GE shows how data has tranformed business

Quick: What do you think of when you think of GE, the company formerly known as General Electric?

Huge grey machines that grind and spark and hum, producing electricity? Dirty diesel-powered locomotives rumbling and screeching through the countryside pulling miles of coal cars?

old school locomotive

Me too. But really what GE is, it turns out, is an ideal prism through which to look at the future. We all know the world is changing at warp speed. But sometimes the change is so rapid, so vast and so seemingly diffuse, that it helps to occasionally zero in on one story to see the bigger picture.

Which brings us to William Ruh, GE’s chief digital officer, speaking on stage with the New York Times’ Steve Lohr at the Structure Data 2016 conference in San Francisco.

“Everything we’re doing is on the bleeding edge of technology,” Ruh said, talking about how the digital revolution has revolutionized GE. “It’s a cornerstone of our culture. We’re not an industrial company. We’re a digital industrial company.”

So, put away your images of workers shoveling coal into GE-built boilers or whatever those hulking grey machines in your mind’s eye actually are. GE is much more into the types of machines that artificial intelligence experts talk about — the learning machines, the kinds of machines that fly airplanes, run the economy, power digital marketing and e-commerce, inform medicine and on-and-on.

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Granted, my conference epiphany is based on a 20-minute talk by one executive with one company. But the kinds of change that Ruh talked about reflected a much broader change. For instance, those big machines you picture (OK, I picture) when you think of GE?

That’s not really the way GE looks at the world, in part because that’s not how GE’s customers, and others who buy things, look at the world.

“We’re going to see a movement away from big capex projects,” Ruh said, using the shorthand for “capital expenditure.”

Those who run companies, by and large, no longer see products when they buy something. Instead, they buy outcomes, he said. An electricity provider, for instance, no longer buys a power plant. And an airplane manufacturer no longer buys a jet engine.

“They think about the idea, ‘I can generate 5 percent more electricity on a wind turbine or I can get more hours out of my jet engine,” Ruh said. “This digital thing is fundamentally changing our company.”

Of course, GE still sells stuff. But like so many legacy companies before it, it increasingly sells services and expertise. It’s selling outcomes, Ruh said, an idea that “is fundamentally embedded into how you build machines and how  you service them. This idea of selling outcomes; how far will that go?”

The question was rhetorical, but the answer is: Pretty far.

It is the digital revolution and the ability to gather, process and analyze huge amounts of data that have changed the nature of GE’s business and business in general.

wind turbines

Ruh talked about a wind farm that GE worked with that was initially producing 5 percent in additional electricity. By using data-fueled computer modeling to optimize the production of the existing turbines, GE boosted that additional electricity to 20 percent — and nearly doubled the power provider’s profit, he said.

How? GE takes real-time data — accounting for weather and the performance of the turbine blades, for instance — applies sophisticated algorithms and physics modeling to create multiple digital “twins” of each turbine in a wind field. It then tests a range of operating conditions and practices and instantly comes up with the most efficient way to produce power.

The company can use the same method, Ruh said, to create digital twins of every aspect of a power plant to improve efficiency throughout the plant. And, he says, there is no reason to think such digital twins will extend only to the industrial world.

“I contend that in 30 years we’ll have a digital twin of a human and all this data we collect, that we really can’t do much with, we will feed into it,” he said of the digital human model.

Optimizing the human body. Pretty cool.

So just how far has GE evolved? At the end of Ruh’s talk, Lohr diplomatically asked about recruiting tech talent to a company that might be seen by some (ahem) as an old-school, industrial company. How would he sell GE to, say, a Silicon Valley tech whiz deep in the land of Google, Facebook, Apple and the many startups that turning the world upside down?

“You get to work on meaningful things,” said Ruh, who left Silicon Valley giant Cisco to work for GE.

And yes, these days, the line works.

Photos of wind turbine by TLPOSCHARSKY and steam engine by David Lofink published under Creative Commons license. Conference photo of William Ruh and Steve Lohr by Mike Cassidy.

Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com; follow him on Twitter at @mikecassidy.