GE has sold most of its digital assets, with many of these going to relatively unknown competitors who have swooped in to pick up the pieces.
While traditional business wisdom infers that to fight off competitors, your company has to constantly adapt and grow to provide the customers with what they need. The mantra runs that ‘you can never get too big’. In GE’s case this turns out not to be correct.
GE Digital was the brainchild of former GE CEO Jeffrey Immelt whose vision was to transform the industrial conglomerate into a software company. Immelt created GE Digital in 2015.
However, by 2018 GE announced a breakup plan and General Electric Co. is continuing to look for ways to streamline and simplify its business. According to Bloomberg, this includes exploring options for its software arm, which uses sensors and data analytics to help manufacturing equipment run more efficiently.
There are lessons from the GE story, according to Matt Mead, who is CTO of the digital tech consulting firm SPR. Mead provides Digital Journal readers with his analysis.
Digital Journal: What went wrong for GE that caused them to sell off their digital assets?
Matt Mead: I surmise that GE was trying to be too many things to too many people. And because of digital transformation, smaller, scrappier, previously non-threatening organization suddenly become formidable competitors. GE’s digital assets were unable to keep up with and adequately compete with neither these more agile and niche firms, nor the high rate of change within the digital transformation space.
DJ: What should GE have done differently?
Mead: One different approach would have been for GE to stay the course on their digital transformation mission. Ideally, earlier in their journey, its digital assets would have been transferred to a smaller entity within the company, free from the red tape of a large organization and with the autonomy to model itself after other firms with previously successful digital transformation initiatives.
Another approach would have been to craft strategic mergers with and acquisitions of competitors that would’ve filled the need for this autonomous entity, and rolled them into the fabric of GE.
DJ: For other companies, what are the warning signs they should look out for that they’re headed toward the same fate as GE?
Mead: One of the biggest factors in the downfall of GE’s digital assets was the number of competitors. Like sharks in the water, GE was able to defend itself from a few “sharks,” or competitors, at first. But once there was a swarm of competitors attacking simultaneously from different angles, it became impossible to defend itself completely.
DJ: What are the pertinent lessons from this?
Mead: The lesson here for other companies is that it is critical that they keep an eye on their competition. They must understand the trajectory of their own industry, how other industries might be colliding and how their competition landscape could change as a result. A simple example of this kind of industry crossover is AmazonFresh’s purchase of Whole Foods, which has allowed Amazon to take market share away from grocery stores, despite it not being a competitor in the space initially.
In a follow-up article, Mead looks at the strategies that big corporations should be considering when digital disruptors target the company. See: “How to adopt a digital transformation strategy.”
