Open Innovation in action

GE’s R&D centre in Munich, Global Research – Europe, is a European hub for Open Innovation, one of four Global Research centres run by the giant multi-industry corporation. In the first of a two-part mini series, the head of the centre, Carlos Härtel, describes the philosophy that drives its research to Science|Business’s Peter Wrobel.

Carlos Härtel, head of GE’s Global Research – Europe.

Where does GE expect to see its innovation originating – do you think it’s mainly going to come from your own labs or is it going to come increasingly from elsewhere, such as start-ups, or SMEs, or universities? Are you looking inside or outside?

Probably the answer is it’s a bit of both, I guess. Although the majority of the critical innovations  – if I define innovation as what’s in between an invention and a product – that element of the technology story is pretty dominated by in-house development, and that is a tradition of the company.

Where do the ideas come from? I would say we are very open to ideas from basically everywhere, from small companies, from universities, from our competitors, in many cases from customers who may not say, “Look, I have an issue here, please go and check that out”, but who say, “Look, I have an issue here, are you aware of it, and I think the solution to that is urgently needed not only by us but also by the whole industry.”

That initiates a thought process and a methodological approach to say, for example: What ways do we know from other disciplines, or different industries, that we can actually use at this point? So the synergy idea of, maybe, I’ve done something in healthcare around IP systems that inspection technologies may now be able to actually leverage for their own products. That’s something we try to do, this brokering, as much as we can, in house.

But the idea generation process is completely open. When it comes to translating that into a functioning prototype or showing feasibility of a concept we very much rely on our in-house resources.

I understand that you are open to ideas from all sources. But are you actively encouraging new ideas from all sources? For example, you held a Global European Technology Forum last year, in December. Are you looking to develop new alliances with research institutes, for example?

I wouldn’t say new alliances. All in all, maybe my tenure with the company isn’t long enough to really tell the difference between the present and the past.

Traditionally, probably, companies like ours have been more reluctant to work together in a strategic fashion with outside partners. But right now, quite honestly, [working with outside partners] is quite common. When we came [to Martinsried] it was of course a decision to have a strategic alliance, at least with this one university that we share the campus with, but also to broaden that and [interact] with other companies, large research institutes, government labs across Europe. This is pretty much part of the agenda that we had, our mission if you will. I would say that from the time that I got to know the company [such alliances] have always played a role.

Look at the continuum between here’s the application and a specific application knowledge needed, and there is a fundamental unknown of some scientific mechanism – a relationship between two quantities that you have to control to actually have a process working. If it’s far down to the left where the understanding is lacking and the fundamental mechanisms need to be clarified, I think we have always worked with institutions like government labs or universities for that joint research.

Are you going to repeat the Technology Forum this year?

We may. I’m not quite sure – it’s not yet planned. We may not do it in the same format. We have meetings of different kind and the Technology Forum was one of the things we did.

We also had events where we invited customer groups for what we term “Session T”, which means Session Technology, where we sit together with the customer, the customer’s challenges and our potential solutions, and try to open up and engage in a dialogue.

We also have meetings, of course, where we invite people from universities or researchers and listen to peers. They may have the exact same format or have the same name, but we are continuously engaged in this activity.

But [the Technology Forum] is probably not going to be a fixed format that we will follow from then on every year like a brand or so. We’re going to change the format, maybe from year to year.

Could you explain a little more about Session T?

T for Technology. It’s a pretty effective process, in my view. It started out as internal session between the research people and the commercial people – the people that understand the market and customers better – so that the research guys would understand what the commercial boundary conditions are.

However, it has evolved into something that is a dialogue between technology (or research, or engineering, depending on who you talk to) from inside the company, and from outside, the company’s customers, who would be buying, or testing, or evaluating our products.

A typical example would be our oil and gas industry, where we had a full week [with] a different large different player in the industry every day. We would present our road map, we would tell them what we think the challenges are, what solutions are available and what we work on. And they tell us a) how they find what we have in mind and b) what they would like us to do – because maybe they have something else that is bothering [them] a lot more than we think and we aren’t actually addressing.

So that’s dialogue about building a future jointly – that is something we do in a Session T with customers, and it’s a very effective process. We could also say it’s a “voice of the customer” session, but that sounds too much like someone doing market research by asking the consumer, “Do you like the taste of the soap?” It’s not exactly like that: it’s among experts who look at the same issue, or technology, or product, from two different angles and try to come to terms with what exactly the challenges are going forward.

In terms of your own research, are you still managing to do any?

No, unfortunately not. [I say] “unfortunately” with a smile. In a position like this you cannot afford to be completely out of research, but I don’t do any measurements myself, I don’t run any simulation programs. What you have to maintain is a close link to the projects ongoing, at least with the central, key projects, because people will bounce ideas [off you]. [They will] come into your office and ask, “Hey, listen. You have some experience in research as well. What do you think? Is that the right approach? Does that sound like a smart idea, or do you have any other suggestions?”

So you need to stay in touch with those projects, but I would neither initiate a new project directly myself, nor would I be engaged in the direct execution of the project. There’s lot more on the strategic level, when it comes to reviewing and assessing progress, or basically  brainstorming with people on what a good approach might be, or a worthwhile project to do.

