A conversation with Taylor Dawson, founding member of FirstBuild, GE Appliances’ open innovation incubator

This is part of my series on thought leaders in the innovation space. Check out the other articles here.

Taylor Dawson started his career as a design engineer at Lexmark and GE. Six months into his first job, he was tasked with designing a new toner cartridge for a Lexmark consumer printer. Throughout numerous experiences designing products for consumers, Taylor began to see a pattern in how product decisions were made. “We have industrial designers who work on projects and think from the consumer standpoint, but if there is ever a skirmish between engineers and industrial designers, in my experience, the industrial designers almost always lose. And they’re only involved at the very first stages of conceptualization.”

Taylor Dawson, founding member of FirstBuild, GE Appliances’

Taylor observed that being involved throughout the product lifecycle gave engineers more say in the development of the user experience. “Engineers are touching the first prototypes, running tests and labs, and they’re actually making key decisions that are critical to the user experience with absolutely no understanding of who the customer really is or what their daily use of the product looks like.”

Taylor saw a need to shift how product decisions were being made and he wanted to be a catalyst for that change. “I always wanted to get into a place where I would be able to actually impact how products were developed. Because quite often the first thing that you design, especially in a big company, ends up having an outsized impact on the end product. So we’re delving a lot into design thinking and how we avoid biasing the final solution.”

Challenging the norms of product design eventually led Taylor to become a founding member of FirstBuild, GE Appliance’s open innovation incubator. He shared with me his thoughts on why frameworks don’t suit innovation and how optimization and innovation are uncovered through entirely different processes.

GE’s FirstBuild
GE’s FirstBuild

Frameworks are too reductive for innovation

In Taylor’s view, innovation is supposed to be messy. “For some reason, everyone, especially people from a business school mentality or a big corporation mentality, likes to think that there is a neat clean process that you follow that is going to lead you to success.” He sees innovation as more akin to the chaos of life. “I think the reality is that the world is so much messier than that. It’s egotistical to think that you can reduce real life to a set of steps that, if followed, will result in ultimate success. If you try and do that you’ll find that you just continuously hit up against contradictions, and there’s no one simple process to follow.” Instead, Taylor believes in creating an environment of exploration where value can be discovered in the unexpected.

“It’s egotistical to think that you can reduce real life to a set of steps that, if followed, will result in ultimate success.”

Rather than distilling innovation into a process that anyone can do, it’s important to find people with the right mindset and initiative. “In the innovation space you’re trying to start something new, so you can’t reduce it to a series of steps. You need to be willing to learn and do new things that might be very uncomfortable. When we’ve hired people for the business side, I’ve tried to find people who have enough initiative to where, if we’re working on something new, they will just figure out what the next step is as opposed to being told what to do.”

“It’s more about the people than it is about the process.”

Taylor with the FirstBuild team in 2015.
Taylor with the FirstBuild team in 2015.

When making hiring decisions, Taylor puts less emphasis on degrees or experience that perfectly conforms to the job at hand. He finds a willingness to dive in to be a critical skill when it comes to innovation.“It’s not so important to have the right degree, to have the right set of experiences. It’s more important to have the right mindset and to have the willingness to go and do stuff that is uncomfortable or may seem like it might be beneath your station. When we’ve hired people, we really tried to find people who have the courage and the lack of ego required in order to get things done in that way. It’s more about the people than it is about the process.”

Hiring for innovation

Having a solid approach to hiring is important to the foundation of any innovation program. When possible, Taylor recommends working with a potential candidate as a contractor for a short period of time before hiring. “We make a practice of having an active talent pool of students that we’re circling through. You can find someone who works well with your team with the skill that you need. We’ve been able to have people that we knew well, or that we had worked with for six months or so, that we could bring on the team after we knew what they were capable of doing, that they had the right chemistry, and the right capabilities.”

Woman looking at map

When time is a concern or you’re trying to scale up quickly, look for people with a history of dealing in uncertainty and examples of a willingness to just figure things out. “I was hiring for a role that is very hard to find a cookie cutter solution for because we didn’t even know what the job was going to be. And two months after this person started, we knew that it was probably going to change a lot. So the person that we selected for it wasn’t selected because of their degree or because of their previous experience. They were selected because we knew that they had the initiative to go and figure out the next step. They were just that kind of person, and we’d seen them do it in a previous job.”

The rules for optimization do not apply

When approaching innovation, Taylor believes it’s important to recognize that the rules for optimization and the rules for innovation are entirely different. He shared one of his favorite observations which comes from Kevin Kelly’s 1997 article “New Rules for the New Economy”:

“Wealth in this new regime flows directly from innovation, not optimization; that is, wealth is not gained by perfecting the known, but by imperfectly seizing the unknown.” — Kevin Kelly

“The reason I like this so much is that it cuts directly against the approach taken to innovation by large companies. You can wrap a process around optimization to achieve predictable yields in performance improvement. You won’t be able to wrap a process around innovation. You actually have to let go of the process and become comfortable with uncertainty.”

