my constant contributions that led to millions of dollars of savings at GE, I was actually asked to participate on Jack Welch’s Work-Out council at the GE Aerospace Division Level. From my perspective, GE’s Work-Out program was one of the most progressive innovation programs ever created (My perspective on having consulted with, and have insights on, nearly all of the Fortune 100 companies and over half of the Fortune 500 companies). The following is my perspective on the ingredients and recipe for a highly successful innovation program like GE’s Work-Out.
Ingredients for a Successful and Well Balanced Innovation Program:
From my perspective, creating a highly successful hyper-innovation program, similar to that of GE’s Work-Out program, depends on developing a balanced approach of delivering both value to company and sense of purpose & engagement to the employees. The following charts highlight the balanced scorecard that should be the cornerstone of measuring the health of an innovation program. I call this the 8 Over 8 Innovation Scorecard and, if the 8 Over 8 Innovation Scorecard measures are in balance, then ‘the company will be Great & the Employees will be driven to Innovate’. (The left of chart (Y-Axis) indicates my take on the relative importance of each of the eight factors).
Employee Ingredients for a Successful and Well Balanced Innovation Program:
In Part 2 of this series we will review each of these eight ingredients of employee Engagement to determine why they are so important.
Steven Jeffes is a thought leader in developing world-class corporate innovation, CRM, marketing, social media, loyalty, customer retention and customer experience programs. Steve is expert marketing strategy design & optimization: design, development and launch of world-class and best practice marketing and social media programs; change management organizational design and process excellence in marketing, sales, customer service, engineering, product management; and development of successful sales and sales management programs for Fortune 100 companies and government entities.