Ge Case Study

In 2005, GE launched a strategy, Ecomagination, to increase revenues from environmentally friendly products. The interest was spurred by natural -resource and environmental challenges facing the world. GE’s energy business was complex and dispersed serving a wide range of customers. They had impressive R&D capabilities, but new innovative ideas tended to develop form small organizations and individuals within the sector. They wanted to figure out how to be a leader in Green Energy and integrate its existing efforts with those outside the company.

In 2010, GE and some Venture Capitalist partners started an open innovation initiative called the Ecomagination Challenge. Entrepreneurs, businesses, innovators and students competed for funding with ideas about improving the world’s energy future. Total funding was $200 million. VC firms Foundation Capital, Emerald Technology Ventures, RockPort Capital and Kleiner Perkins Caufield & Byers were given full discretion on investment decisions. Start-ups that received funding were not locked into exclusive agreements with GE. The VC benefits were GE could take new technologies to market at scale. Entrants submitted their ideas to a panel of VC’s, GE executives, academics and technologists. The best would receive funding from GE and its VC partners to begin new ventures.

Instead of the estimated few hundred entries, Ecomagination received 400 responses in the first round and 1000 in the second round that focused on efficiency and sustainability of electricity to the home. GE selected 40 finalists and the panel selected 23 winners.

The challenge led to a number of startups being funded. Ecomagination became an interface between GE and the startups, its not easy for entrepreneurs to work with large companies like GE. For GE to claim success from the Ecomagination initiative, the ventures would have to accelerate growth of an existing GE business or increase scale. Neither would happen in the...