At GE, Beth Comstock looked to fuel an entrepreneurial drive within the company with “imagination breakthroughs,” she says. As the then-vice chair of GE’s Business Innovation, she strove to help the company think leaner, with a startup mentally to help see what it could launch with less.
To Comstock, that starts with a willingness to collaborate and co-create coupled with steadfastness and perseverance. Then Comstock challenges leaders to switch up their language, which to this former CMO means stop calling an old idea by a new name and calling it innovation.
Entrepreneur David Kidder concurred, challenging companies to stop valuing “decisiveness over discovery,” a wrong turn that inevitably leads brands to stop learning, discovering, or innovating. Kidder would prefer navigating contentious crossfire to consensus. A room full of nodding heads to Kidder is a warning sign of a “super crappy idea,” he says.
Hear more from Kidder and Comstock as they talked with Signal 360’s John Battelle during Signal 2017 about their advice on missteps to avoid, failures to embrace, and how to unlock that entrepreneurial energy from within.
We do work hard to create a narrative here. And David referenced this. Learn from the best learn from the outside. Our next two speakers are exactly that. P&G is sort of at the beginning of a transformation engagement just a year or two in. And there is a company that is many years into a very similar transformation. That’s GE. So we’re very thrilled to have Beth Comstock, the vice chair of GE with us today and also referenced by David Kidder, who has been the partner on GE’s journey and now the partner on P&G’s journey. So please join me in welcoming David and Beth to Signal.
So you guys have been collaborators and friends and partners for some time. Tell me the story, Beth, how did your innovation journey start both with David and Bionic, but also prior to that? Because I know it’s been a long journey for you.
I have been around a while. But my innovation journey started really with a marketing lens. I know I’m with my people here. This belief that innovation really starts where change is happening, and that’s in the marketing. And trying to get a company like GE to realize that marketing needed to be at the beginning of the process, not at the end. You just don’t give us something and we launch it. Let’s have marketing in the beginning. understand the dynamics of the market, zero in on what problem are we trying to solve for what customers and and create a rallying cry around marketing as an innovation machine. So that’s taken me on a journey. And it’s hard. I mean, big companies, we all have to try a lot of things and take what works and discard what doesn’t. And David has just been a great friend and advisor for a long time. I think we got to know each other through marketing and media work. When I was at NBC, I got to know David well. One day David and I were talking and he was he was coming out, I don’t know, Company Number 20 probably. And he was working with a big customer who was a big company and we were commiserating, why is it so hard? Why is it so hard. And David spoke with great credibility because he knew how to seed and scale a business. And he also knew how hard it was to work with a big company. And that was really what started us kind of down a path of working together.
As I recall, you actually wrote our business plan overnight and said, “Go build this, and I’ll fund it.”
So tell me what it is you do.
No one knows. I like to keep it totally mysterious. What the hell is it that we do? We are a small army of entrepreneurs. We believe that venture capital and entrepreneurship are forms of management in the same way. An administration degree exists. In this case, it’s actually a way to create growth. In the mindset mechanics of a venture capitalist, fund problems. They create great volumes of bets and the role of entrepreneurship, because we help lead a transformation of GE, which we’re probably halfway through with Eric Reese, is the way to work differently. And entrepreneurs work radically different than a planning job. And so we we help move large organizations into that model, and install this growth OS, which is called Growth Works here and Fast Works at GE and D10X. They make it their own, it becomes something that’s part of them and how they create a permanent growth capability. And we have the evidence that it works.
But tell me about it at GE. What’s the before and after?