While optimization can be useful for a business, it ultimately leads to diminishing returns because processes can only be optimized so much. “For businesses that are currently existing, a 10% growth rate would be an awesome growth rate. They can create a predictable amount of extra value just by optimizing the things that they do well. The gain that you’re going to get through that is going to diminish over time until the point where you reach optimal performance.”

“You actually have to let go of the process and become comfortable with uncertainty.”

Companies that want to dramatically grow their top line have to abandon the processes they use to find optimization because they don’t work for disruptive innovation. “At GE Appliances, they apply the NPI (New Product Introductions) process to a new innovative product. It turns out that it fails dramatically for a lot of reasons. One of the biggest reasons is because they look at that as a massive launch and think about how they’re going to invest in it the way that they would invest in one of their major platforms. The projects end up very costly and time-consuming. And they don’t really learn anything about it until the very end.”

As an alternative, Taylor suggests re-tooling your playbook and operating like a startup in order to start getting feedback from paying customers as early as possible. “We’ve styled our playbook along the lines of building a startup. We start small, we’re very open, and we talk to customers very, very early on and all the way through the process. We focus on getting an early version of a product into the hands of real paying customers.”

Taylor likens the process of innovation to panning for gold. It’s a long-term, continuous process in which you find a shiny gold nugget every once in a while. “We like to think that the rules of optimization have their place. Probably 99% of the people in a major corporation are going to use those same rules, the ones they’re comfortable with, to continue the trajectory of the existing company and keep squeezing value out of the existing business model. And then 1% of the people in your company who can be comfortable with uncertainty, who are interested in learning new things and finding new value are going to spend their time panning for gold, looking for the hidden gems that could become the thing that replaces the existing company.”

When it comes to building and funding teams, Taylor finds that a long-term pursuit like innovation benefits greatly from shorter-term goals and investment timeframes. One of his recent ventures involved a team of eight people who, for a time, were struggling with a product that wasn’t bringing in revenue. “Fortunately after about six to eight months of beating our heads against the wall and not being very successful, we found a product that we could offer, that can lead us to being cashflow positive in the coming quarter. But before then, it’s like staring down the barrel of a shotgun.”

Ideas start here

Taking away some difficult lessons from that experience, Taylor sees value in building smaller teams with short-term milestones. “The best practice I’ve heard is to fund three to four people full time for three months. Don’t expect they’re going to start something. Expect that their job is discovery. Give them three months to discover if they think there’s something there. If they’ve proved to you that there’s credibly something there, give them three more months to get their first customer. And if they can get their first customer, keep them going. If not, let them move on to the next thing or rotate back into their regular job.”

Innovation Accounting

In order to discern progress in short timeframes, Taylor has adopted Eric Ries’ Innovation Accounting approach to measurement. “The basic idea is that you are looking for lead measures of success that are tied directly to future financial performance. Once you understand which critical attributes yield success, you establish a disciplined rhythm of hypothesizing, testing, and evaluating against a previous benchmark.” The results of the first iteration should then drive subsequent iterations. Taylor doesn’t view this approach as revolutionary per se but does point out that applying learnings to future work in a rigorous way is often a rare practice.

On a recent marketing project, Taylor describes shortening experiments and sprint timeframes to collect more data points. “We launch the sprint on Tuesday morning, running it on Tuesday and Wednesday, and then look at the data on Thursday. By Friday morning we’ve launched another sprint and we start the process again on Monday. We do that for six weeks in a row, so we have about 12 data points. And we’re able to see exactly what’s happened every single time we did it.”

The key to identifying the right metrics is having an idea of what the solution looks like. “For the project, we’re working on now it’s pretty simple, but for the project, we were working on when we first started six or twelve months ago we had no idea. We understood that there was a need in the marketplace, but we didn’t know what the solution looked like. And when you don’t know what the solution looks like yet, you don’t really know how to measure your effectiveness at that solution. That’s a really frustrating problem and it’s a problem that almost all startups go through.”

When structuring innovation programs, Taylor has found that it’s important to acknowledge reality, consider the right team allocation, and ensure your data is truly validated. “Any innovation program that you’re running, if you’re really good, you’re gonna probably have 20% of the things you work on actually get to the next step. Almost everything falls flat.” With this reality in mind, he suggests holding off on adding more people to the team until there’s traction. “It’s rare to find something that performs better than what you’re currently doing. So in that world, you have to make sure that you’re not putting too many resources behind any one thing before you’ve got some traction.”

In order to validate that an idea has traction, get a commitment from actual customers. The three ways customers can show you they’re getting value involve time, money, and social currency. “Time means they’re willing to spend some time talking about it. Social currency means they’re willing to tell their friends about it. Whenever we call something validated, we’re making sure that a customer has actually shown that they value the product. The best form of value that they can give back is, of course, money.”

Make your employees heroes

Once the team is in place and experiments are running, Taylor believes a leader’s role is empowering and mentoring the team and then getting out of their way. “It’s actually based on this idea in a book by Donald Miller called Building a StoryBrand. He says that the hero’s journey can be applied to your company’s brand. You want to turn the customer who buys your product into the hero, and you’re the guide who takes them through the end of their journey and solves their problem.

