Open Innovation Strategy with GE Appliances and FirstBuild

We don’t usually record our InnoLead members-only meetings, but this one is an exception: André Zdanow of GE Appliances talks about their journey with open innovation, crowdfunding, and their FirstBuild makerspaces in Kentucky and Connecticut. Leaders from NASA and AstraZeneca ask questions and share their experiences. Click play to watch the meeting, or read the notes below.

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Getting Started

• The meeting started with InnoLead’s Scott Kirsner making a round of introductions and briefly mentioning the revolving door approach that companies take when building ecosystems and infusing open innovation and crowdsourcing into their operations.
• He then calls on André Zdanow—CEO, FirstBuild; ED, Small Appliances at GE—to recap GE Appliances’ journey with open innovation, crowdsourcing, and building ecosystems.

Foray into Open Innovation: André’s Background

• Andre was the first angel investor in Mophie, creators of the Mophie Juice Pack and other on-the-go wireless charging options. He later worked at Quirky, a now-defunct crowdsourcing platform focused on consumer products.

FirstBuild: GE Appliance’s Journey into Open Innovation

• With a background at Quirky and some of GE Appliances’ co-development history with Quirky, Andre got an opportunity to join GE Appliances in 2018.
• Joining GE Appliances led to the first dive into FirstBuild, an open makerspace.
• FirstBuild has a robust makerspace that is open to the public Monday through Friday in the evenings and all day on Saturdays.
• Guests are free to reserve and use FirstBuild equipment to create, fabricate, or do small-volume productions. Guests also learn how to use and work with challenging equipment.
• The three philosophies behind FirstBuild
  • If we are closer to the consumer and transparent, we will get better fidelity.
  • Break the bureaucracy hampering proper decision-making and innovation.
  • To help engage with creatives—not necessarily investors, many are enthusiasts. In turn, developing hands-on skills and next-gen engineers and product developers.
• Today, FirstBuild’s approach to innovative processes has led to multiple meaningful innovations.
• At CES 2024, FirstBuild showcased some products, including:
  • the Combo Washer,
  • the Nugget Ice Maker, and
  • the Smart Indoor Smoker, which is now part of the Small Appliances Division at GE Appliances.
• These products wouldn’t exist if FirstBuild never thought of how to be closer to the consumer, how to continually disrupt, and how to redefine the innovation process.

FirstBuild Product Case Studies

• The Smart Indoor Smoker, Arden.
  • Arden is a pointer to why it is important to work with creatives.
  • In a process that was quite popular on YouTube, a FirstBuild engineer bought a 1956/’55 GE refrigerator, ripped everything out, fabricated some metal sheets, added a Calrod heater, and FirstBuild made it into a smoker.
• An Open Hearth Oven, an oven with no door
  • The thought process for the product revolved around what could happen if the team catalyzed an oven with the catalyst and airflow system in the fridge; can we smoke in the winter?
  • Hence, the team developed an active smoke filtration system and catalyzed the smoke in the oven.
• These case studies also point to why openness matters. Guests who come into the makerspace see the products and ask when they would be made commercial products — they want them on the counter. And that helps the company make the necessary push.

What kept FirstBuild Alive?

Question: Is there a business result you’d point to where you say this  is  what kept  FirstBuild alive, despite GE Appliances being sold to Haier and nobody visiting FirstBuild during the COVID era?

• In the first three or four years, FirstBuild ran on a strong belief in the principles of its potential.
• In 2016, it crowdfunded Opal Nugget Ice Maker with the aim of raking in $100,000 to $150,000. It raised $2.7 million instead, which kept it going through 2018.
• It was mostly a cost center initially, but a lot of work was done to generate early engagement, early feedback, and a growing community.
• Haier believed in the concept of a micro-enterprise model, which also directed the need for FirstBuild to start paying for itself in 2018. To boost sustainability, FirstBuild employed KPIs that weren’t just measuring how many product concepts they could come up with and what product actually made it to the market.
• While FirstBuild has not broken even, it has been self-funded since 2018 and has measurable ROI. And with Opal as its baseline, it’s also been able to keep another successful small appliance business in existence.

Lessons in Crowdsourcing

Guest questioner Steve Rader from NASA points back to Quirky as one of the significant foundations of crowdsourcing on a platform and asks for more (of Andre’s) insights on crowdsourcing experience at Quirky, and crowdsourcing in general.

Question: What were the key lessons that you learned out of your really rich experience in crowdsourcing?

• At the time Quirky was active, it looked towards greenlighting three new products into the development process every week.
• The result was a tremendous number of products to process. Consequently, it was a lot more difficult to drive meaningful innovation and what’s really important to Quirky.
• The key Lesson from the Quirky approach
  • Less volume gives you more fidelity
• Key lessons on crowdsourcing from the FirstBuild Approach
  • Make invention accessible—bring in the community at the product level and create deep engagement with the audience.
  • Be open to finding makers in both enthusiasts and investors—doesn’t necessarily have to be product developers or those trying to be one. Find them wherever they are.

