How Makers Are Transforming with Kevin Nolan | Exponential Manufacturing
Kevin Nolan, CTO of GE Appliances, explains how the company created FirstBuild, an open, community‑driven micro‑factory located on the University of Louisville campus, to inject rapid, low‑cost innovation into the traditionally closed, capital‑intensive appliance business. He contrasts the historic, linear, top‑down NPI process at Appliance Park with FirstBuild’s open‑door, maker‑focused environment where anyone can walk in, prototype, and co‑create. The playbook relies on co‑creation through hackathons, flexible low‑cost tooling, a pull‑based lean manufacturing system staffed largely by engineering students, and rapid market validation via direct‑to‑consumer sales and crowdfunding (e.g., a high‑temperature pizza oven and a Nugget Ice machine that raised $3 million on Indiegogo). FirstBuild targets a 6‑month idea‑to‑market cycle, 12 new products per year, and financial break‑even, using the platform itself as the primary product. Nolan highlights strategic lessons: separating the innovation environment from core operations to reduce internal resistance, lowering the cost of failure, and treating FirstBuild as a platform that continuously generates new appliances. The talk ends with an invitation to join the community.
Chapters
Thank you. It's truly a pleasure to be here and to tell the story of how we're taking manufacturing in new directions at GE Appliances. So first, I'll start with a picture that you can see. This is not a refrigerator. This is an icebox. This is before we put refrigeration in these devices. But I want you to pay particular attention to how they're being made and how they're being assembled. If we fast forward maybe 80 years, this is a picture I took a couple of weeks ago in Louisville, Kentucky at Appliance Park. where we make millions of appliances manufactured here in the United States. And you'll see, although different, it looks very similar. Someone from years ago could see, they would know exactly what we're doing. Hey, these guys are building appliances. If you look at this, these look like energetic young GE engineers from times ago. And this is how these products— that icebox was, I'm sure, designed in a facility very similar to this. If you fast forward, here's how we design products today. And you'll see the technology's different, but I'd argue the way, the processes, and what we're doing haven't really changed that much. So it kind of gave us some questions at GE Appliances, and we started looking out. Is there really ways this new technology can really redefine how we design products, how we make products, sell products? And we early on went out looking, we got external, we met up with a company called Local Motors, Jay Rogers, and really started to say there are different ways and maybe different things that this technology can bring to us to really redefine what we do. So what we did is we created a new business. There's a new business within GE Appliances. I'm the CTO of GE Appliances, and this is under the technology group, oddly enough. But it is a new business where you'll see what we do is much, much different. It's located around 4 miles from Appliance Park, so it is off on the edge. And that's one of the reasons I would say manufacturing on the edge. But as much as John Hagel talked yesterday about, we did something outside, and we'll talk about why that was key. It's on University of Louisville campus. It's a great university. It's got the Speed School where we have co-op programs and we have real hands-on engineers that graduate every year. And I think that's also part of one of the secrets that we have here, of really getting outside. What's our charter? What are we trying to do? It's a big goal. We're trying to invent a whole new world of home appliances and really bring innovation into an industry that I would say is lacking innovation. When you go into the store, is there really new innovation coming into this? And we feel that there's not enough, and there's more we can do. One of the keys you'll see in our mission here is this word community. And I think that's one of the fundamentals that we're doing different, is the whole aspect of FirstBuild is not inside us. It's working with the community and doing everything with the community on how we design, build, and sell products, and to build products that people are passionate about and that they really want. So to do this, we really had to redefine our values. If you look at this optimization, you know, my real job, what I do day in, day out that brings home the paycheck, as a CTO of appliances is we optimize, and there's nothing wrong with this. You know, we have to make things more efficient, better every day. That's what we do. That's what we're great at at General Electric. But with that, it's closed. If you want to come visit me in the office, you need to sign in with security. There's a badge. If you want to get back into one of the labs, you basically have to sign an NDA. It's a very closed atmosphere. It's top-down what we work on. We have a 3-year growth playbook process. that we are very follow— we very closely follow. And then it's very linear. We have an NPI process that is very structured as we take things through these programs. It is a very structured process and it works