Well, the before, it’s just this continual journey to try to just innovate more from within. I think our company had gotten pretty good over the years at acquiring growth, and not necessarily growing it. And it’s hard. Both are hard. And we were not using the base of strength that we had. And so a lot of just innovation, we had something early we called imagination breakthroughs that were these basically startup ideas within. And we just started to learn things.You have to protect a class of ideas. You have to protect a group of people. They need sort of a different track. We learned we needed different funding mechanisms, different incentives, different ways to measure success. We were a scaled company asking these small startup efforts, what’s your profit? What’s my profit? I don’t even have a customer. What are you talking about, ‘What’s my profit?’ And so I think we just went through a course of just constantly finding great advisors and coaches who could who could bring one more toolkit. With Fast Works, there’s an entrepreneurial spirit that we have to bring back here. We have to move faster. We had gotten a bit bureaucratic, actually not a bit, we’ve gotten a lot bureaucratic. And it was this function of dysfunction meets business unit meets region, and it was just gunked up. So we had to simplify, and we had to give everyone in the organization, David used it, the permission, the ability to say, I can do this, I can be entrepreneurial, no matter what my job is. And then the tools of Lean Startup. And I think with David and some of the work Bionics certainly does in our ventures group, this idea of the Stage Gate funding. Of getting people who love to seed the business. They actually don’t want to operate a $10 billion scale business. They love getting from zero to $100 million. Give them that time and again, and we had largely ignored those people or they left because we thought they were just dabbling. And so the before was, we weren’t really looking to scale this effort. And now we’re trying to move faster and scale a more entrepreneur approach at GE.
This is sort of what Mark was talking about between the farm and the garden I guess? do you have an example of a garden that turned into a farm crop?
I’ve got a lot of them. David and I were just talking about a great colleague, she’s been sort of the poster child, the role model for Fast Works. And her name is Terry Bresenham. She runs value products for GE Healthcare. And this is basically think of consumerization of health. But think of the most sophisticated technology in the most common use case. So ultrasound, that’s so simple, a midwife can use it with a red light green light approach. You don’t need to be a radiologist or or a doctor to do it. Before Terry came into healthcare and did this job, it was a lot of debate. ‘Who’s going to lead it? Is it the region? Or is it the centralization mechanism?’ And the budget was never aligned in the right way. She couldn’t get her hands on $2 million, let alone five. And frankly, she didn’t need even two or five, she just needed enough to get going and test to the next phase. So Fast Works comes along, and it gives her the tools, the visibility and the permission to start to identify the customer problem, bring everybody together around a shared view of the problem. It was no longer Milwaukee headquarters versus India. And who knows better what’s right. I mean, really, India does, let’s talk about that whole debate. But suddenly, you had the the mechanism that brings everybody together around a shared view of the problem, which was, let’s look at India, let’s look at what the customers need. What problem are we trying to solve? How do we get from one customer to many? How do we test our hypotheses? So it suddenly sort of takes everybody to the core essence of what’s the problem we’re trying to solve. As opposed to my view is better than your view and all the internal battles that erupt in company?
It’s so good to hear you say so.
What did I not put into context. Because John is saying it’s hard to understand why you wouldn’t just innovate from India up. Why doesn’t that happen in companies?
Because they think it’s a planning exercise. Like it’s a financial engineering job that does the work of growth. And I think it’s a growth engineering job. It’s a discovery job, not a planning job. And discovery sometimes seems like it’s cute, and there’s not a lot of rigor behind it, and it’s all these fun things to do. And entrepreneurship, is this wild, crazy shoe wearing job? And it’s like, no, actually, entrepreneurs are fairly risk averse. They are obsessed with the problem. They have put all the tools into the world to solve it. And then they want to like basically not die, right? Your idea is dead, it becomes undead. And so this lack of discipline and entrepreneurship, I think is ridiculous. I mean, I’m gonna go to zero. I want over a cliff, if I can’t solve this problem, right? That’s a lot different than the mindsets that large company which is I’m going to lose my bonus if I don’t financially engineer this well. So replicating that mindset, and funding it like a VC is how you create that sense of urgency to make an idea become undead. And that’s a really important rigor that happens in a entrepreneurship.
Then you get in a company where everybody can say, ‘Hey, Tara has done this, and the business is growing exponentially for them, and they’re going from tens of millions to 50 to 100 million plus plus plus revenue. This is starting to work. I want to be like Terry.’ People who’ve given her the runway to do it. And so now we’ve seen it a lot of Terry’s around the company. And I think it really is the emergence of a growth leader at GE.
Does it create cultural challenges when you have..?
