Last week, the WSJ published an article “The Dimming of GE’s Bold Digital Dreams’ that delivered fascinating insights into what went wrong with the company’s plan to transform itself into a software powerhouse.
The piece resonated with me since I have structured our business and service offerings in Enterprise Transformation to help companies prevent what happened to GE Digital.
Here is a short overview of the issues that were highlighted in the article and our approach to address these with our clients’ digital transformation journey.
Issue 1: GE didn’t assess the probability of a realistic transformation
In 2014, GE’s CEO Jeff Immelt correctly saw that in order to survive into the future, GE would need to transform itself from a company known for power plants, MRI machines and aircraft engines to a company that could dominate the industrial software and digital solutions space. He tasked a High Impact Innovation team to deliver a demonstration of apps and software that could be used across internal departments. There was just one problem: No one knew how to go about implementing Mr.Immelt’s vision.
Mr. Immelt had the right intentions (to transform the company into a software powerhouse) but it didn’t seem that the desire for this digital transformation was rooted in customer needs or was assessed properly. When we take our clients on a Digital Transformation Journey, we start with a 6 week assessment, called Pulse.
By diving deeply into our clients’ current business operations and benchmarking against industry best practices, we uncover unrealized potential and opportunities early in the process. We identify the highest-impact changes to best increase capacity, and determine how to build on existing strengths, overcome current obstacles, increase efficiencies, and create high-performing teams.
This vital step was seemingly skipped at GE Digital.
Only at this stage can a company implement actionable solutions and realistic plans that tap into the full potential of the organization to get to where it needs to go.
Issue 2: GE pretended to have the necessary skill for being a ‘digital-industrial’ company
When the “High Impact Innovation Team” presented to Mr. Immelt, he liked it but it turned out the apps were flat design visuals with no working machine behind it and his Executive Leadership team had never assigned a budget to their Digital Transformation. Meanwhile, GE’s communications office was launching the company as the world’s first “digital-industrial” company in press releases. Revenues from digital solutions were forecasted at $15billion for 2020 and the company achieved $3.6b in 2016 largely from it’s own industrial units. That year, GE Digital was on track to spend $5b.
From immersive Boot Camps to Intellectual Training and Concentrated Coaching, we provide our clients with in-depth education to provide the skills that are necessary to embark on a Digital Transformation. A ‘more action, less lecture’ style provides a better understanding of fast-track agile adoption and accelerated product development that was clearly missing at GE.
Issue 3: GE inverted the usual industry model of engineering a single piece of software that can then be sold and resold
With no coherent strategy in place and a lack of well thought out processes, GE’s product development path was wasteful. Instead of charging a small team with developing the best product and then letting the operation grow with the product’s evolution, GE set up a huge organization that wasn’t quite needed yet. Problems increased when Mr. Immelt kept pushing for the initiative, while it became obvious that the software platform had no viable proposition, internal departments didn’t want to use it and even the sales force wasn’t sure how to pitch it. The desire to create a GE-owned and operated cloud was stopped by limited resources and time thanks to competition coming from Google, Oracle, Amazon and Microsoft. The software platform was slow and with the acquisition and integration of new companies and their tools, the software’s code became messy. After Mr. Immelt left in 2017, a new CEO took over, was fired in 2018, and his successor Larry Culp sold a part of the business and named a new CEO to turn it around.
Committed to leveraging modern, agile best practices, GE Digital should have worked with small teams to deliver their software platform to market with the highest velocity. We work in iterative Design Sprints to understand, plan, design and test to rapidly create an MVP From here, clients can create a testing plan and establish future iterations built for scale. We call this Product Studio, where we build the best version of our client’s product from design to deployment in under 120 days.
This Was missing in that early 2014 meeting between Mr. Immelt and his “High Impact Innovation Team”.