Global and Local Crowdsourcing

Question: How’s FirstBuild merging the global crowd with those in the immediate locality?

• When it comes to driving innovation, the impetus for the innovation can happen online. FirstBuild drives a lot of online engagement, with the engineering team also acting in the capacity of product developers scouring online platforms for content and relevant forums.

Challenges of a Makerspace

Question: What were the challenges in getting FirstBuild set up?

• Funding: it took a lot of funding to set up FirstBuild. Thanks to Kevin Nolan at the helm as the CTO, there was a big strategic initiative that helped in carving out funds to get things started.
• However, there was another challenge – Securing partnerships
  • It was important to secure a partnership with the University of Louisville—a sort of symbiotic relationship. The university was a fertile ground to establish FirstBuild’s labor pool, but at first, it felt like the partnership was not going to work.
  • The university was already on track in the sense that it had an activity center for engineers who engaged in international rocketry competitions and made technical equipment. So, the biggest challenge was being intentional about securing the partnership.

Question: FirstBuild has successfully established a new makerspace at Stamford. Are there plans to have a third maker space?

• The focus is currently on Stamford. While FirstBuild hoped to be on UConn campus, it was unable to.
• However, it has been able to establish some public-private relationships and has worked with the state government, the local government, the state colleges, and UConn to drive substantial engagement. The company hopes to have more maker labs in the future.
• Key lesson from the Stamford expansion:
  • Although FirstBuild could not establish a campus location at UConn, its situation is a prime example of what should be if a makerspace wants to drive external engagement with the community—and not just focus on college campuses.
  • The location within the community helps the public-private partners see the maker labs’ impact on the community’s economic value, skills development, and other relevant factors.

Open Innovation in Services

Question: How do you see this working for other types of innovation, maybe in the world of services?

• Crowdsourcing is applicable to services, but it may not manifest in the form of a makerspace.
• For example, we have Google’s design sprint, where it designs, prototypes, and tests ideas with customers.
• One of Watsco’s products (developed by Andre) was a B2B wholesaler for people who aren’t familiar with Watsco. And it served as a conduit for other manufacturers. None of the innovations manifested as hardware.
• Watsco consulted with experts and built clickable wireframes, then put it on iPad and assessed how people interacted with it. Was it intuitive? Did the audience follow the click path?
• In the case of people providing, say, a food service, one may notice a frequent change in the menu. In such cases, there could be two things going on:
  • They are probably offering fresh food and tailoring the menu to what’s in season.
  • The customers are the guinea pigs and they are continually experimenting.
• Starbucks once had a website called “My Starbucks Idea,” where they were sourcing food and beverage experience ideas from customers.

The Importance of Paying Customers

Question: How important are paying customers in terms of their involvement in product development? Are there ways to bring in early majority and late majority customers to provide input?

• A lot goes into content creation and marketing to ensure quality signals/feedback, with the aim being to stretch beyond and meet audiences that are not just DIYers or early adopters.
• With more fidelity, it is easier to bring in more audience.
• Marketing is structured to amplify what the company is doing while the teams continue working on the signals to determine what it costs to acquire an audience and what conversion should look like.
• Some important questions to ask in teams include: are people going to buy the product? Is the messaging right? Did I hit the price point? Why didn’t I get the desired result?
• This marketing approach could be done alongside traditional consumer insights until you get to the point where people are willing to vote on a product with their money.

Working with Startups

Question: Does FirstBuild work with startups that do their own thing?

• Although FirstBuild is focused on creating future products, it has also had conversations with founders who want to use their space to incubate ideas.
• However, FirstBuild does not allow startups to run a business at the makerspace. If a startup wants to make an alpha, the company could help it in the crowdsourcing and learning process, whether for idea generation, validation, or actual fabrication.

Relationship Between GE Appliances and FirstBuild

Question: Since FirstBuild is self-sustaining, what is the relationship with GE Appliances? What are the potential handoffs?

• At the time Andre joined GE Appliances in 2018, FirstBuild was bursting at the seams with the success of Opal. Everything was centered on D2C and Amazon—there was no small appliances division then. Engineers also handled customer relations directly.
• Developing the Small Appliances Division at GE helped smoothen things.
• There was an overlap between when Opal was a FirstBuild product and when it was a GE Profile product. With GE Appliances, the consumer feedback was a lot richer and more nuanced.
• Using the lessons learned from the Opal experience, FirstBuild took a very different approach with crowdfunding the Indoor Smoker.
  • It built traditional concepts and explored multiple designsIt adopted GE Profile’s brand language, but kept GE Profile out of the marketing to evaluate the product on its merits.
  • The point was that it means a lot more if consumers want the product, even without the GE logo on it.
• In other cases, FirstBuild often liaises with GE to salvage the learning experiences, features, or capabilities of a failed product. Or simply share innovations on products they have been working on.
• FirstBuild is currently open to working with companies that are not GE Appliances.

