02/20/2013 01:17 pm ET Updated Apr 22, 2013

How Large Companies Can Innovate

In this blog, I am going to show you how one GE exec (at GE HealthCare Hungary) figured out how to instill a sense of creative freedom among the employees that led to a real burst in innovation.

Dr. Lajos Reich was an Executive Participant in a recent Singularity University session. When he told me his story of spurring innovation at his division at GE Healthcare Hungary, I literally booked an interview with him the next morning at 6 a.m. so that I could capture his story for my book "BOLD" and for this blog. I thought his story was THAT important for you to hear.

Lajos Reich is currently GE Healthcare's Chief Technology Officer in Hungary. On his way to this position, he worked at chief technologies at a small Connecticut firm specializing in lighting, then onto GE facilities in Cleveland, Ohio, Bangalore, India and, ultimately, Budapest.

"I learned a lot," he says. "First of all, the difference between leading a small company versus a large company. In a large corporation it's hard to be nimble, because people are so hard-pressed to do their work, and they're often kept isolated in their own departments or on their own projects, without interacting."

"When I returned to Hungary to take the CTO position, my goal was to foster greater teamwork -- literally to institute a complete cultural transformation."

Since his arrival in 2008, Lajos has not only increased the number of employees at that GE division by 50 percent, he has also dropped the company's attrition rate from 15 percent to 2 percent. Better than that, under his leadership, GE Healthcare is now responsible for generating 20 patents per year, which is more than any other company in the country. So how did he do that?

"Innovation is a modality," he says. "Before, my teams were separate. A big part of the change was to move them closer so they could learn from each other. "Here are the two principal things that I did," he says:
  1. "First, I started to host a technology symposium every year for all the engineers where they could hear across the divisional lines what they were all up to. Before, since teams did not work together very often, there was a tendency to reinvent the wheel." At last year's symposium 200 engineers gave 54 presentations. "This knowledge-sharing opportunity was so popular that I started a monthly technical seminar series, where people present their work to other GE engineers in a deeper context."
  2. "Second, I was actually inspired by your X PRIZE, and I wanted to create a competition to foster creativity. I was also inspired Google's 20 percent time, where they give each employee 20 percent of their time to innovate, no strings attached. So I ended up doing a combination of both in a very risky fashion," he says.
"I decided to create a competition for best innovation, with the prize being a 64G iPad (which, in fact, equaled around one month extra net salary for an average engineer). Rather than offering 20 percent more time, I offered people an entire week to do with as they wished. They could go to the beach, or shopping or even stay at home -- or they could work on an invitation and enter the competition. It was totally up to them.

"Engineers always complain that they do not have time to innovate. That there's too much documentation. They tell me that 80 percent of their time is spent on documenting rather than creating. So in this one-week competition I said: 'No documentation; just focus on creating and innovating. Do whatever you want. If you want to use your time to develop a prototype, great.' I gave them access to every resource and didn't disturb them with any last-minute meetings. They were totally free."

Lajos had conducted this experiment in innovation without letting his supervisors know and, should it have been a failure, he could easily have been sacked, he says. But the results were staggering.

The upshot: No one took any time off to go shopping or to the beach. The engineers formed 13 groups and came up with 13 different prototypes. Lajos created a one-day symposium to present the ideas. The management team selected the top three for awards, and six of the 13 have led to patents, with one or two of those products actually likely to become a marketable product for the company.

Many companies would not take the risk of giving engineers a whole week to innovate, Lajos says, "but a concentrated time does make a difference. They are not taken out from the flow of the idea, they can fully concentrate on it."

In my next blog I'm going to explore Lajos' steps for unleashing creativity.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.