The Biggest Startup: Eric Ries and GE Team Up to Transform Manufacturing

December 9, 2013

Lean manufacturing, the idea that companies create more value with fewer resources, has been driving productivity for decades. But what if you are efficient at making something that nobody wants? “That’s what happened to most of the startups I’ve built,” says Eric Ries, entrepreneur and author of bestseller The Lean Startup. “Most of them failed.”

The first that did not was the social entertainment network IMVU. Ries’ quest to find out why led to the Lean Startup movement that is revolutionizing how businesses are launched and managed. “What creates value for a startup is learning if we are on path to a sustainable business,” Ries says. He says that successful companies have to “make that shift in perspective, from making stuff to learning which stuff to make.”

Eric Ries trained 80 Lean Startup coaches exclusively dedicated to GE’s FastWorks. Together they exposed almost 1,000 GE executives to Lean Startup principles.

The Lean Startup approach does not mean that you have to think small. GE, a global industrial leader with 300,000 employees and $147 billion in revenues, has been in business for more than 130 years. Started by Thomas Edison, the company has historically embraced innovation and new business ideas to remain competitive in the rapidly shifting global market. To advance that goal, GE is now transforming its culture to be leaner, faster and closer to customers.

Over the past year, GE has been working with Ries to develop FastWorks, a program built on his Lean Startup principles. As the name implies, FastWorks combines a set of tools and behaviors designed to deliver better outcomes for customers faster. “It will harness our entrepreneurial spirit and improve the way we work,” says Steve Liguori, GE’s executive director for global innovation and new models.

The program has the backing of top GE management, including Chairman and CEO Jeffrey Immelt and Chief Marketing Officer Beth Comstock. They saw an opportunity to take many of the aspects of the Lean Startup movement and apply them inside the company. “I tell all of our managers to read The Lean Startup,” Immelt says.

GE executive development leader Janice Semper says that through FastWorks, GE was “creating a culture where we operate faster while delivering better outcomes. At the heart of it is the discipline of testing and learning that permeates the entire the organization,” she says.

In the first year, Ries trained 80 coaches exclusively dedicated to FastWorks. Together they exposed almost 1,000 GE executives to Lean Startup principles. GE also launched 100 FastWorks projects in US, Europe, China, Russia and Latin America. They range from building disruptive healthcare solutions to designing new gas turbines. GE plans to expand the program to 5,000 executives and launch hundreds of new projects next year. “GE is an ideal laboratory for applying lean practices because of its scale,” Ries says. “This is undoubtedly the largest deployment of Lean Startup ideas in the world.”

GE Energy Management executive Jeff Schnitzer, for example, is already building a startup inside GE focused on entering large energy markets dominated by established players with a small team and limited funding. “We’ve learned from Eric and started building ‘minimally viable products’ to solve quickly customer needs,” Schnitzer says. “We needed a disruptive, transformational and meaningful solution that included some very substantial ‘pivots.’”

Pivot is a Ries’ term that he borrowed from basketball, and one of the most crucial aspects of lean management. It describes a special kind of change designed to test a new fundamental hypothesis about a product or strategy.

Ries and Liguori will be speaking at the Lean Startup Conference at the Masonic Theater in San Francisco, later today. Their panel, called “The Biggest Implementation of Lean Startup on Earth,” will include GE executives with hands-on FastWorks experience like Schnitzer. Says Liguori: “Part of our leadership culture means always tapping leading thinkers like Eric and the most cutting-edge practices.”