The Journey Is On

Taylor has adapted this concept, replacing the role of the customer with the role of employee. “I think this should apply to the way you think as a manager or boss. You should see yourself as a guide who turns your employees into heroes. If you can put your employees in a position where they can go through a journey that changes them, that actually fundamentally helps them get over a challenge or fear, jump over a hurdle that they’ve always seen in front of them, they will be loyal and hardworking. It will be an enriching experience for them, and they’ll perform for you. That’s the experience that I had with my former boss. And it’s the type of experience that I try and create for the people that I work with now.”

As customer feedback starts coming in, Taylor encourages teams to value data and devalue opinions. “Create a structure and a culture that allows for rapid and low-cost evaluation of new ideas. This can be very uncomfortable as people in the corporate environment are used to conforming to the opinions of leadership, and leaders are used to expressing their opinions.”

During his time launching products for GE Appliances, Taylor found that one of the damaging parts of the process was the requirement to run the idea all the way up to the top. “If there’s a person who is perceived as the smart guy or gal in the room who says ‘that’s a stupid idea,’ the thing gets shot down. What does and doesn’t get launched is subject to the whims of the people who are considered to be the smartest people in the room.”

Opal nugget ice maker
Opal nugget ice maker

As proof that hierarchy does not determine one’s ability to predict success, Taylor recalls an experiment. The product was an ice maker with a $500 MSRP that would be crowdfunded for a price of $400 — still four times the cost of a typical ice maker. Guesses were collected on how much the crowdfunding campaign would receive from people all over the company. The answers ranged from $300,000 to $3 million. By the end of the campaign, the funding totaled at $3 million.

“The only way of knowing what product is going to hit is getting it into the market and letting the markets tell you.”

“The person who guessed $3 million was the custodian and the person who guessed $300,000 was the CTO. There was a perfectly indirect correlation between your salary and your ability to guess the market for a product. And it validated exactly what we were trying to do. Because we were trying to prove that people aren’t very good at guessing. No matter how well educated you are, no matter how much experience you have, people aren’t very good at guessing what product is going to hit. The only way of knowing what product is going to hit is getting it into the market and letting the markets tell you.”

A lesson on fear and perception

One of the biggest lessons Taylor has learned in his career is that fear and perception can limit one’s potential. He attributes this lesson to an early experience at FirstBuild. As an engineer who mostly interacted with other engineers, Taylor was eager to get out into the world and talk to people. When the opportunity arose to talk to an online publication he jumped at the chance.

“I spoke to them and I didn’t tell them anything confidential, but the story came out the next day and my boss called me up.” He later learned that GE has a policy that any conversations with the media about GE business had to be pre-approved. In response the head of communications sent out a company-wide email to ensure everyone was aware of the media policy. Taylor initially found this experience to be incredibly embarrassing as those he worked with knew that he was the reason for the email.

Looking back, Taylor sees the experience as one of the best things that happened to him. “It gave me this perspective on what is important and what is unimportant, what the worst case scenario looks like. And it turns out that the only thing that made that a worst case scenario for me was my perception of the event, not the actual outcome of the event. Most people continue to be constrained by things and make decisions based on the fears that they have about what’s going to happen. I’ve been able to, over time, become much more independent from the fears of what’s going to happen by running through the very quick exercise of what’s the worst thing that’s going to happen here? If the worst thing that happens is people might perceive me differently, that’s probably not a really big deal.”

Innovation in the cornhusker state

When I asked Taylor who he thought was getting innovation right, his response came from a place many people wouldn’t consider a hotbed for innovation: Lincoln, Nebraska. He applauds the work of NelNet and their internal incubator as a program worthy of attention.

“They let their employees come up with a pitch and if it sounds like a good idea they’ll give them a very short leash to run on. So, it’s this three-month long discovery exercise. They are not expected to have dollars by the end of it, but they are expected to come back and have learned something significant that proves their hypothesis that there’s really a market. It’s not costly, but it’s really hard for companies to get right because management has a tendency to want to get heavily involved and call the shots.”

Tide Spin

Taylor also appreciates P&G’s efforts on launching Tide Spin, an on-demand laundry service. A P&G brand manager, David VanHimbergen, initially pitched the idea to his VP. David asked for six months and two or three people to launch an on-demand laundry service branded with the Tide name. “And I think that within three months they got the business up and running. They rented a warehouse, and within two years they had a comparable company. They recently acquired a local laundry service and they’ve actually doubled or tripled their market with that acquisition.”

Getting comfortable with uncertainty and realizing the importance of people over processes are two ways Taylor believes companies can set themselves up for finding success in unexpected places. Relying on rigorous data collection and application, even teams with limited resources can turn uncertainty into valuable learning opportunities that inform product decisions so they’re more closely aligned with consumer needs.

If you want to read my other articles about innovation experts and practitioners, please check them all out here.