None at all? I’m just thinking, you know, then, Terry becomes a superstar at GE for growing a business from zero to $100 million. There’s somebody running a $10 billion wind turbine business. It’s like, whatever.
But that is the tension. Because we’re big companies. We dream in color, we dream in scale. We love big. And that’s a problem. I think one of the great lines of David’s is, you know, premature scaling. We do that. Money is not our problem in any company. And it’s really about constraint. And usually people don’t like hearing that. But we can all do more with less budget. And so there is that culture of, ‘I’m big and scale and you’re not.’ But I think if you’re running a company, like a portfolio manager, you need to be counting on not just what’s my core growing and core innovation gets way undervalued as well. What’s next, and then what’s the new, which is really hard. And if I don’t have that in my pipeline, I’m going to I’m going to be dead. Leaders have to be incentivized differently. They have to be able to show a pipeline vitality. They have to show a certain amount of revenue coming from new sources.
This isn’t just, fenced over here is our innovation stuff. Every leader has to have part of this.
It becomes part of the way they work. Today, large companies can sort of operate as well. They have tools like six sigma, lean manufacturing, everybody’s incentivized for efficiency and de-risking, and so doing new things inside that big to bigger machine often leads to incremental, crappy ideas. When you’re doing that zero to $100 million revenue job, the way you fix that conflict is you have to have at the top down. You have to value that $100 million on a top line basis, because it’s literally new oxygen for the company. The bottom line stuff, which is where something’s going to scale where the efficiency that skill matters is the bottom line job. But there is a difference between top line and bottom line. The oxygen we breathe today, and then new oxygen coming in. But the secret to this is that if you get really good at creating oxygen, and we create new ideas, a lot of the ideas that die become the features of the core, they become the product development of the core. They work in concert together because they’re learning faster than anywhere else in the marketplace. And David talks about this, which is if you’re if you’re not learning as fast as anyone else you’re at a huge disadvantage. And so I think once you kind of get the mindset and mechanics in place, if you don’t have top down, it doesn’t work. Because I mean, a lot of initiatives that we’ve seen that don’t work is when the leadership tries to go for innovation or growth, we rarely use the I word which is, you know, ‘This is for my people. Here’s a tool for everyone to work better.’ How do you expect to create growth if you are yourself not a growth leader? It’s sort of ridiculous. Like, ‘Everybody works this way, and then give me some growth.’ No, actually you’re half the problem, because you actually don’t know how to great growth. How you invest, how you think? All the answers are typically all that are sort of open secrets. It’s your ability in how you think, how you invest, how you work that creates that advantage. It’s not because you don’t have the tools. It’s not because you have the ideas. It’s how you think and how you work.
Another example from GE, the new head of our healthcare business, a guy named Kieran Murphy is a great example of a growth leader. He just got named to the top job. But he is thinking in this way. And he goes, ‘I need a position in immunotherapy. ‘I don’t have the right people. I don’t have enough funding.’ He calls the GE Ventures team and says ‘How do we partner together? How do we venture together?’ And together they’ve created four or five new incubations of businesses. Several of them are partnered with customers where we are set up outside the mothership co-creating with customers, with founders who come from outside. Several have founders we’ve pulled from inside GE and said, ‘We’re going to have this as a wholly owned.’ So he’s starting to realize, ‘I have options in the where I can go to get people.’ I’d say in the old way it would be we can do everything ourselves, and everybody wants to be an innovator. And we’d waste time. Now it’s a realization of, ‘Who has the skill at this stage? And where am I gonna get the capital? I can’t use the fact that I don’t have money as an excuse. I need innovative ways to fund this.’ And he now has an incredible portfolio and sort of positions in a lot of things. So when change shows up, he can fund one more, kill something earlier, but he’s totally changed how he looks at his business.
You’ve been not only an icon of innovation and management for some time. You got a roomful and a webcast full of people who are leaders. What are the things that you’ve noticed, maybe your top two or three habits, that you’ve had to change in order to work in this way?
