Every company must be digital-driven to thrive
For publicly traded companies, it’s difficult to build a digital transformation strategy that spans years when investors are looking for quarterly results. To understand how large industrial companies are addressing these challenges, I spoke with Bill Ruh, the CEO of GE Digital. When asked how GE was approaching digital transformation, he replied with a simple, yet powerful statement. “If you can’t master the idea of digital inside your analog business you open the door to commoditization.” Therein lie the challenge and the opportunity for an established company in an increasingly digital era.
GE is widely credited with creating the Industrial Internet of Things (IIoT) term that describes how the industrial sectors could deliver new value by embracing digital components in a physical industry. The company has also been focused on making this vision a reality by building products in this sector for several years. For example, GE saw an opportunity to reimagine every aspect of the electrical value chain.
During GE’s recent Minds and Machines conference, the company described how its customers, such as the New York Power Authority, are changing their businesses by infusing digital technology into a physical product market such as utilities. The New York Power Authority, with the help of GE technology, now calls itself the world’s first digital utility. It has worked with GE to create a real-time digital replica of its assets and automate many back-office processes. New York Power Authority views itself as the orchestrator of a network of power generation. In other industries, such as aviation, Ruh said GE’s customer could rethink who repairs the engine, how to repair the engine and who will give advice on how to fly them. So not only are companies updating technology, GE’s customers are changing their businesses.
Your client’s business outcomes drive the transformation agenda
The previous examples led to an interesting discussion on how companies need to perceive the process of digital transformation. For GE, Ruh shared that creating an Industrial Internet product isn’t as simple as a vendor redesigning its products with new digital bells and whistles. Delivering new business outcomes for your customer is at the center of how any company should view its digital transformation efforts. For example, at GE designing technology that enables a zero-downtime environment can save a liquid natural gas plant owner up to $100M per day in lost revenue. This type of return on investment changes the value of the vendor within the network and the customer’s overall market opportunity.
For the business to business (B2B) markets, such as the industrial industries, it’s important to understand how your products will ultimately help your customer meet its end consumer’s need. A great example of this occurs in the solar market where you need to supply technology that allows the supplier to keep its costs low while providing features that deliver value to the end customer, such as information on energy consumption.
Another key take away from the conversation is digital transformation requires a catalyst because change for change sake is too hard. GE Digital has multiple business units, but its business units don’t necessarily all operate at the same pace of change. There are industries, such as energy, where the customers have an acute pain point such as falling product prices. In the areas where there is an industry catalyst, change happens faster. Find your catalyst and build solutions for that problem.
Maximizing and growing talent: A key component of any transformation strategy
To close our discussion, Ruh shared that digital transformation at GE isn’t simply a matter of just updating the technology within a company. The key to any company’s success, including GE’s, is creating the right culture and talent. A company must build a culture that brings its people along, making certain everyone makes the digital transition. It requires rethinking jobs, providing training and potentially advancing the company culture in new directions.
As Ruh said, every large company needs to be digital because established firms will never outrun startups. While a large business can’t easily compete on speed, it can compete on scale, assuming it can leverage the benefits of its size — such as brand and customer base. A company needs to bolster internal innovation by growing digital talent within the company, hiring where available and acquiring where necessary. Finally, digital transformation never ends, because leading organizations always strive to make their products easier and more efficient.