GE staying Current by becoming an ‘as-a-service’ business
- General Electric (GE) is traditionally known as an industrial products company. However, this is changing and the company is fully embracing new digital business models.
General Electric (GE) is transitioning away from selling traditional industrial products towards selling ‘as-a-service’ packages, by wrapping data and digital solutions around its core offering.
It is doing this by adopting a more entrepreneurial approach to its business, incubating and separating out divisions, and building upon its IoT capabilities with its Predix cloud platform, which is specifically designed for industrial data and analytics.
This is in turn allowing its customers to take advantage of new IoT business models, where they are consuming GE products as-a-service, with enhanced analytics capabilities.
Beth Comstock, GE vice chair of business innovations, was speaking at the Stifle Industrials Conference this week, where she explained how the company is transitioning itself towards this new model.
GE is in a strong position to take advantage of the IoT market, as it has recognised early that it if it invests in network, data and cloud platforms, it already has the brand presence and products to embed ‘as-a-service’ offerings into its portfolio.
However, along the way it has had to figure out how to become more agile and simplify its business. Comstock said:
So we’ve been on a journey, especially in the past three to five years to be much more agile, faster, to be much more like a startup. Why is that important? Because our customers expect that. There is incredible change happening in the marketplace right now, and our customers need to be ready for it and we need to serve them better.
So frankly with a lot of our global activities and some of the new technologies we were getting into, we were worried that we were going to be a bit bureaucratic. So we instituted a real mandate to get simpler, get rid of layers in the organization, get rid of need for certain approvals, just allow the company to move at market speed.
From heritage to Current
Comstock spoke about GE’s “amazing technical heritage” and said that the company has a technical depth that is unparalleled, with some amazing engineers and scientists.
And GE is keen to point out that this combination of data, cloud and connected devices is not simply about the technology, it means a great deal more than that for businesses.
While we're innovating tech forward, we also have to see what the trends are, what the opportunities are, increasingly it's not just the technology, it's what's the business model. How do we combine those technologies for new offerings, how do we create new ways for customers to have savings or benefits. And digitization is allowing us to do that in a much faster way.
Comstock gave an example of how this is being applied to GE’s 140 year old GE Lighting business, which has been rebooted and modernised to take advantage of its new Predix platform and is now an all new energy business called Current.
GE has separated this business out and is now officially selling customers ‘energy-as-a-service’.
Comstock said that this allows GE and its customers to start to see not only how they’re using energy, but how they’re deploying it, providing them with a smart infrastructure that allows customers to layer on other applications. She said:
So let me use Current as an example, because I think it speaks to what I said up in the earlier page. It’s a way to take something as old as GE and show how we're transforming it into a new model of revenue, value creation, margin generation, and also I think it's a great example of what other GE businesses are going to be doing as we entered the digital age and as we start to scale up with Predix.
LEDs if you’re familiar with the technology, it allows you to embed sensors and controls into the hardware. So that suddenly a dumb fixture becomes something very smart, intelligent, a sentient -- a sentient entity, one light fixture can connect to another, connect to another before you know it, you’ve a mesh network in any kind of a setting. At the same time we were hearing from our customers that they were demanding more -- they wanted more operational flexibility in energy management and they wanted access to more renewable technologies.
We also brought on board a model we've been incubating about an integrated solar offering that would allow customers renewable energy on-site and more flexibility about the amount of energy they could generate on-site.
We’ve been incubating new models in storage and we had a long-standing renewable technology in electric vehicle charging. You put those altogether, you start to connect the light fixtures, the jet power generation through our software platform called Predix, you start to be able to analyze the data, capture a lot of data, bring the insights of GE's incredible Predix capabilities with artificial intelligence, data connectivity, simulation and we're able to start to offer new models of sort of business exchange with our customers
So when I talk about energy as a service, this is really the strategy that a company like Current has. But I want you to think about this as a new startup being incubated in GE with the DNA of our oldest business and the DNA of our newest business in the digital. This is a journey for Current, but every one of our businesses are going to have to go through a similar journey.
Wave one is just connect my stuff. Where is it? I want to know it's connected, I want to know how it's performing. We call that asset performance management. Where is my stuff? How is it doing?
Wave two is once I get a pattern of usage and access to other data and other applications I can start to create service, savings, benefits for my specific use case.
Ultimately for Current wave three is when the data allows us to create more dispatchable energy…almost a marketplace for dispatchable energy. Everyone will come to a wave three differently.
Comstock also provided some insight into how GE is changing its own business, where it is both investing in new technology and adopting more agile practices that allow the company to adapt more quickly in the market.
For example, one of the mechanisms it has created is GE Ventures, which partners with startups of interest. She said:
Yes, we're doing some small amount of equity investing in some of these startups. But equally important is the cultural impact where we're using partnerships with these startups to round out our offers, to help us get simpler, faster and…to partner for growth.
Equally, the company is bringing in people of interest. People that it feels could help the company adapt its
culture to a nimbler mindset. She said:
The other thing we've done is started to bring in more entrepreneurs who are serving in residence for some of GE's business offerings, our digital offerings that bring in entrepreneurial mindset, if you will, as a coach working with our traditional GE business leaders, and that all wraps up to something we call FastWorks. It really is the cultural mandate. Are we moving faster? Are we getting feedback from our customers at an early stage to know whether we're spending money in the right way?
And finally, GE is investing in new technology at an industrial scale, which is enabling its incubated businesses to deliver these new IoT models to its clients.
The other thing I want you think about is that with our investments in GE at Predix, which is our industrial Internet platform and cloud service. Its industrial scale. It's built for the most amazing sets of data. Think of the use of a jet engine, one terabyte in just the average flight of a jet engine. Now imagine a fleet. Imagine the entire airline business. We're talking industrial scale data.
So if you're a business like Current and your customer like J.P. Morgan, the ability to tap into the analytics, the cyber security, the machine learning that GE is investing in industrial scale, we think its unparalleled.