For big companies, the perks of thinking like a startup
November 17, 2014
The FastWorks initiative is all about keeping things simple, nimble and consumer-focused
Companies that work in Saskatchewan’s light oil sands need to measure the various phases of oil, water and gas that go through wells during drilling, so they can predict and control what comes out and can get to market. There is technology to measure this, but it can be expensive.
At the beginning of 2014, some of the smaller companies went looking for a startup firm that could help them develop cheaper, more nimble measuring equipment. They wanted people who could work fast, and they found FastWorks™ at the GE Customer Innovation Centre in Calgary.
FastWorks is a product development strike force within the GE centre. It’s also the name of a decision-making system based on The Lean Startup, a process developed for Silicon Valley companies by systems expert, author and blogger Eric Ries in 2008.
The Lean Startup is a way of looking at a business or engineering challenge that focuses on what the customer wants or needs, sets aggressive deadlines and simplifies the steps toward putting new ideas into action.
FastWorks grew from GE Chairman and CEO Jeffrey Immelt’s interest in Ries’ work. The pair got together about two years ago to see how GE could apply Lean Startup principles to its worldwide work. In the first year, Ries trained 80 coaches and introduced Lean Startup principles to nearly 1,000 GE executives. The company has launched at least 100 FastWorks projects in North America, Europe, Asia and Latin America.
“Instead of a 30-page contract with terms and conditions, we say, why don’t we have a six-month pilot?” says Gandeephan Ganeshalingam, the GE Calgary Customer Innovation Centre leader.
FastWorks principles are designed to get the huge numbers of talented engineers and researchers at a large company to think and act as if they were working on a shoestring in a Silicon Valley warehouse. “We take the customer problem and break it into a bunch of what we call leap-of-faith assumptions,” Ganeshalingam says.
FastWorks applies Lean Startup principles such as developing a Minimum Viable Product − the simplest, most stripped-down prototype of a new product that can still yield information about how well it’s doing its intended job. “The principle is that every feature you add, you have to put a lot of thought to it, and it delays you. That can waste time,” Ganeshalingam says.
The customer and the FastWorks team can hammer out the criteria that will determine a successful project in a two-page document and the team can get to work, he explains.
“We outline clear success criteria with a shared-risk model,” he adds.
Metrics with meaning
Another important principle put to work is Actionable Metrics — measurement that yields information that can be applied immediately to business decisions. Actionable Metrics looks at an innovation in terms of the payoff; not like vanity metrics, which are a form of wishful thinking.
For example, Actionable Metrics may show how many clicks on a website translate into eventual sales; vanity metrics may show an increase in web traffic for a company without showing how much it cost to gain each new website visitor, or how the visitors are following up.
In the case of well measurement, the challenge was to come up a way to measure the oil that comes out of a well and the water used to extract it separately, in real time, without having to go through the more costly physical exercise of separating the two before measuring.
“We signed an agreement with a small producer here in Alberta,” Ganeshalingam says.
“We started working on this project in March or April. It’s a meter that we co-developed in the United States,” he says. “It’s only a [relatively small] piece of equipment, but we applied all the [FastWorks] principles to it and it worked.”
It’s a way for a team to look at a problem and condense into two major questions, he explains: “Should we work on this problem? Can we work on this problem? We can probably build anything, but we find we have to be disciplined in discussing whether we should.”
For example, a company might seek to build a new plant to export liquid natural gas (LNG). Traditionally, a team might begin by looking at potential sites and preliminary engineering plans, taking the customer down the road toward building the new plant before it’s even certain that it will be needed and commercially successful. This runs up a great deal of time and cost.
This kind of complexity comes from siloed thinking: The customer’s engineers might become enamored with the new plant project, paying little attention to whether the energy market will be the same by the time it gets built.
Learning to Pivot
A FastWorks analysis might begin instead with a simple spreadsheet, asking if it’s worth building this particular plant in the first place. In the case of some projects, the FastWorks team will build a 3D model to build a Minimum Viable Product and see if it can be scaled up to meet larger industrial needs.
Ganeshalingam urges his 10-person team (out of a staff of 400 commercial and technical experts at the Calgary centre) to keep their decisions as simple as possible, and always to focus on the client.
They also need to know how to Pivot — that’s a Lean Startup term for a deliberate course correction based on new insights. In one of the most famous Pivots, an online company called The Point set up a bulletin board aimed at building a community dialogue but found it attracted little interest. The founders executed a Pivot after they placed a coupon for pizza on the site and had 20 responses right away. They turned the bulletin board into Groupon.
“We’re finding that with large projects the best way is to help the customer move through decision-making process quickly,” Ganeshalingam says. In the oil and gas sector, the FastWorks team decided that their goal would be to try and go from a first customer inquiry, to scoping out a solution and begin piloting it in six months.
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