“The old business model doesn’t work anymore”; Jeff Immelt Explains Why GE Is Leaning into Risk
May 12, 2017
GE Reports Canada
At the Customer Innovation Centre in Calgary, Jeff Immelt discussed strategies for thriving in the era of rapid digital transformation.
Though we’ve been hearing about the industrial internet of things and digital disruption for more than five years now, the real transformations are only just beginning.
As Jeff Immelt said in a speech at the Customer Innovation Centre in Calgary on May 10, 2017, “The Industrial internet of things is real and it’s going to change the way we all do business.”
A new set of circumstances have set the stage for rapid growth: affordable sensors, increased processing speed, proliferating Cloud-based apps for industry, and tools like on-demand manufacturing. Together, these technologies are enabling startups to bring transformative technologies to market much more quickly—and disrupt longstanding business models just as rapidly.
All companies face the threat of Digital Darwinism, AKA “adapt or die”. This risk is clearly felt in Canada, where business leaders display less excitement and feel less empowered to join the 4th Industrial Revolution than their peers in developing markets, according to the latest Global Innovation Barometer report.
One reason they identify for this hesitation is institutional resistance to risk-taking. But companies don’t need to become reckless in order to boost their risk-tolerance. At GE, Immelt takes what he calls “a forward-lean on risk.”
“The old business model doesn’t work anymore,” Immelt told the crowd. “We need a full ecosystem to make the Industrial Internet of Things work. We work with partners, developers and companies that we have an equity stake in to make this happen.”
Adopting a Strategy of Collaboration
Partnering with startups is a wise strategy for corporations that want to be part of an innovation ecosystem, because these small, nimble companies are often better at developing new technology quickly.
“We’re focused more on speed than ever before,” Immelt told the crowd. “We’re now focused on creating minimally viable products and that’s tough for a company that has always worked with big industrial machines like jet engines, where there’s no such thing as a minimally flyable product.”
To facilitate this cultural shift and assist with partnerships, GE developed a strategy called FastWorks, which is a system of principles and practices to help corporations and startups collaborate effectively. “We all want the same thing: to bring a value proposition to our customers as quickly as possible,” says CIC leader Gandeephan Ganeshalingam. “This structure lets us do that.”
In many ways, the CIC puts Immelt’s ecosystem strategy on full display, particularly at its Zone Startups Calgary hub. GE Canada CEO Elyse Allan has called the ZSC “a sandbox for young companies and GE to play together, to the benefit of our customers who need creative solutions for their challenges.”
For example, GE wanted to address the challenge of pipeline integrity. After reviewing available technologies, GE identified HiFi Engineering’s total coverage system, which uses fiber-optic cabling to ensure instantaneous leak detection. HiFi joined the roster at the ZSC, and the tech is now integrated onto the Predix platform, where it can be coordinated with other digital tools to improve pipeline safety.
Those kinds of successes occur more often and more efficiently when companies look to the broader ecosystem for solutions. Collaboration is challenging, and accelerating innovation means taking risks, but digital disruption is here to stay. Don’t shy from risk, says Immelt: lean into it.