The future belongs to companies that can craft strategies and build their capabilities to succeed in a new phase of global competition. It is why GE is undergoing the biggest reinvention in its 130-year history.
It started with the divestiture of its financing arm as well as the sale of GE Appliances and signals a strategic shift toward a 21st century digitally-enabled industrial enterprise.
It is just one part of a radical overhaul designed to transform GE into a digital industrial company that leverages information-driven intelligence for our products and processes.
Big data, advanced analytics and intelligent devices that monitor production machinery will largely drive this shift, transforming the way products are designed, built and used.
Given GE’s influence, pioneering such a transition carries tremendous significance.
You only have to look at global industrial productivity figures to understand why. From 1990 to 2010 productivity was at 4% year over year, a figure that has since reduced to 1%.
The 4% figure was a result of businesses getting huge amounts of productivity from enterprise resource planning (ERP) and software in lean activities widely run throughout the 90s and 2000s.
This has largely dried up, and after GE’s bet on big data, the next frontier of productivity lies with marrying the operational world with information technology.
GE has long had the ability to collect machine data, with sensors embedded in equipment for years monitoring operational performance, but without taking into account external factors and how they would interact with the product itself.
Marrying the two together, and making this enhanced data accessible were the missing parts of the puzzle, so GE got to it. We researched companies that produced high-quality data analytics, in an attempt to truly understand the behavior of machines.
By collecting 50 million data variables from 10 million sensors installed on various machines, lessons were drawn from the data sets that taught GE engineers to find interesting and unique patterns in sensor data that could be used to predict the future performance of machines.
At the center is Predix. Our cloud-based operating system is giving customers awareness to monitor and improve equipment performance.
Could data help GE’s jet engines require less frequent maintenance and provide better value back to customers?
By connecting maintenance records, parts and outside information such as the price of natural gas, weather and other variables, GE can prolong the lifespan of engines and save customers an average of $7 million in fuel from efficiency alone.
So the longer a jet engine can stay on the wing of a plane without having to go in for maintenance, the more price, value and revenue per cycle an airline can get out of it.
130 years old and more nimble than ever
Such a pivot externally has required significant change internally.
With 300,000 employees globally and another 15,000 contractors, ensuring everyone is pointing in the right direction has at times been a difficult task.
Especially when lowered barriers to entry put GE in the same ballpark as nimble Silicon Valley startups, whose level of technology explains why they are increasingly laying their claim to market share.
What makes these startups so efficient, is the pressure and accountability that comes with uncertainty.
At GE we are embracing the concept of small teams. Ten to 15 people who own an outcome or deliverable for the business working toward a common goal. The empowerment of being tasked with full accountability over a complete solution serves the added purpose of providing employees with the opportunity to see how their work is impacting the company.
The second thing that keeps us nimble is aligning what we do with business values. We need $1bn in productivity over the next few years just to ensure we remain competitive with other industries.
Growing our software business from a $5bn to $10bn business through Predix, and the creation of Industrial Internet applications will lead the way.
Everything GE’s IT team works on ties back to business outcomes, signalling a shift from a myopic to a holistic point of view.
A layered approach to security
With the incoming explosion of IoT, or what GE calls the Digital Industrial Internet, data security has become a key concern for businesses delving into the digital abyss.
When you consider that GE makes the world’s most critical pieces of infrastructure: jet engines, power plants, clean water devices, locomotives, and healthcare equipment, building trust is key.
Therefore, reassuring customers that you are doing the right thing and helping them understand that security is not an afterthought, but rather a part of the process, is paramount.
And now presented with the forthcoming Digital Industrial Internet, GE has increased cyber security investment by 200% over the last five years alone.
No one actually believes it is possible to perpetually thwart unauthorized entities. So focusing on product, enterprise security, and emphasis on the ‘crown jewels’ (the codes and secrets of how the company is run) in a layered way has proved to be the ace up our sleeve.
Being fast to identify, respond and continuously learn how to recover before the next attack must be coupled with a strong incident management process and capability.
This is built around an intelligence arm tying event information with geopolitical, commercial and investor information. It’s about strong partnerships, game-changing technology and a world-class team.
All of these things contribute to our focus on the digital industrial internet, a technological moment akin to the early 1990’s when the consumer internet was in its infancy.
The future is becoming clear, and we are sure that changes in the technological landscape are about to enable industrial improvements that are immensely important to both GE and the wider global economy.