Last year, the aviation engineers at General Electric found themselves with a jet engine bracket problem. At 4.48 pounds each, the brackets, little pieces of metal that support engine components, were weighing the plane down. Now, in the grand scheme of airplanes, a five-pound bracket seems pretty harmless, but it was a problem nonetheless, and one GE thought was solvable. “We thought, wouldn’t it be great if you could figure out way to make the bracket lighter?” recalls Steve Liguori, GE's Executive Director of Global Innovation & New Models.

Traditionally, the only way to make a bracket strong enough to support a jet engine (which by the way, can weigh around 13,000 pounds) was to pour titanium alloy into a mold. This results in a strong, stiff object, but it was far from optimized. GE figured if it could find a way to reduce the weight of each bracket, they could significantly scale down the heft of an engine, resulting in millions of dollars' worth of fuel savings each year.

GE knew the part needed to be 3-D printed. Problem was, the engineers didn’t have the time or, frankly, the know-how to significantly reduce the weight using advanced manufacturing. “Our engineering knew this problem was there, but based on our focus and priorities we were never able to really get around to it,” Liguori explains. “So we asked them, what are some problems you know we’ve been needing to solve but just haven’t been able to get to?”

>"‘Where did you find this kid, and how much aviation experience does he have?’ Zero.”

GE turned to GrabCAD, an online community of more than a million engineers and designers, and presented a challenge: Whoever could redesign a bracket that reduced the most weight while still supporting the engine would win $7,000. More than 1,000 entries came in, with the winning design by M Arie Kurniawan a young Indonesian engineer who reduced the weight by a whopping 84 percent, to .72 pounds.

“I’ll never forget the day we presented this to Jeff Immelt [GE’s chairman and CEO],” Liguori says. “He was like, ‘Where did you find this kid, and how much aviation experience does he have?’ And you know the answer to that question? Zero.”

It was a triumph of crowdsourcing—for a nominal price, GE used the knowledge of someone they would have never otherwise met to innovate its way out a design problem. It was also a proof of concept for the engineering behemoth's new innovation strategy. Under Immelt, GE has invested a sizable chunk of its annual $6 billion R&D funds into taking advantage of a simple, internet-enabled truth: Now, more than ever, it’s possible to connect with people around the world, so why not take advantage of that to solve some engineering problems?

Accessing the Global Brain

By tapping into the bright minds outside its walls, the company believes it can improve the innovation that goes on inside them. “You pretty quickly start to understand, you can’t do it all,” says Beth Comstock, GE’s senior vice president and CMO, who is heading up the company’s open innovation push. And it does make sense.

Today, you don’t need every expert in-house, nor is it always smart to hire a sole contractor. Rather, it's totally possible, and often more efficient, to crowdsource for that knowledge. Liguori puts it this way: “For all of the smart engineers at GE, we sure don’t have a lock on all of the smart engineers in the world.”

GE's CMO, Beth Comstock. Image: GE GE's CMO, Beth Comstock

Comstock believes that by marrying the insight of people outside your company with the smart people inside it, you’ll get to a solution faster than you otherwise would have. And crowdsourcing, she says, is particularly effective way to push people to develop smart new ideas.

The company’s partnership with Quirky, a NYC startup that crowdsources for designs and manufactures the favorites, is one example. The partnership just produced a smart air conditioner, and part of the deal was that GE would open up its trove of patents so would-be inventors could make use of them.

The company is also tapping into Kaggle, a community of data scientists, for its Flight Quest challenge. They're asking scientists to come up with algorithms to optimize flight paths and reduce delays, and the winner of that challenge will get $50,000. This of course, brings up questions like: Who should get credit? And how much should contributors actually be paid if GE stands to make serious profits off of these ideas? After all, $7,000 for that lighter bracket seems like a pittance compared to its economic impact, or even what GE would have paid a high-caliber engineer to solve the problem.

GE is the clear winner in these deals, but Liguori points out the rules and compensation for each challenge are clearly stated, so it’s not a surprise to anyone who enteres. It’s also true that once the idea leaves the winner’s hands, GE is responsible for funding the development and manufacturing of it. Still, Liguori adds, these questions have merit. "We're getting into an area about compensation and who owns IP," he says. "It's all getting sorted out right now."

