Last year we published The Right Way To Establish A Digital Platform Business to examine how GE’s former CEO, Jeff Immelt, established GE Digital under the leadership of Bill Ruh. GE Digital and its Predix platform were supposed to be an engine of revenue growth for GE. Given all the doom and gloom news surrounding GE in recent months, we felt it important to publish an update, examining where GE Digital stumbled and how it might yet succeed.
In the latest report, It’s Not Easy For An Industrial Product Company To Build A Software Platform Business, six colleagues and I analyze the evolving digital strategy at GE to collectively determine some lessons learned.
While what we see is no surprise — the path to digital business is not only long but also fraught with difficulty — we also found that:
- GE Digital remains core to GE’s strategy. So far, GE CEO John Flannery has pledged his full support for GE Digital. We expect GE Digital to continue to bring value to existing GE customers through new software applications built on Predix.
- Predix’ role will change. As GE Digital focuses on building Predix-enabled solutions for the internet of things (IoT), its value as an industrial IoT platform will increase in line with measurable business outcome improvements.
- You can’t run a software business the same way you run a product business. Despite being respected the world over for their management expertise, GE’s leaders have struggled to grow a software business, which requires a fundamentally different set of skills.
What It Means
Overall, GE remains on a multiyear digital journey. As with any digital transformation, executives at GE will continue to adapt to market changes and pivot their strategy based on market feedback. Whether GE will eventually be more successful under Flannery’s leadership remains to be seen. Until GE Digital becomes an “industrial segment” — GE parlance for a business unit with numbers reported to investors — it’s hard to see how Predix will be anything more than the underlying IoT platform for GE products.