It’s such a good question we could do a whole day on that. A couple of thoughts I think for all of us who consider ourselves innovators or change. We love change. I think there’s a couple of things. First you have to search inside yourself. Change really starts from within. You have to be willing to change the way you do things. You have to be willing to be just relentless and not give up. If you believe something’s going to happen, you cannot give up. You have to maybe give up the way you’re doing it, the way you approached it. But if you see something has to happen, so there has to be a tenacity that you have to be willing to sign up for. I think you have to worry about language a lot. And I think that’s something that people don’t focus on. Oftentimes, our conflict is we’re calling the same thing, different things. And we there’s something in our culture where you see sort of a new initiative, and I say, beware the cool kids, because it’s sort of like, ‘I’m driving change, and you’re an old fuddy dud. I’m the cool kid, and you don’t know anything.’ The reality is, we have to come together. We’ve been driving this now with digital and industrial. P&G. GE. We have incredible scale and market capability of people who know what they’re doing. How do you get most of those? So those will be a couple of things I’ve seen. Really these things, innovation, it’s tools, it’s mostly its mindset, and are you willing to change how you behave? And are you willing to change how you collaborate and co-create with others? And if you can do that you can innovate? How would you add to that?
How do I say this nicely. A lot of large organizations overvalued decisiveness versus discovery. Discoveries would be nice to have. But decisiveness, ‘We need to make a plan, and here’s the check, and then you go execute the plan.’ The problem is, that creates a huge amount of intellectual dishonesty, because once the team sells the dream, they can never unsell the dream, which means you literally stop learning. And when they fail, which they’re going to, they all leave so that all the learning walks out, because success is about education. So you have to fundamentally change that dynamic so that you can actually create the commercial truth-based conversations so you create learning, real learning, which means that really comes through discovery,. This is a secret of venture capital, which is you have to spend a lot of time in a non-consensus based place. Which means if we all think it’s a great idea, it’s probably a super crappy idea, which means we’re all going to agree, look. And that means that everybody knows it in the room, and everybody in the marketplace knows it too, because they’re not stupid. So if you can hold a position in a non-consensus view of the world, which is against, which is when the unlearning part happens, you have a very good chance of discovering a new behavior, which is what monopolies live, and living things that people don’t know, in most cases, consumers don’t even know. So the tools of voice of customer research, which is very often commingled with making things and companies. ‘We plan and they still make it.’ And then they go along, they check all the boxes of like, commercialization, research. And, of course, they said, ‘You’re awesome.’ And then they we do the voice of customer, of course, ‘I’m awesome.’ And all of a sudden get the marketplace, then it sucks. How did that happen? Well, it actually didn’t work from day one. Right? So changing the way. So upfront, you’re doing huge amount of volume of discovery and seed-based investing, which is one of the best commercial stage processes in the world, because it delivers the commercial truth so you can hear it. So holding the non-consensus position for a long time with a large portfolio, it will teach you what the answer is. It’s not a managing job. It’s an investing job. Entrepreneurs don’t take money from VCs, so VCs can tell them they do. You know this. In fact, if I’m a VC, and I write an investment check to an entrepreneur who needs my advice, I’m lighting my money on fire. This is about talent, and truth and discovery. That leads us to what we make at the core and where we go to get new growth.
What advice would you give a company like P&G, which is a few years behind you in terms of the engagement with all of these ideas? And maybe another way of asking this question is, what mistakes have you made, that perhaps P&G can learn from?
