The Industrial Internet – stand up and make your CEO paranoid

We say that a lot of people are “larger than life.” But Jeffrey Immelt, CEO of General Electric (GE) truly is – both in physical size and perhaps more importantly, in terms of his passion and vision for GE. He extends that passion to describe a vision of the Internet that we don’t often hear – one aimed at industrial rather than consumer usage. He also had a clear message for CIOs about their role in this new era and he delivered to an elite group of CIOs at the recent Gartner Symposium in Orlando.

GE is 123 years old – founded in 1892. You don’t get to be that age by being timid. From Thomas Edison to Jack Welch – GE has had leaders who have defined not just the direction of their company but of their entire business era.

Even in the shadow of these business icons, Immelt’s vision stands out. Under his leadership, the company is divesting itself of key business areas – financial services and the consumer business. They will do this to focus on Immelt vision of “the industrial Internet.”

Immelt took the time at the recent Gartner Symposium to share his vision for GE’s industrial Internet called “Predicts.” Predicts, according to Immelt, is simply, “a better analytical cloud than anyone else. It will have better security more robustness than any of its competitors. Because we understand your business.”

According to Immelt “there will be an Internet of the home – but it’s going to be a crowded space. And your iPhone is probably going to be the gateway. Everyone wants to see this through the eyes of the consumer.” Everyone, that is, except GE. So rather than contest a crowded space against the new giants like Apple and Google, he’s opted to focus on an area where he feels that GE has a real advantage.

There is enormous potential. GE’s goal is $15 billion in software revenue by 2020 from enterprise applications and the industrial Internet.

So while his competitors are expanding their offerings across consumer and corporate offerings, GE is focusing with laser precision on the industrial customer to deliver nothing short of “a whole new way to create value from industrial assets.”

But what does the industrial Internet really mean? Immelt illustrated it with the example of a locomotive. Today’s locomotives, like other industrial equipment are extremely sophisticated technology, nothing short of a “rolling data centre.” But that technology is far outside the expertise of a Google or Apple. “The industrial Internet is equal parts knowing how the locomotive works and how the network works.” Only by having this understanding can you get the outcomes that industrial customers are looking for.

“Customers,” he stated, “want better outcomes – predictability, productivity. To win in this arena, you need a real appreciation of what your customer’s products do. That’s our thesis.” He took the point further to demonstrate just how deep GE’s knowledge is. ”If you are a rail CEO,” he stated, “your single metric is velocity. Go from 23 mph to 24 mph and that’s $200 million added to your bottom line.”

For Immelt, that’s what will make GE the dominant player – a deep understanding of the client’s business and a focus on measurable results for the customer. “If you can’t measure it in outcomes,” he said, “we don’t have a role to play.”

In describing this differentiator, he took a shot at his other high tech competitors, asking “do you (the customer) want to be in a world where everyone made money but you?” GE will not only strive for outcomes, according to Immelt they will also have “skin in the game.”

That relentless commitment to customer outcomes not only demonstrates the ability to focus that has made GE a leader decade after decade – it’s also a key to overcoming obstacles to adoption of this platform. As one question from the audience pointed out, Predicts will require getting a lot of data, not just from customers, but from competitors whose equipment will also be used by GE’s customers. As CIOs, this audience knows better than most how difficult it can be to get companies to part with their data.

And there will be an enormous amount of data. GE has developed a concept of merging the “physical and the digital” with a process they call “digital twinning.” Every asset has a digital image and a physical instance. Data are gathered and constantly compared against its digital twin. The resultant analysis generates a range of benefits from predictive maintenance to better use of fleet equipment.

He acknowledged the challenge. “Yes, we have to open it up to other companies – it’s a fleet.” But in GE’s industrial internet “customers are going to manage their own data.” And why will companies part with their data and insist their suppliers do as well. Once again, the answer lies in bottom line results. Or as Immelt put it “if you are putting food on the table, people will part with their data.”

With data, however, comes a second challenge – security. Immelt acknowledged that this was a problem they simply had to solve. The speed at which GE can move forward is a function of how well they can deal with security.

Clearly, GE’s timeline is aggressive. “You go to bed as an engineering company and you wake up as a software company.” Moreover, Immelt indicated that not only is his strategy different than the other tech giants, the way of getting there is also different. Unlike so many tech giants, he intends to focus first on internal capabilities. “We don’t think that there are things that we can’t do,” he stated. “When it comes to technology and science, if we can’t do it, Thomas Edison would come out of his grave and kill us.”

But it’s more than just pride driving this decision. Immelt doesn’t have a lot of time for the mergers or “techquistions” used by so many of the other tech giants. “In a candid assessment of M&A in the software space,” he said, “there has probably been more value destroyed than created.” He’s not afraid of acquisitions if necessary, but his solution will be “organic at the core.”

And that, for Immelt, “is why CIOs matter.” He came here, to speak to his potential customers, but also hinted that he had an eye to potentially recruiting great talent at the CIO level.

In a business that is so highly dependent on information technology, Immelt says, “CIOs matter. They’ve gone from keeping the cost down, managing the help desk and not complaining too much to a different stance. But today they are (or should be) reconceptualizing what it is to be CIO of your company.”

Immelt sees a great CIO as an innovator. And in this industrial Internet “there’s going to be more innovation. We have to be willing to disrupt our own business model.” Because “even GE can be disrupted.” So, according to Immelt, “anyone in the room that is not that ‘healthily paranoid’ is in the wrong room.”

His one piece of advice for CIOs? “You’ve been too passive for too long. You need to conceptualize how valuable you are to the company. Actively demand your seat at the table.” And while CIOs need to become more confident, Immelt says that the “CEO, on the other hand, has to become more paranoid.”

For those who might shy away from such a bold strategy, Immelt is clear. In his mind, there is no other option.

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Jim Love, Chief Content Officer, IT World Canada

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Jim Love
Jim Love
I've been in IT and business for over 30 years. I worked my way up, literally from the mail room and I've done every job from mail clerk to CEO. Today I'm CIO and Chief Digital Officer of IT World Canada - Canada's leader in ICT publishing and digital marketing.

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