Who’s afraid of the big, bad Uber?
Not the ride-sharing service itself, but the disruptive potential of what we’ve come to call Uber-ization. This term has now entered the boardroom as part of strategic planning vernacular. It’s the threat of a digital competitor who skates past all the traditional barriers to entry: the largest taxi service in the world that owns no cars; or a lodging service without any real estate; or a razor blade purveyor without any manufacturing.
At times, it seems like we’ve entered the paradox economy—the key to dominating an industry is to not invest in the one thing everyone thought was essential.
Could This Happen To Me?
Executives have nightmares about their industries being disrupted by digital and wake up in cold sweats asking, could this happen to me? (Hint: yes, it can!)
Oftentimes, the first instinct is to play defense and protect existing business. But now is the time to go on the offensive, to experiment, to create new offerings and push into new markets. You can’t outsource your digital transformation; you have to identify your value proposition and exploit it to become a market maker in the industry you serve. Your strategic partners play a key role in this, but if you’re to be successful, you must own your own digital transformation.
Transformation is a process that will take time. If you haven’t already started, you can start small, but you must start now. We began this transformation years ago at GE. We experimented, and we figured out what would work and what won’t work for us. We’re putting everything we learned into our Digital Transformation Playbook as a way to help move other companies up the digital industrial maturity curve.
The Five Keys To Driving Digital Transformation
- Operating Model and Capabilities: Organizations need to understand how to configure their operations for transformation—determining what capabilities, roles, leaders, and teams are needed. At GE, we created GE Digital to help drive our transformation. We do two unique things at GE Digital: 1) We hold CIOs accountable for driving productivity improvements inside the company; and 2) We take the best productivity ideas (Predix, Asset Performance Management, Digital Thread, etc.) and feed them into our software business, where we develop and sell these Industrial Internet solutions outside of GE. Our CIOs help us define, refine, and commercialize IIoT solutions, moving IT away from being just a cost center. I believe this is the IT model of the future.
- App Economies Will Win: We know software is eating the world. Companies that leverage data and the power of the app economy will set themselves up for long-term success. For example, we recently announced a partnership with the Swiss company Schindler, a 142-year-old leader in elevators, escalators and moving walkways to track and monitor its assets with Predix, our operating system for the Industrial Internet. With Predix, Schindler can enter digital at the innovation level and start building on capabilities quickly, all with an app economy mindset. Predix allows Schindler to track their products to identify service issues and, through analytics, start predicting maintenance issues long before equipment fails. They’ll realize savings by reducing unplanned downtime and maintenance costs. And what about those 1 billion people who use Schindler’s services every day? They don’t have to take the stairs (sorry exercise!).
- Your Ecosystem Matters: You can’t transform on your own. We pair the capabilities of the app economy with our growing partner ecosystem, where we (and all industrials!) can tap to find ready-made digital solutions. Digital transformation takes a village. Your partner ecosystem can help you transform, and, in doing so, can help you help your customers transform too.
- The Power of Culture: Transformation doesn’t matter unless you’ve got a culture that’s willing and able to embrace it. At GE, we embraced lean startup principles we call FastWorks, which emphasizes iterative innovation, space to experiment, and a fail-fast mentality. It represented a massive change for a 350,000-person company founded in the 19th Century, but that’s why we’ve been referred to as the 124-year-old startup.
- Alternative Business Models: At GE, we’re incredibly outcome focused. We’re exploring new business models, such as outcomes-based agreements that share risk and reward. Creating services on an open app ecosystem also opens up the ability for our customers and ecosystem partners to put their own applications, analytics, or microservices on Predix, all in an effort to accelerate this change of IT from a cost center to a profit center.
I hope you’ll join us at Minds + Machines, on Oct. 25-26 in San Fancisco, to explore more outcomes of digital industrial transformation. Early bird registration ends Aug. 25th, so don’t miss out!