Case Analysis:
GE’s ecomagination Challenge: An Experiment in Open Innovation
June 1st, 2017
The most pressing challenge in today’s world’s is the scarcity of resources that are required to be part of our everyday life, for example energy, technology and water. This GE’s Ecomagination case is about a business with a growth strategy to enhance resource productivity and reduce environmental impact at a global scale through commercial solutions for customers, through optimal operations, innovating collaborations both internal and external, investing on innovative ideas, a.k.a. Open Innovation. The case’s key themes are: 1) investment from both internally and externally on small projects in comparison to GE’s own massive energy business, 2) the performance of team with moving prioritizes and frequent changing priority and 3) process and structures to make sure the investments pays off in an even bigger way. Two similar companies to this case are: Shell and Samsung.
Shell a global leader in energy and petrochemical industry has adapted Open Innovation internally known as Game Changer (GC) since 1996, this program works with start-ups and businesses on unproven early-stage ideas with the potential to impact the future of energy. Till today, Shell has evaluated 1500+ proposals and implemented 100+. One of them is a massive project to develop a Floating Liquefied Natural Gas (FLNG) plant, a truly radical innovation. GC is the well-structured and coherent program for working with external partners consisting of: 1) seeking proposals for radical innovation; 2) external technology collaboration, primarily with suppliers; 3) technology ventures, an investment fund for early stage companies; 4) techworks, looking to rapidly prototype technologies already proven elsewhere; 5) ideas 360, a global idea competition for students. Shell recognizes the strategic need, have process and structures in place and are now attracting more partners for Open Innovation.
Samsung wants to innovate like a startup and so is more active and open about their efforts on building external innovation capabilities. Samsung Open Innovation addresses all 3 themes so detailed for GE with their four legs: 1) a partnerships team - think of commercial partnerships between us and a third party; 2) a ventures group - R&D investments in startups; 3) an M&A team - an opportunity to acquire small teams, fit them into Samsung, and have them build products as part of the company; 4) accelerators. Samsung forms a group of five or six people per team and give them the benefits of a small company, which is autonomy, nimbleness, and the freedom to build the product they want without going through the approval process. Additionally, gives the benefits of a big company, which provides financial support, extensive distribution, and other resources. The goal to be achieved is build a game-changing software products that can connect all of our devices. Samsung targets different kind of “value pools” i.e. groups of external partners for their open innovation efforts including suppliers, universities, consumers/users and startups.