“We’re looking for new models of innovation. We don’t have all
the answers or all the capabilities.” This candid admission comes
from Beth Comstock, GE’s Chief Marketing Officer and Senior Vice
President.

Comstock was telling me about the company’s growing innovation
platform, the target=”_blank”>GE Ecomagination Challenge which inspires
collaboration between GE and entrepreneurs.

The ecomagination brand has done yeoman’s duty over the last six
years. It started as a business strategy that wrapped a handful of
greener products into one brand story about helping both the
environment and customers.

Now this strategy/brand hybrid has evolved into an umbrella idea
to cover everything from operational improvements - such as href=”http://www.gereports.com/on-the-hunt-for-energy-treasure-at-ge/”
target=”_blank”>eco-efficiency “Treasure Hunt” events that
have saved GE a whopping $150 million in energy costs - to
innovation initiatives, both internal and external. The
Ecomagination Challenge, now in its second year, is GE’s foray in
to the fast-growing world of “open” innovation.

Starting in mid-2010, GE asked the world for their ideas about
“Powering the Grid” and, later on, “Powering Your Home.” In 12
months, GE received an astonishing 5,000 business plans. GE and its
venture capital (VC) partners such as Kleiner Perkins and Rockport
Capital have invested $134 million (of $200 million allocated) in a
small selection of these businesses.

The Challenge “winners” range from relatively established clean
tech companies such as software provider Hara, to a range of “two
guys in a garage” innovators (ten of these small start-ups received
$100,000 Innovation Awards). GE then set aside an additional $20
million for the Ecomagination Innovation Fund, run by VP of
ecomagination Mark Vachon, to help accelerate some of the best
ideas by launching commercial pilots with GE businesses.

While GE has worked for years with outside thinkers in
universities and research labs, the scale of this effort is unique.
And it’s expanding - GE recently launched both a China-focused
ecomagination Challenge and, in a nice brand extension, a
Healthymagination Challenge to identify healthcare technology
ideas.

I see three major reasons that this kind of joint innovation
between small and large companies is both exciting and absolutely
necessary.

Entrepreneurs need GE: Crossing the “Valley of
death”



The technologies needed to solve sustainability challenges, at the
scale we need them, are not going to come cheap. We’re revamping
multi-trillion dollar industries in energy, transportation, and
buildings - this isn’t like software or social media businesses
that can grow with limited capital. VC money isn’t going to take
these ideas far enough. The yawning gap from what a start-up needs
in seed funding to what’s required to build billion-dollar
businesses is often called the “valley of death” in funding
circles.

Who can help new techs cross the valley? Of course government
can provide capital and buying power. But we need the private
sector to provide those inputs, plus critical know-how on
building a business. GE’s Innovation Fund provides an example
of how to fulfill this need; its purpose is to accelerate the
scaling and commercialization of new ideas.

GE needs entrepreneurs: Challenging assumptions



Sustainability challenges are broad, deep, complex, and daunting.
To paraphrase a famous quote from Einstein, we’re not going to
solve these problems with the thinking that got us here or, more
simply, you can’t get there from here. Entrepreneurs are put on
this Earth to challenge assumptions. Large companies, to put it
mildly, are careful, conservative, and vested in the status
quo.

As many have pointed out, the horse-and-buggy companies did not
develop the car. Will new eco-technologies sweep some currently
dominant technologies into the dustbin of history? Most definitely.
Will GE or other mega-corporations lead the transition? Perhaps,
but their odds are a lot better if they identify the technologies
and business models that will bleed away their profits and get to
them before others do.

Although the idea of this whole initiative was to challenge the
world’s entrepreneurs, it ended up challenging GE even more. As
Comstock described the experience, “It’s changing the way we’re
working…Mainly it challenged our assumptions…many
ideas came in and we thought at first, this is not scientifically
possible, but then we’d look closer and figure out why it is.”

I spoke also to Professor Karim Lakhani, a Harvard professor and
expert on open innovation contests. Lakhani, who GE asked to assess
the Challenge, put it all in context: “It was new for a company
like GE to open up the ideas funnel and admit that, ‘hey, we don’t
entirely know what we don’t know.’ “

Entrepreneurs need each other: The Challenge as
platform



Perhaps the most important element of the Challenge is that all of
these ideas can find not just funding and acceleration, but each
other. As Professor Lakhani describes it, “What was novel here was
that GE was trying to create a platform and an ecosystem around
green.” Apparently it worked.

One of the contestants, Sam Qin, told GE that his innovation, href=”http://challenge.ecomagination.com/ct/ct_a_view_idea.bix?c=ideas&idea_id=30BBE5C2-6CB1-4F49-B600-E8780313CD67”
target=”_blank”>From Net Zero to Waste Zero, “only provides a
subset of an Ecohome solution…the Challenge has put us in touch
with companies that provide the other pieces.” In total GE gathered
70,000 innovators from 150 countries and received more than 80,000
comments.

In any open innovation process, winnowing the funnel of ideas to
the ‘good ones’ is a thorny task (more in a later post on this),
but one method is to let the community itself figure out the best
ideas. We’ll see more of this approach as companies get more
comfortable opening up.

So large and small companies all need each other. As Comstock
put it, “What can we learn from start-ups? A lot, but there’s also
a lot that a big company can teach a start-up.”

Given the nature of our problems, programs like GE’s may be our
best hope of marrying capital with ideas, seasoned hands with
entrepreneurs, and practicality with, well, hope.

This post
first appeared at target=”_blank”>Harvard Business Online and is reprinted
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