Digital transformation at GE: Shifting minds for agility
Case Study

Digital transformation at GE: Shifting minds for agility

20 pages
May 2019
Reference: IMD-7-2011

The case explores the journey taken by GE, at the instigation of Jeff Immelt in 2008, towards transforming itself from a global industrial giant to becoming an Industry 4.0 leader, by harnessing the nascent promise of the Industrial Internet of Things. The case illustrates the different initiatives launched including: 1. Fastworks – lean methodology including design thinking and agile-lite approach to creating new products. 2. Business analytics and sensors for products. 3. Creation of GE Digital in San Ramon, combining analytics with a platform – Predix – and working under full agile methodology. 4. 2015 – introduction of Chief Digital Officers in each industrial vertical reporting to Bill Ruh at GE Digital. 5. Digital Foundries – to help GE customers with their digital transformations. Immelt had invested more than $4 billion into GE’s digital transformation. The case uses examples to illustrate the transformation and the challenges GE faced. Challenges included: the initial decision to create a separate division rather than embedding digital into the verticals upfront, culture change, different skill sets and time horizons, different recruitment and remuneration practices, and communication strategies. During the transformation, Immelt retired early due to falling stock value and what the market judged as previous bad decisions. He was replaced by John Flannery, a GE veteran, charged with overhauling GE by focusing on financials and spinning off parts of GE. Flannery announced he was supportive of GE Digital and the changes, but it was clear that the focus was on the industrial verticals. The markets were unhappy with the speed of progress under Flannery and a year later, he was also replaced. This time by Larry Culp, a GE-outsider. The case ends in 2019 with Culp’s announcement that GE Digital, the digital ‘home’ of GE was to become a separate enterprise, although wholly-owned by GE.

Learning Objective

The audience will learn how a large industrial MNC tried to transform itself into a digital technology leader but the challenges it faced doing that and the result.

Keywords
Strategy, Digital Transformation, Change Management, Execution, Industry 4.0
Settings
United States of America
General Electric, Industrial Automation, Industrial Engineering, Industrial Goods
21st Century – 2008-2019
Type
Published Sources
Copyright
© IMD 2019
Language
English
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