FirstBuild and the Indiegogo Crowdfunding Platform

Question: Is FirstBuild still using Indiegogo? It feels like a lot of big companies do one Indiegogo experiment and never figure out how to keep up with the results.

• It’s important to use crowdfunding platforms for two reasons:
  • They have better traffic
  • With the inflow of big investors on such platforms, the platforms are viable places for startups and independent inventors as there is a methodology, and they are also proven.

Open Innovation at AstraZeneca: The CoSolve Challenge

Rob Albert, Innovation Consultant at AstraZeneca, spoke on open innovation at AstraZeneca.

• AstraZeneca has had open innovation capabilities since 2012, with CoSolve or the Open Innovation Challenge being two of its primary efforts.
• Through CoSolve, AstraZeneca has been getting and working on ideas and solutions from and with experts around the globe. There are about 10,000 research scientists at AstraZeneca.
• With AstraZeneca’s approach, if an individual proposes a tangible idea, the company could either pull them in as a post-doc or an employee. Thus, seeing to it that the interactions doesn’t end at the transfer of ideas.
• CoSolve still has open challenges and has given about a million dollars in prize money for intellectual property transfers.
• The CoSolve team continues to seek and get funding to ensure that when people have innovative ideas to solve these science problems, there’s enough funding to follow them up.

Failure Points of Open Innovation Challenges

Question: What’s the failure point that companies hit where they run one or two challenges or competitions, and then it just dies?

• Input from Rob Albert: Running challenges like this embody heavy risk discussions. However, some of the things that made CoSolve from the first year were:
  • Having a good lineup of R&D leadership at the top,
  • Getting legal on board for intellectual properties and risks, and
  • Ascertaining compliance
• Input from Steve: If you get sponsorship but don’t find the problem owner and get them aboard whatever you need to implement, they will sabotage your results. So:
  • You must get the stakeholders and problem owners on board.
  • You have to understand if any of the internal folks feel threatened or left out. The philosophy is that we do not replace the innovation of the internal folks but rather try to get a better starting point for innovation and acknowledge that they still own the results that come out of it.

Who Do You Invite In?

Question: Who do you invite in, and how do you invite them to the process?

• When running the innovation process, we don’t necessarily have a local bias unless we are doing local hands-on testing.
• Generally, we take a broad approach to finding whoever we can or finding relevant conversations and inject ourselves into the mix. It could be Reddit, Instagram, or wherever.
• Some of the early people we engage are people who have developed a hack at home, we hop in and ask if they are interested in a product solution.
• We also reach out to those who don’t have the means, wherewithal, or care to make this life hack—whatever it is.

Gen AI and Open Innovation

Question: How’s FirstBuild talking about gen AI as part of the innovation process or even the engineering, commercialization, and rollout process?

• It manifests in different ways:
  • From the commercial side, we think of it in terms of messaging, scripting for videos, etc.
  • With ideation and conceptualization, consider feeding AI with data from successful processes and try to get a suitable framework. With the framework, you can isolate variables and do a lot of versioning very quickly.
  • From an engineering standpoint, consider how it could help with design or thinking about alternate solutions.
  • From a cost and product standpoint, how can you frame gen AI feeds to get good ideas to drive down innovation costs and create successful consumer products?
  • It is also a quick way to create a 20-page deck for presentations.

Question: Is there going to be a convergence of Gen AI that can propose divergent ideas, and Open Innovation where you are trying to get divergent ideas?

• Gen AI is definitely going to play a role, and we are going to see better input from the crowd, who would then be armed with these AI tools.
• However, a lot of the technological and industry knowledge is not all digital and these language models are yet to access them.
• As a result, connecting the dots between a problem and a solution is still a very human thing.
• We can think of it as Open Innovation 2.0, where there is a capability to drive human cognition with platforms and crowds where people are assembled into high-performing teams. Then, we can take on a lot more complexities with open innovation challenges.
• In conclusion,
  • There are a lot of opportunities available in digitizing information to train models we can leverage.
  • Say, when you have demographic data, how do you create a digital persona that is, in aggregate, the consumer that’s engaging with your content around a product? With the AI results in hand, what sort of content or concept do you create to engage with the consumer, knowing that you have trained the model with aggregated data?

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WebcastsOn-DemandOpen Innovation / Co-CreationcrowdfundingFirstBuildGE Appliancesopen innovation