GE was on the verge of dominating the industrial internet. Suddenly, it doesn’t. What happened to the GE digital transformation?
The ambitions that entail GE digital transformation is no secret to us for years. However, there is so much negative news that surrounds GE and its grand vision these days. In other words, GE digital transformation (DT) is considered a failure. What went wrong? Before discussing that, let’s first have a little background.
Behind the curtain
GE’s DT initiatives began way back in 2013. GE began developing Predix, the company’s supposed-to-be software platform for the industrial internet. A year later, the company announced that it was generating more than $1 billion in revenue from productivity solutions. In 2015, GE announced the creation of GE Digital, the company’s new business unit.
Afterward, a year later, GE reportedly had more than 1,500 employees in its office in San Ramon, California. Publicly, things were really going great for GE Digital. However, the picture was less rosy internally. Listed below are two of the many factors why.
- In practice, GE Software was an internal development shop. The company has numerous business units, including Aviation, Transportation, Power, and others. However, these business units all had IT development needs. Hence, GE used the resources from GE software to implement “innovation”.
It was more like digital enablement. Moreover, GE Software’s revenue came from billing other GE business units, not external customers.
- GE Digital started selling services to other industrial companies. GE was offering to help them on their own DT journeys. Thus, the company also became a consulting firm. According to reports, GE had mixed returns on these efforts.
Indeed, GE achieved some significant improvements thanks to GE Software and GE Digital. However, there were no game-changing, multibillion-dollar innovations. The company only achieved gradual improvements and made them slightly more competitive.
What Went Wrong
DT isn’t just adding technology to the existing model. It is about rethinking your current business model to adapt to the digital era. However, most companies fail to do so as it is extremely difficult. Furthermore, implementing the entire DT process in-house will surely lead to failure.
For GE Digital to have succeeded, it needed to be separate from GE. Making GE Digital its own business unit was a smart move. However, it also took the roles and responsibilities of GE software. You don’t need thousands of people to be successful in your DT initiatives. All you need is a small group of people with an innovative mindset.
Finally, you need to start small. Most companies attempt to accomplish the entire process at once. However, attempting to do so is a recipe for disaster. GE tried to transform each and every one of its business units and look at what happened.
Start the process with one industry and one business unit. Then, use the momentum you’ll achieve from the success of that project and spread it to other divisions.
It is not yet too late for GE digital transformation. There’s no reason it can’t be successful. However, the company needs to structure its digital business correctly.