I was really honored yesterday to hear some report outs of a couple of the entrepreneurial teams here who are driving change. I was incredibly impressed. So I think in the time you’ve been using some of these tools, it’s great to see the results. So I’d say you’re on your way. In hindsight for us, there are a couple of things. I wish we had tackled the cultural, some of these cultural and mindset issues up front. It wasn’t just a set of tools. And it’s not just the lingo of minimally viable product, and you know, pivot or persevere. I think we needed to tackle the culture first. And by that? I mean, just really, what is it that’s pulling people back. David said it earlier, it’s not just about needing permission, you’ve got to act. You’ve got to have your hair on fire that I have to do this. So I think I would have spent more time focused on some of those cultural issues and giving people an opportunity to just discover for themselves. You can’t tell people what to do. People have to discover. So I think now five or six years into this, the more people engage with this method, it’s freeing it sort of unlocks the entrepreneur in most people. And even if you’re not going to be an entrepreneur, you can do things differently. So I would just say try to find ways for more people to discover it themselves. Don’t just tell people what you’re doing, give them a chance. W did something we called Fast Works Every Day, which was just a way for people to use a core set of tools with different questions. For example, ‘What’s your hypothesis?’ Do not ask for profit before you even have a revenue stream. So at the top level of the organization, have leaders ask different questions, have them support the entrepreneurs within. At the middle level of the organization just constantly, And this applies for everybody, constantly ask for feedback. ‘What could we be doing better? What does our customer need? Am I getting enough of the truth of what’s going on?’ And if you’re just starting out in your career, just be bold, be brave. You’re not just empowered, grab power. If you see a better way, do it. And so I think those kinds of imperatives go a long way. And I think hearing from David makes you believe it’s sincere here. I hear it from him. I believe it. And so I think those would be a couple of things that I’d pass on.
David, anything to add, and then we’ll have time for one or two questions.
One. So this is the deep work. Bt the fastest way to kill a company or marriage or thing is contempt, right? So in our we talked about this in our own culture, but we try to bring this into the company. We have this rule called the Seven to One Rule, which is impossible ratio, which is the admission that people, products and data, we have to realize that those things are going to fail. And so without a default state that you’re forgiven, so we can deal with the failure, the people are not going to tell the truth. You have to have a default state inside the organization that people take risks personally, professionally so they can evolve an idea or evolve who they’re becoming because the default state is, you’re forgiven. Let’s deal with the failure. And they don’t fall apart when you actually go after the failure because they take it so personally. So I think getting into that mindset, which is, ‘I want you to go on offense. I want you to act and because I know you’re going to fail, hopefully productively, cheaply. The failure is good. You’re forgiven.’ Let’s go after that. Let’s go after that learning. And so it sounds very soft, but ultimately I don’t think these large companies have enough institutional permission around the idea that you should take risks and you’re most likely going to fail, which you’re forgiven for. Go after it
With our team we had something fun called it Failed Con. And it was just a little failed convention. And we all had to share. Some people were digging really deep, it was like the time in fourth grade, but everybody had to share. And I shared a very public successful startup and it failed very successfully. And very large. And, you know, I will never forget Jeff Immelt saying to me, ‘You know what, we just have to try things.’ And so to be able to say to the team, ‘I was responsible for this. But here’s what Jeff said.’ It was tens of millions of dollars. He said, ‘Just try.’ I’m saying to you, ‘Just try those.’ That kind of storytelling is really important.
We have we have one or two questions. We have one down here.
You mentioned that you need to be careful not to undervalue core innovation. And then you also talked a little bit about language and making sure we don’t create kind of the cool kids and the not so cool old fuddy duddy. Can you say a little bit more about how you’ve been able to sort of nurture your core innovation and make sure that’s helped healthy and growing while you establish this new way of working?
Just recognizing that sort of this notion, you call it Growth Works, we call it Fast Works. Fast Works is the way we work. There’s a core set of principles. And this really test and learn I think would be the most powerful way I could could say to you. I’ll give you an example of core innovation. And David worked very well with this group. We took our group that was really struggling, our oil and gas business. I mean, it’s unlike anything here but it was really struggling. And they had a limited amount of investment they could make in new products on the core. But they took this methodology with a very entrepreneurial chief technology officer, and he basically was able to decide earlier what was what they were going to greenlight, try multiple things, test and learn, and then decide faster when it wasn’t going to work and redeploy the capital. He was able to have new product introduction go from 36 months to 18 months and have his new product introduction budget go from something like what he wanted was $400 million, and what he had was $200 million. And he was able to get everything he needed to do in that amount of budget. And so now we’re saying be like Eric and trying to get more heads of technology to act that way. I’m convinced it can work.
I wish we could continue for another 25 minutes or 30. But unfortunately, we have to move on and please join me in thanking David and Beth for coming today.