well. It's predictable. We launch many, many new products every year. And these investments are anywhere from $10 to $100 million investments. So you want to be predictable and you want to bring yourself a good return to your shareholders. What we're doing at FIRST Build couldn't be more different. It's completely open. Anyone can come in anytime. We're open 9 in the morning till 9 at night, Monday through Friday, 9 AM till 5 PM on Saturday. If you're a competitor, if you're just someone that wants to see what we're doing, anyone can come in and see what we're doing. It's completely open. We're all about experimenting, and we're all about iterative. You'll see we don't have a plan. Which sounds odd. From GE, it kind of drives me nuts every day. We don't know what we're going to be working on during the year, because it iterates, it changes constantly. And it's basically what the community wants to work on. What's our goals? Because we still do have goals. Our cycle time, 6 months from an idea to market, takes 6 months. And that's just when someone thinks of it, to be out there selling products. We need to come out with 12 new products a year. We want one to graduate innovation success. That's GE Appliances, GEA. And that means it's gotten so good that we can no longer manufacture it at FirstBuild, that we need to bring it into where we scale very well back at Appliance Park. And then our goal is to break even financially. This was funded out of our R&D efforts because it is innovation, but it's a way— and you'll see the model we have— we can actually make money on innovation, which I would argue is very disruptive. So what's our playbook? We design with co-creation. So our engineers are actually working with the community. It's not GE engineers running these projects, it's the community that gets involved and execute programs. We build in small batches, and you'll see that with different manufacturing techniques. And we sell things, one, to make money. Of course, we love making money, but that's not really why we sell products out of FirstBuild. We sell products there to validate ideas. That's our real value-add, is to sell products to validate, do people really like the innovation we're working on? So I'll step through the playbook of how we do each thing a little bit different, and I would say a lot different than your traditional way that we do at General Electric. So, you know, how do we design? When you walk in, and this is very much as Dale talked, and we are really about the maker movement. That's our community. That's our target audience, is the makers. When you walk in, this sign is boldly out there in FIRST Build, is we're about prototype. We're about making things. You don't find PowerPoint. I don't think we've made a PowerPoint chart ever in FIRST Build other than ones like this that I've got. It's not how we do programs. We make prototypes. We make physical things. If it's electronics, we'll make circuit boards there. The whole thing is a dream prototype shop. And we keep saying, no meetings, no approval process. Let's just build things and see what happens. When you look at the design, how things look at FIRST Build, it doesn't look like those pictures I showed at the beginning. It's chaos many times. And for some engineers, it is just not their place. But it's much different. We work with a community. People are in there doing their own projects. We'll have artists come in at one point. Someone might come in to work on some things for their home, an entrepreneur might want something different. Anyone can come in and use our space and interact and work with our engineers. We'll have people working on science fair projects, STEM projects, but that's our community and that's who we reach out to. I would say our best product planning has actually come out of hackathons, and this is not how corporations typically do product planning. But our hackathons have just been amazing things. People coming in there, in 12 hours, we'll come out with 10, 12 ideas. But what we find out is what resonates with the community. What do people like working on? So we have no clue what's going to come out of these hackathons. But some of our best successes so far have started just like you see here, with a bunch of folks just having fun, signing up to come in. We've had to change the way we work with IP. I mean, we'll talk later, and if people want to learn more, we're going to have discussions later where we can get into some of the real aspects of how we do this. But it's a much, much different approach to design and looks much different than what we still do at Appliance Park. And it, I would argue, yields much dramatically, dramatically different results. Now, how do we build? You know, I would say what we're doing here, the manufacturing aspect is probably one of the biggest innovations we've got. And it won't look very innovative. It looks very simple what we're doing, but in its simplicity, It's unlocking unbelievable things for us at FirstBuild. So I'll use a case of a pizza oven. So this oven is a product that we've been working on for about 7 months as far as physically going through. We're building it. This is 100% manufactured at FirstBuild. It's community-driven. It's an amazing product. The top deck on this thing gets around 1,200 degrees. Anyone who likes