GE hopes Lean can bring innovation

Eric Ries began by blogging about start-ups but has become a leading consultant in Lean processes. In 2011 he published The Lean Startup, which has now sold over one million copies. He presses the importance of limiting waste so that the best product can reach the consumer as quickly as possible. His success with start-ups has garnered the attention of larger companies like GE that want to use his techniques to drive innovation on a very large scale. One of the first to hire him was GE. GE has adopted his practices as well as some traditional Lean initiatives in order to better satisfy their customers and eliminate some of the waste that such a large conglomerate generates.

One specific area that GE is implementing their Lean techniques is in their appliance division where they hope to cut lead times in order to better meet customer orders as they come in. They also hope to apply their Lean techniques beyond manufacturing and incorporate them into all aspects of the business. From design to marketing they GE wants to make products with the end user in mind and have all units applying the same strategies to their work.

This instance of using Lean practices throughout the firm can be extremely useful as we continue into a more automated age with a greater emphasis on the service industry in the economy. There will always be new ways to eliminate waste and the Lean principle that operations must be stopped and fixed when something is wrong is very important. One of Eric Ries’s main tenants is that when failure is encountered the company must be able to pivot and adjust. By incorporating this into all aspects of a firm it can become very flexible and more capable of taking on new challenges. GE also shows that no matter how large the company is there will always to innovate and advance. Ries also describes how despite the change in CEO at GE he believes that they will continue to use his practices and hopefully alleviate some of the issues that are plaguing GE.

2 thoughts on “GE hopes Lean can bring innovation

  • February 27, 2018 at 8:48 pm

    Very relatable to the topics discussed recently in class, Thomas. As a massive company, GE must be trying to squeeze every bit of efficiency out of its production. While exercising the principles written in The Lean Startup, what did GE and other prominent firms do to ‘cut waste’ and speed up production? Obviously, stopping something and fixing it when something is wrong is important, but how did GE fix its errors? How did GE adjust and pivot to try and move forward as a more efficient company?

    While learning how to manage constraints in class, I wonder if GE figured out a way to break up a bottleneck in production, or in your words, ‘pivot’ to more efficiency in production. A bottleneck is what slows down production, and it is very important, especially in larger firms, to eliminate as many bottlenecks as possible. Efficiency in production leads to bigger profits, and that is ultimately what the firm is looking for. Experiencing many bottlenecks in the cycle of production will never lead to efficiency.

    In theory, GE is troubled with bottlenecks and it uses the Lean principles to fix its problems in production, how much do the Lean principles relate to the terms we have covered in class? Did GE use a systematic approach that focuses on actively managing constraints that are impeding progress? Did they only build inventory in front of bottlenecks, assembly, and shipping points? These are some of the few key principles in the Theory of Constraints, and I am curious to know if Eric Reis discusses similar topics in his book that helps companies boost efficiency.

  • February 28, 2018 at 5:38 pm

    GE has certainly been struggling as of late so any ability to cut costs would likely be welcomed by the company. The past 12 months GE has tallied shareholder losses of $135 billion, so I’m not surprised to see them reorganizing the management of the company. Like we discussed in class, lean production is a very effective strategy, but it is very difficult to implement effectively, especially as a long-term solution. I hope for GE’s sake that the Board reorganization won’t halt any forward progress on pushing towards lean production.

    An article I have attached below details a little more why lean production is so hard to implement. One of the biggest reasons is lean production is more than just a redesign of processes. Yes, process redesign is a large part, but also necessary is building and creating a culture of excellence. It’s about fostering company values that center on quality and implementing a focus on quality in every part of the company, not just the production processes. This is one of the reason so many established companies have so much difficulty implementing it. Often times they already have much of the company culture set by the time the company tries to implement lean production and it does not fully mesh with company values. Perhaps this is why Eric Ries has had so much success by helping startups. Startups do not have as many of the burdens that established companies do when implementing lean production. His ideas, though obviously effective may not translate as well to GE. According to an Industry Week survey only 2 percent of companies that have a lean program have achieved their anticipated results but I hope GE has more success to turn the company around and get out of their slump.

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