The ecomagination Challenge: Open innovation, real business

December 9th, 2010 by Caroline Scheinfeld View Comments

Ideas, Innovation, Entrepreneurs, GE and Venture Capitalists = the potential for a greener tomorrow.

At the ecomagination Challenge conference, two panels discussed the benefits of crowdsourcing. Through capital and proper advising, companies can generate great products, which not only benefit the environment but also produce a profit. Jeffrey Immelt, Chairman & CEO of General Electric, defined ecomagination Challenge and its progress.

The Challenge consists of a platform where businesses, entrepreneurs, students and innovators can propose ideas about how to “build the next-generation power grid,” and have the chance to get funded. This experimental Challenge costs a whopping $200 million–100 million of which was funded by GE; the other 100 million by four venture capitalists. GE used this Challenge to learn about innovations with the potential to reduce energy usage, greenhouse emissions, carbon emissions but also to produce a profit.

With the $200 million investment, GE is using the power of the Internet to seek ideas from people on a global scale. GE has made 12 major investments, five grants and a University Challenge. The 12 investments are worth $55 million and consist of five in the energy grid arena, five on the energy-efficient side, one investment in solar energy powered air-conditioners and one with common wealth and Columbia University to research electric vehicles. GE also will be giving out three early innovation grants to very early stage ideas. Partnerships with universities will help promote material science technology.

The first panel focused on the incredible speed and audacity that characterize GE and helped the company process 4,000 ideas and choose five in a relatively short timeframe. While GE has been known to be one power, which engages in a great initiative, this Challenge illustrates openness to bringing outside ideas to the table. On a macro level, a challenge of this magnitude takes a large amount of people coming together to bring the most efficient technology forward.

Immelt said that people outside the GE community are capable of things he cannot achieve, but what the GE community does have is a team of 45,000 salespeople and 45,000 engineers. With thousands of talented GE employees, Immelt can “drive innovation [at a] scale” others probably could never accomplish. With partnerships between GE, small businesses and individual entrepreneurs, a tremendous amount of innovation and production can be accomplished. Innovations produced by smaller companies have a greater chance at success and adoption when backed by large corporation like GE.

CEO of Joulex, Thomas Noonan, said while capital is necessary, it is not sufficient in building innovation, a comment also mentioned by venture capitalists. Noonan applauded GE for merging great ideas with their big commitment. Currently, companies in capital markets face extreme challenges, which can be overcome with the help of large corporations like GE. Now, more then ever, corporations must step up to invest because others are apprehensive due to the instability of the economy and the previous recession. General partner at RockPort Capital, Chuck McDermott, said corporations must assume certain roles due to the difficulties in raising money. He also mentioned how people are apprehensive to invest without credibility.

This conference illustrated the power of what a large company can do by financing innovations by smaller businesses or individuals. The panels portrayed a new generation of companies, which consist of enabling, innovating and positively affecting society. We are moving from a consumption-based society to a collaborative one, as Rachel Botsman pointed out in her “Collaborative Consumption.”

I have high hopes for a 180 degree turn in this world and people thinking about the environment and preparing for future generations. Hopefully, our society will no longer be characterized by instant gratification and over consumption, as it was during the 20th century.

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About Jay Levy

Jay Levy

Jay Levy is a co-founder and principal of Zelkova Ventures. Jay focuses most of his time in working with the current portfolio company and looking at new investments in the software-as-a-service, internet media and green tech space. More »

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