Wall street recently published an article on the struggling division of GE- GE Digital. You can read the article here:
So I will not get into reproducing what the article states in detail (assuming you have already read it or will read it), the gist of the article is :
(1) GE’s vision was to build the Industry 4.0 for the world- essentially become the largest and most prominent Industry 4.0 platform. (Opinion: It had reasons to have this bold vision considering the wide array of manufacturing capabilities that the conglomerate has and add it to the fact that GE has been leveraging sensors in its large Industrial asset products for years-so it had experience in the domain)
” The CEO wanted GE to be known around the world for more than just jet engines and MRI machines, power plants and nuclear reactors. “
(2) The meaningful vision did not turn into reality. Some of the aspects behind not being able to realize this vision are in the snippet below but here is my opinion- Mr. Imlet’s vision was not far off. In fact, for a manufacturer with the kind of scale and expertise that GE had manufacturing a gamut of Industrial aseets- that WAS and IS the only path to long term viability and sucess. The challenges mentioned below can be summarized in one sentence – lack of a Digital innovation culture.
The deep influence of culture and talent in Digital
” Deep costs, employee confusion and delusions about what it would take to reposition the company for a digital future would make it more difficult to turn Mr. Immelt’s vision into a profitable business”
Many legacy organizations that once were very successful in “their era” assume that the same chops that saw them become successful then, will lead them through the Digital age. And despite so many examples littered everywhere, they formulate visions, and chase them, with the same mindset and people that made them successful- in 80s and 90s.
Digital is not about technology at all- it is about talent. Talent that thinks outside the century or half century culture you have developed. If you believe in the fact that Digital economy is a paradigm shift, then to be successful in your vision of anything Digital, you need to make that paradigm shift culturally as well.
So what could GE have done or should do differently- and salvage its Digital Dream
In my opinion, the challenge that GE ran into was its vision of building a Digital Business Unit:
” The board tacitly blessed Mr. Immelt’s digital dreams and his plans to stand up a software company inside General Electric”
What GE needed to do was:
Embedd Digital into its existing competitive advantage- the world class equipments (engines, turbines etc.) that it manufcatures.
It did not need to build a seperate Digital business. Now the logic may have been that this capability will be a stand along product, as envisioned, an Industry 4.0 network that it can offer as a service. But even for that, the starting point should have been:
- Build the capability internally (People, processes, technology) & master it
- Make it productive enough to get quick ROI
- Scale and Industrialize the product
The Gap between vision and Roadmap
As the article itself emphasizes, GE had all the ingredients in house to first create a solid in-house network, AND THEN, develop and scale it as a standalone product:
” Mr. Immelt said GE would know best which data to gather and how to interpret their meaning because it knew the machines. Its staff designed and built and repaired them for decades. They knew how they worked, and when and why they failed. Engineers empowered with the right digital tools could begin to learn new things from their own machines, the CEO said. “Big data” would help GE better predict when critical parts in engines and turbines were likely to wear out and break. These applications would run on a GE-developed software platform called Predix, which would reside in a new division: GE Digital. “
All that makes perfect sense- but the challenge on hand with executing this vision inhouse, even if it was supposed to be an in-house product, was obviously the gap betwen the vision and the roadmap.
Often, we don’t realize that a true roadmap is not just a plan. In order to create an effective Digital roadmap, you need to go beyond the vision into a more detailed plan, that starts with talent. You need people with Digital talent to understand what variation of vision can be realistic and how it needs to be planned to be executed.
As I always say, if any aspect of vision pertains to re-inventing the wheel, whether it is building a self service AI tool that hundred other companies have developed or the PreDix platform-
Remember, in case of developing Digital capabilities like this:
If any other competitor has developed a similar product which is now beyond the “emerging” phase, you will never be able to compete with that, unless your product completely re-imagines the offering.
What that means is that there were already many companies out there with mature products in this space, which in technology years means a decade of head start. Reinventing a product very similar to something that was already out there in many different flavors was not prudent.
To summarize all the thoughts, the three high level things they can still do are:
(1) Think about Digital as an extension of their existing Manufacturing capabilities
(2) Develop a team that can understand the nuances of Digital and Operations, integrate them in their vision and be imaginative about the rudimentary perceptions of Industry 4.0 products
(3) Accquire a portfolio of innovative startups that are emerging in the arena of Industry 4.0, that can allow it to rapidly develop Industry 4.0 offerings that are beyong=d what is available in the market.
Views my own.