One of GE's new partners is Local Motors, which makes cars using open-sourced designs. Image: Local Motors

A New Way to Make

Since 2010 GE has hosted a series of competitions similar to Flight Quest and the jet engine bracket challenge, but the company is investing in the ethos of openness other ways, too. In fact, it's GE’s most recent partnership that's likely most indicative of how the company envisions its future as a maker of goods.

In March GE announced it would be partnering with Local Motors to create a line of new appliances. The simplest way to describe Local Motors is to say it's a small company that manufactures vehicles. And while that's technically true, it doesn't give justice to the company's real achievement, which is, the company has developed an incredibly smart platform for tapping into the desires of its community and producing products people actually want.

Local Motors operates with two main directives: Co-creation and micro-manufacturing. All of Local Motors' vehicles begin online, where community members upload ideas and designs for new projects. It's in this First Build platform that designs are tweaked and developed through conversations, with the most promising getting prototyped in one of Local Motors’ two micro-factories.

With GE, Local Motors will be translating this process into developing appliances. It will work in much the same way: Interested designers will log on to the platform, First Build, and share their ideas. Throughout the year, a few of those ideas will become prototypes in a GE-dedicated micro-factors and will be sold in small quantities. To put this in perspective, a Local Motors factory is about 20,000 square feet and employs around 50 people. GE's current appliance factories are around 1 million square feet and employ close to 7,000 workers.

>Scaling down has some benefits: The idea is that GE can bring better, more relevant products to market.

Scaling down has some benefits: By engaging with customers early on and prototyping small quantities, GE can bring better, more relevant products to market, and do it faster and more cheaply than ever before. This cuts down on the risk of mass producing an unwanted product, but it also means GE can scale up once a product proves itself in the market.

“It’s not rocket science to say, 'Hm, I should talk to my customers before I build something,'” says Jay Rogers, CEO of Local Motors. “But executing that is super hard.”

It’s particularly difficult for a 130-year-old company like GE. “We’ve always done it a certain way,” says Comstock, explaining that GE’s R&D process is finely tuned machine that cranks out fully-finished, optimized products. Ideas are often developed in a vacuum—a very smart vacuum—but a vacuum nonetheless. This means products, both consumer and business to business, don’t see the customer until they're nearly finished.

GE wants to change that. Comstock points to GE’s recent embracing of ideas like minimum viable products, start-up speak for producing a product with just the core features. “If you’re talking about the most advanced science and technology, just that notion makes you nervous,” says Comstock. “A minimally viable product? We want it to be optimally viable.” There may be a certain part of this that seems like marketing, but GE insists that to be competitive in the 21st century, it needs to think like a start up.

Act Like a Startup, Make Money Like a Fortune 500

With 300,000 employees worldwide and more than $16.9 billion in 2013 earnings, GE is definitely not a start up. But GE’s open innovation strategy ties into a bigger internal push at the company to adopt a Lean Startup mentality and management style.

Around 18 months ago Eric Ries, the brains behind the Lean Startup movement, found himself in a meeting with Comstock and a handful of GE higher ups. The entrepreneur was there to talk about his method of management, which encourages failing early, speed to market and presenting customers with a minimum viable product. “You could just see the thought bubble over their heads,” says Comstock. “Which I imagine said something like “this guy is really on to something, and this probably works in software, but this is never gonna work with hardware.”

They decided to try it anyway; and the resulting program, FastWorks, is something of an internal overhaul at GE. All across the company, employees and managers are being trained refocus and retool their workflow. “We’re saying to people it’s ok to try things earlier, it’s ok to bring customers in earlier,” says Comstock. “You’re giving people a lot more freedom to move faster to make more small mistakes.”

GE hopes this effort, along with its focus on open innovation, will lead to a culture where new, unexpected ideas can blossom instead of getting stuck in corporate bureaucracy. Will a Facebook mentality work for a company as old and large as GE? And will it even make an impact? It depends on the company’s measure of success. But one thing is certain: In order to thrive in the modern world, GE is going to have to rely on more than just itself, it's legacy relationships, and its marketing might.