pizza, we— That's hot. The bed gets to around 800, 900 degrees. So it cooks the way it's never been available in a home before. When we first heard a community member, we said, you're completely crazy. No one— I don't know how we're going to do it. But we've got a product that we're actually installing in a new store in SoHo this week as we speak. But how do we make it? I'd say one of the secrets is that product, if I was going to make it at Appliance Park, would typically be a $10 million to $25 million investment for a corporation like GE. Our investment in first build for making that product, a new platform, has been zero. These tools are about as much as we spend. These are modular. They're around— that tool you're looking at right now is around $150. So one of the things that we try to do is have zero capital investment in new products. And then the first one we sell, we can actually have returns. And that's how we can do low volume, because it's all about validation. Because I do not know how many of these pizza ovens I'm going to sell. If I sell 10 of them, it's great. If I sell 200, even better. But we don't have what we would typically need to have to do a project like this. We don't have an accurate forecast because there's never been anything like this in the market before. The other thing is we're all about lean. As we try to do this with zero capital investment, lean is our best friend. And I'd say this has been— I've been studying lean for a long time at GE. I've never had lessons like I'm getting at FirstBuild on what lean is really about. It's 100% pull. We don't make parts until we get orders or we have a purpose for the product. Our workforce, actually, you see right here is a student from University of Louisville. We bring in students, engineering students. It is an unbelievable training ground, and we're flexible. When the students are available is when we make products. Okay, so everything is pull, from even pull from a workforce standpoint. And they're great jobs. They're great learning experience for the students. FirstBuild is probably 80% student-run, which is another very interesting thing that we're learning there, working through. Our fabrication, it's all programmable. It's all flexible. So we do have capital. We have an amazing makerspace. If you want to make something, FirstBuild is the place to do it. But it's not dedicated capital. So everything we're designing and making there, we're making on flexible machines. You see here is Jody making it on a programmable CNC bender. That pizza oven was 100% designed for flexible tooling, which was a whole different way for our engineers to think, our community to think, because all we have is what we have in our microfactory here at FirstBuild. Checking. One of the things we're finding is how do we gauge? How do we get Six Sigma? accuracy into a product in this kind of low volume, so we have to do things differently. We're going back to some of the basics of how you fundamentally gauge, so we're taking some low-tech approaches, but it's all about speed, flexibility, and low cost. And then we build. You can see here's an assembly line. No big investment. That assembly line's flexible. It's just standard tables that we buy at Home Depot. We put rollers on them. It's cell manufacturing, so each oven is built in a cell. One student can build a whole oven up in 4 or 5 hours. But again, it's all about flexibility, low capital, low investment on what we build. And the results are amazing. I mean, we've got a product now that has really taken the industry and just woken them up. We went to the Kitchen and Bath Show. No one had ever seen an appliance like this before. And I would say it's truly available because of FirstBuild, because what we have. Now, again, we don't know how big it's going to be, but that's what we're kind of experimenting with FirstBuild, but doing things in a radically different way. Now, selling, I'd say this is, again, one of the most interesting areas, is how do we sell differently? So we'll take a case study of Nugget Ice. We've got one in the pavilion over there where you can see our actual first device that we went out and started selling. But we had some salesmen that were just crazy about nugget ice. And that started coming in to us from a community, people talking about it. And so we did a little bit of research. We found it was regional. Around Boston, there's not much. In New England, people don't know what nugget ice is. Some people call it Sonic Ice. But we started seeing a real preference in certain parts of the country. We put— the idea was on our firstbuild.com. It started getting a lot of traction. That's how we figure out what we want to work on, because we just see excitement around a product. We put a challenge out. We got designs from all over the world of what a nugget ice machine would actually look like. We built a prototype. We went to Indiegogo. We put this on Indiegogo. And within 30 days, we were one of the top 10 funded projects ever in Indiegogo's history. We ended up with right around $3 million. I think we're up around $3.6 million of nugget ice machines sold. Just the other weekend, we sold 150 over 2 days. And this is off of firstbuild.com, selling direct out of first build, so no retail channels. What's interesting is we sold this before we ever