At the same time, I am also trying to be the Minister of Foreign Affairs here, if you will, in our organisation. When it comes to partnerships, the details have to be sorted out on a local level, but the initial steps to a partnership and the main strategic direction in many cases needs to be set by people at a strategic level.

I do that, talk to deans and the CEOs of companies, and try to find ways we can actually generate win-win situations through some collaboration. And that means I have to be familiar enough with the content and the scope of the work we are doing here – otherwise I would probably misguide everybody. It means I have to be knowledgeable about what’s going on, and I have to have an opinion on that, too.

Do you have a long-range, strategic view about where GE Research will be five, ten years’ time? Or do you call that long-range?

It’s pretty long-range. Any extrapolation I would dare to make needs to be based on where the company is going as a whole. I see the company as a whole going somewhat away from the end consumer market. You see that now with appliances: we are going away from businesses that have reached a certain maturity in technology development. They are getting more commoditised, where a company like ours probably is no longer the ideal player in this field.

We go into areas where high technology is critical, where performance is critical, more into the investment goods sector. So infrastructure is something that we strongly build up. Healthcare would also fall into the same category.

So where technology is the differentiator and the portfolio we bring is unique, and also the opportunities we have to cross-fertilise between the different industries that we are in, where this is really key to being competitive and getting an edge over the competition – that’s where we are moving.

What does that mean for us? I think you will see strengthening in research of all the key disciplines that will be critical for areas in energy; in exploration and exploitation of oil and gas; in areas around healthcare; certainly everything around aviation, the aeroplane as a whole system, where we are in a sense serving a lot of the needs of customers when it comes to power on board, from thrust generation in engines, to the final distribution systems of electricity on board in different grids. Those are the kind of areas which we will be strengthening.

We may get out of some of the areas that are absolutely critical, say, for the materials business that we have been in for so long. If you have polymer chemists, for example, who used to be a very large population of the company, those people may move into other areas, and we may actually recruit more people in other fields when it comes to materials today, like composite materials, manufacturing of composites, ceramic materials, superalloys, high-temperature materials. Everything that’s relevant for leading-edge turbine technology, for example.

That will be the scope. The way we are organised [is] for me almost the more interesting question, because right now … we have a system that is very much organised around the optimum efficiency of a relatively centralised system. Most of our researchers are today located in the US, at headquarters, which is in upstate NY.

The three global sites [Munich, Bangalore, Shanghai] have a much smaller headcount [but] unique access to their markets and have line of sight to their customers, particularly in the Asian region, which are maybe today mid-size, but may become huge customers going forward.

The question is what is the right form of organisation in a research organisation within a large conglomerate like GE. I think you will see more of a focus on local collaboration, on local partnership, and maybe less of a centralised structure – more like a network than a hub-and-spoke system.

The company is going so strongly abroad – we already have 50 per cent of our revenue coming from international countries [outside the US]. Right now our company is about half-and-half inside and outside the US. That is true in terms of revenues, and as a rule of thumb also true in terms of headcount. You may see that the company five to ten years down the road only be 30 per cent in the US and 70 per cent abroad. The international portion is more important, and in the international portion there will be many opportunities for innovation and partnerships and also research collaborations with customers and institutions.

That gets harder and harder, in my view, to organise through a centralised system that has basically the strategic planning and setting of goals and objectives at one site, and hopefully you roll out the strategy globally.

I think you will have more focus, more emphasis on a decentralised model where the local site – be it us in Europe, or Shanghai in China, or Bangalore in India – has a bigger responsibility for making sure we get the maximum out of the local presence. So ideas flowing out of that market, customers being strong in those markets, being potential research partners of ours in those markets, they will probably see more of a direct link with the local R&D research sites than they have today.

Which is not meant to say that people always need to talk to the US to make progress: we have many local partners here in Germany where we basically do all the dealings at an operational level. But certainly it’s still true that – simply given the sheer size – we need to rely quite a bit on the existing resources at other sites to execute our programmes at full scope. I cannot have all the different disciplines in-house that I need; I need to reach out to my global peers. They will help me with their resources in the project where I don’t have the disciplines myself. But we still have in a sense kind of a centralised organisation where strategy is set at once place and it’s just being rolled out globally at the different sites.

So you work quite a bit with Bangalore and Shanghai?

We work with all sites. Very much with the US, also now more and more with Bangalore and depending on discipline also with Shanghai. It is not the case that everyone works with someone in Shanghai, because not all the disciplines in Munich are also in Shanghai. For example, composites is a  really a close collaboration between Munich and upstate New York, where the headquarters is. In some other areas – if you look at, for example, combustion engines, where we have a rail business, which is building diesel engines, there is a very close collaboration with India, where there is a centre of excellence from the rail business, a technology team from rail which is very large. So you would have a link there with India, which is very strong – and some US elements as well. But [where the link is stronger] always depends on the specific technology you’re looking at.

The series ends next week with a look at specific research projects that GE is undertaking at the centre, based at the Technical University of Munich’s Garching campus, and how it works with the university and other academic centres in Europe.