Business Report

Open Innovation at GE

General Electric and startup companies alike say they benefited from the company’s call for ideas about the smart grid.

General Electric had an innovative way to come up with innovations related to the emerging “smart” electric grid: the company asked for ideas.

A winner: An energy-efficient heating and cooling system from a Swedish company called ClimateWell got GE’s attention.

Last July, GE launched what it called an “ecomagination challenge,” a competition in which startups and inventors were asked to present technologies that could help GE accelerate its development of products and services related to the smart grid. GE got 4,000 submissions. It gave $100,000 cash awards to five young companies and formed strategic partnerships with 12 others; all of them are expected to help GE’s business in one way or another in such areas as energy storage, utility security, energy management software, and electric-vehicle charging services.

The goal was to “bolster the company’s R&D program by opening the company up to innovation from the outside,” says Tore Land, who headed the challenge.

GE set up a website to take submissions; entrants were asked to describe their technology, its value proposition, and its potential to be integrated with GE’s technologies or expertise. GE executives and external advisers, including venture capitalists and the editor of Wired, judged the ideas on the basis of their originality, feasibility, and potential impact. Members of the public could vote as well—GE got comments from some 74,000 people overall—though the company won’t say how much weight the public’s votes had.

Among the $100,000 winners was Capstone Metering, a company in Carrollton, Texas, that sells networked water meters. Scott Williamson, the company’s president, says the company entered the challenge not only to attract new funding but also to gain wider exposure. As for GE, its new relationship with the company will give it better insight about how water supplies can be networked much the way the electric grid is. Capstone expects to undertake a pilot program this year with a GE competitor, Honeywell, Williamson says.

The challenge also led GE to a partnership with ClimateWell, based in Sweden, which has developed energy-efficient solar-thermal systems for heating and cooling. The systems were commercially introduced in 2008, but now GE will sell the technology much more widely through its appliance division and also help develop it further. Per Olofsson, CEO of ClimateWell, acknowledges that the open-innovation process isn’t necessarily easy: it can be tricky to define the intellectual property rights that each company retains, for instance. But it’s worth the effort, he says, for the opportunity it gives his small company to collaborate with a company like GE that possesses “skill sets that we don’t have.”

Smart water: The Intellih20 water meter from Capstone Metering, a company that won $100,000 from General Electric in an open-innovation program.

Stefan Lindegaard, an innovation consultant and the author of The Open Innovation Revolution, says GE’s project is a model for how to open the corporate innovation process. It succeeded as well as it did in part because the company has enormous market reach and a big network of partners. Access to these things is “much more rewarding than cash prizes” for many startups, Lindegaard says.

GE’s next “ecomagination challenge” is focused on home energy-management systems, and winners will be announced this spring.

The company is also trying to improve on this innovation process itself. Land says the first round demonstrated a natural bias on the part of the judges toward business proposals from companies in the Western Hemisphere. To change that, GE will try to develop a more diverse pool of evaluators, he says.

Michael Mascioni is a freelance writer in New York.

Want to go ad free? No ad blockers needed.

Become an Insider
Already an Insider? Log in.

Uh oh–you've read all of your free articles for this month.

Insider Premium
$179.95/yr US PRICE

More from Business Impact
Innovation Strategies

How technology advances are changing the economy and providing new opportunities in many industries.

Want more award-winning journalism? Subscribe and become an Insider.
  • Insider Premium {! insider.prices.premium !}*

    {! insider.display.menuOptionsLabel !}

    Our award winning magazine, unlimited access to our story archive, special discounts to MIT Technology Review Events, and exclusive content.

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

    Access to the magazine PDF archive—thousands of articles going back to 1899 at your fingertips

    Special discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

    First Look: exclusive early access to important stories, before they’re available to anyone else

    Insider Conversations: listen in on in-depth calls between our editors and today’s thought leaders

  • Insider Plus {! insider.prices.plus !}* Best Value

    {! insider.display.menuOptionsLabel !}

    Everything included in Insider Basic, plus ad-free web experience, select discounts to partner offerings and MIT Technology Review events

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

    Access to the magazine PDF archive—thousands of articles going back to 1899 at your fingertips

    Special discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

  • Insider Basic {! insider.prices.basic !}*

    {! insider.display.menuOptionsLabel !}

    Six issues of our award winning magazine and daily delivery of The Download, our newsletter of what’s important in technology and innovation.

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

/
You've read all of your free articles this month. This is your last free article this month. You've read of free articles this month. or  for unlimited online access.