Lean Startup for MBA's, a GE Case Study.

When GE starts adopting Lean Startup methods, business schools should take note.

Speaking at the MBA Directors Forum in Melbourne this week on behalf of AGSM , I was asked to share my views on how business schools need to innovate to design the MBA of the future.

The value of MBA programs has been under immense criticism since the Global Financial Crisis, with headlines such as: “MBAs: Public Enemy No. 1?” , “Are Business Schools to Blame?” and my personal favourite “Academies of the apocalypse” . Vivek Wadhwa shared these observations in the Wall Street Journal : “I have seen a growing mismatch between the skills that business schools teach and what fast-paced startups require". Whilst I agree with his views, I think that this mismatch also extends to the new skills required by large corporates, not just startups.

A key theme of my presentation to the representatives from over 40 business schools was the need to embed Lean Startup and other innovation and entrepreneurial practices into MBA program curriculum. I used the case study of GE, which has long been held up by business schools as the pinnacle of strategic management, operational excellence and leadership development practices.

The biggest implementation of Lean Startup in the world

In recent years GE has worked with Eric Reis, Author of The Lean Startup, to design their FastWorks program. In 2014 the Harvard Business Review published an article titled “How GE Applies Lean Startup Practices” describing FastWorks being applied to the GE Appliance business, which was also the topic of a panel discussion at the Lean Startup Conference in 2013 .

Through FastWorks, executives at GE are now trained to take risks, learn constantly and ask questions says Viv Goldstein, GE's Global Director of Innovation Acceleration. The executive commitment is also evident in Jeff Immelt's CEO Letter in GE’s 2014 annual report :

“We have put everything on the clock, launching a process called “FastWorks,” based on the entrepreneurial spirit of Silicon Valley. We are already seeing shorter product cycles, quicker IT implementation, and faster customer response than any of our competitors. There are hundreds of FastWorks projects underway. For example, FastWorks is accelerating GE’s development of solid oxide fuel cells, cutting our launch cycle by years."

I recently had the opportunity to coach future leaders at GE's state of the art Global Software Centre of Excellence in San Ramon, California . Through this experience, I can say that I am truly impressed with the level of commitment and leadership that GE has demonstrated in adopting Lean Startup practices to continue to transform the way that they do business.

Business schools should take note of the growing Lean Startup movement, and particularly on its adoption in the corporate world.

GE, as well as other innovative companies including CapitalOne, Intuit, Google and Qualcomm, have proven that Lean Startup principles are applicable to even the largest organisations. This is driving demand from MBA applicants to study Lean Startup as reported by Poets & Quants in “Lean Startup Revolution Sweeps Through Business Schools” . Author of The Startup Owners Manual, Steve Blank, seems to agree, having incorporated his Lean Launchpad course into the UC Berkeley's MBA program. Referring to GE's adoption of Lean Startup, Blank said “GE’s going to be the model for other industries” .

When asked “Why should business schools embed Lean Startup methods in MBA programs?”, Lean Startup thought leader and Co-Founder of Moves the Needle Moves the Needle , Brant Cooper, says:

“Because current programs are based on an organisational structure designed in the Industrial Age. Economic transformation requires organisational transformation. Most MBA programs continue to teach the old way."

And that 'old way' of doing things is exactly why Silicon Valley luminaries including Elon Musk, Peter Thiel and Paul Graham have spoken out against hiring MBA's in tech startups. In fact, venture capitalist Marc Andreessen likens MBA graduates' migration to Silicon Valley as a signal that a tech bubble may be forming .

The GE FastWorks case study highlights the fact that Lean Startup methods are becoming an integral part of the 'new' corporate executive toolkit. Teaching Lean Startup methods in MBA programs will equip the next generation of business leaders to effectively lead growth, innovation and strategy within their organisations.