IF11: What Has GE Learned from Bringing Ecomagination to Scale?

IF11: What Has GE Learned from Bringing Ecomagination to Scale?

Six years ago, GE assembled two teams of researchers charged with settling a debate: Is climate change real? Team A argued for the reality of climate change, Team B argued against it.

"We concluded that Team A, arguing for climate change hands down won," said Mark Vachon, vice president of GE's Ecomagination initiative. "That was really the beginning of Ecomagination and saying, 'We need to respond to this.' And we did."

In a keynote interview today with GreenBiz Senior Editor Marc Gunther, Vachon described how the Ecomagination program has grown at GE against a backdrop of regulatory stalemate in the U.S. The company eventually opened up the program to solicit ideas from outside entrepreneurs through its Ecomagination Challenge.

But first, the company had to walk the walk, Vachon said, including reducing what is a massive environmental footprint. The company set stringent goals to cut its greenhouse gas emissions, water use and energy intensity before doubling those targets. It also doubled its investment in program from $5 billion to $10 billion.

When it comes to innovation, however, Vachon acknowledged that size can sometimes get in the way, and "lethargy can creep in." In response the company endorses at the CEO level what it calls "imagination breakthroughs."

"These could be 100 different ideas, all of which have at least a $1 billion potential opportunity," Vachon said.

More ideas are reviewed as part of the ecomagination Challenge in the form of about 5,000 business plans, Vachon said. These companies, many of them start-ups, are interested in GE because of its distribution capacity, others obviously need investment capital, while others need help reducing technology risk.

"One of the things we learned here is our ability to relate to, in many cases, pre-revenue companies," Vachon said. "That's a challenge and we're developing those skills."

GE also learned that "getting more ideas in the funnel" is an incredible value proposition, but the real magic happens when these technologies implemented at scale. To do this, GE established an "innovation accelerator."

"These ideas and others will be channeled through this organization to say, 'What is the barrier between your idea and scale?'" Vachon said, such as the difficulty in reducing technology risk.

Along the way, he said, these small start-ups taught GE that flexibility is needed as these relationships evolve. GE also learned that it can't stop at the funnel -- it must have a robust process in place to move these ideas through the funnel to scale.

Gunther ended the interview on a high note, asking Vachon whether he could offer a positive vision of the future that contrasts with others' doom-and-gloom forecast of our increasingly resource-constrained world.

We will end up with an organization that is relevant because it is responding to the reality of a world that requires significant natural resource productivity, Vachon said.

"I think we'll have demonstrated great leadership," Vachon said. "That's fundamentally what Ecomagination is all about."