made one or we knew how to make one, which was very disturbing for engineers because we don't like that kind of approach. But it really said, hey, we've got something we know is hot. We know people like it. We can tell you who like it, what the demographics are, where they are. Unbelievable. We know our turnover when we put a Facebook ad on, exactly how many of these we'll sell, what's our acquisition cost. So this really gave us power that we've never had in traditional market research. So this area now where we are experts, I know more about nugget ice than I ever wanted to know. We're going into production this week, and we're going to start shipping this product in the next 3 to 4 weeks. So what have we created? I would say we've created a real innovation engine. We've been open for about 16 months. We've had 10 new products so far. Not all successes. We've had a couple good successes and some failures. You know, we had a connected refrigerator, which I still think is great. We sold 3 of them. But I had no— it didn't matter. I actually made money on that project with even only selling 3 because of the unique approaches that we're taking at FirstBuild. We're excited. We've always— what's fun about FirstBuild, we've always got something new. I don't know how many people know about cold brew coffee. Cold brew is getting very, very popular. As we get into it, we had a huge community. We've been getting into coffee. If you come to FirstBuild, we have the best coffee, I think, in Louisville. But cold brew was something that our community started really getting into. The problem with it, it takes around 10 to 14 hours to do proper cold brew. And we saw that as an opportunity, as a problem. So what we've been able to create now is a machine that in 10 minutes can give you that quality you would typically take 10 to 14 hours. 10 to 14 hours. We've made prototypes, of course, with this. We've been working with the community, people that really understand cold brew, understand coffee. And we're getting ready to put this on Indiegogo. This is going to go on in about 4 weeks. You'll see this product. Follow us on Indiegogo. Follow us on firstbuild.com. And if you like cold brew coffee, you're going to love this machine. So this is our next crowdfunding that we're going to go out— we're going out with shortly. Awesome. So some of the takeaways, I would say some of the real learnings I've had, is this new technology, it causes change. And I think changes like this, if you see the appliance industry, we always thought it was a big barrier to entry, very capital intensive, and we're teaching ourselves that's not true. We're teaching ourselves with this technology, you can get into the appliance industry with a very small barrier. And the maker movement and the way things are happening, That's going to start happening more and more. And I think one of the things I feel fortunate is we're right there and we're having a good understanding of it. Because this technology can cause more change and different ways of doing things. It's not just incremental. And once you take your mind out of just doing things incrementally, you can do amazing things and do it in amazingly different ways. The other thing is this platform approach. I always heard platform, platform. I'm a product guy. I love products. I never knew what people were really talking about. And the reason we built FirstBuild is we built it because we're a bunch of people that wanted to make more products, and we wanted to bring more innovation out. But I'd say the best product that we've made is actually FirstBuild. And we're starting to realize our real value is not Opal, or Nugget Ice, or Paragon, or Sous Vide Cooker. It's the platform of FirstBuild and what we've got and what we have going forward in the future. The other thing John Hagel talked about, I'll reiterate it, is you need to have a separate environment for risk. I'm a 28-year GE employee. I've been trying to do innovation. I love technology. I love innovation. And until I finally gave up, and I will say I gave up and said, I can't do it internally, I got to go externally, it's the first time I would say we're really cracking the code on how to bring innovation quickly. We did it cheaply, but having it separate, I would say, was one of the key things we did because it does get rejected when you have it inside. I'm completely convinced of that. And then the other thing is low cost of failure. Everyone says, oh, failing is bad. You don't want to fail. You shouldn't encourage failure. But what you should do is lower your cost of failure. At FirstBuild, if we fail, nobody really cares. If I fail at GE Appliances, it's big. I'm wasting millions and millions of dollars. People are going to care, and I can't do that. So I think the thing is learn how to make the cost of failure go down. Don't encourage people to fail. I hear that all the time. I don't know why we would do that. You don't tell sports teams to go out and lose, right? But you don't— just keep the cost down. Okay? So thank you. Thank you for the time. We're going to be talking more in the afternoon if you want to learn more about FirstBuild. Please join us, firstbuild.com, and watch us, what's going on. It's exciting. And love you guys to join our community. Thank you.
Excellent. Kevin, thank you so much.
