“Creating success in business isn’t about cheap labor. It isn’t about owning an asset. It’s about who delivers the most efficiency around an asset.”
That’s according to Bill Ruh, CEO of General Electric (GE) Digital and chief digital officer for GE, a company he said has been “disrupting itself for 124 years.” Ruh was among several digital-focused executives who spoke last month at the “Road to Reinvention: Leadership in the Digital Age” conference, an annual event held at the Center for Digital Transformation at the University of California, Irvine’s Paul Merage School of Business.
Why has GE been focused on disruption? To be on the forefront of growth, Ruh said. How? By accepting, creating, and moving with innovation to stay ahead and build success.
This theme of innovation and disruption was woven throughout the event, bubbling up in conversations with each new speaker. In the first presentation of the day-long event, Vijay Gurbaxani, founding director of the Center for Digital Transformation, explained that last year’s conference was about cultivating adoption of the ideas around digital transformation – a belief in why we should embrace digital – whereas this year’s conference focused on how companies can overcome challenges to make digital transformation a reality.
At GE, Ruh was hired to create a new business model to add a digital focus in every business area. The industrial world is “a slow growth world,” Ruh said, noting that since 2010, industrial growth has been significantly slow. A big reason for that, he explained, is the lack of efficiency that can be created when a digital focus is lacking.
Where executives and entrepreneurs get stuck is “when they get so good at what they do that it’s hard to do something different,” Ruh said. The attitude isn’t to simply accept and weather change; it must be an attitude of excitement and motivation to be the change.
We see examples of the transformative power of digital with companies like Uber and Airbnb, Ruh said, which created platforms and tools for helping connect people and facilitate transactions. Again, digital transformation is about creating a better experience around an asset to increase efficiency.
But what does digital transformation mean for industrial businesses like GE?
Ruh’s intention with GE, he said, is to make tools smarter, make them apply to other areas (for example, fuel efficiency and predictive maintenance can both apply to different assets for different purposes), and to build a common platform or operating system from which these capabilities can be built.
The similarities are significant: for consumer-facing services like Uber and for industrial operations like GE, digital transformation is about smarter, more widely applicable tools that can be built from a common platform.
“Predictive maintenance is not just for a turbine,” Michael Chui, partner at McKinsey Global Institute and one of the moderators at the conference, said. “It’s for a person.”
And Chui is right. According to Julie Hill, a member of the Board of Directors for Anthem, the health insurance company is “mining metadata for health outcomes” because data is a huge factor in being able “to know where to go next.”
As a whole, the healthcare industry is cautious, risk averse and cannot, as Hill put it, “start chasing shiny objects,” particularly in the wake of Anthem’s cyber attacks that led to a data breach in 2015. Even so, Hill said, “There is a level of curiosity and openness to new ways of doing things.”
Brian Niccol, CEO of Taco Bell, spoke of business executives needing to “be comfortable being a pioneer, being ahead of the curve” to create a “frictionless experience” with a brand. To do that, he said, they must measure priorities, consider outcomes, listen to feedback, be nimble, and “consider the cost of continuing doing things the old way.”
Richie Etwaru, chief digital officer of IMS Health, said during the event, “The pace of customer experience reset is exponential because tech is growing and cycles reset faster and faster.”
Creating that frictionless customer experience, regardless of product you’re working with, enhances the customer cycle. Vivek Sharma, senior vice president of digital guest experience for Disney Parks & Resorts, explained it this way: more customers mean more data; more data to analyze means opportunity to create better designed products; better products mean more sales, which leads to more customers.
One of the most important parts of that cycle is data analysis, a subject that came up several times among nearly all speakers, who focused their discussion around their customers and how to serve them. Niccol explained, “The synthesis of analytics requires understanding of the customer.” In other words, you have to know whom you are talking to in order to properly listen to and understand them.
Most big companies think they can do everything themselves, Ruh said, but it’s not always the case, particularly in digital transformation. Partnering with other organizations and building ecosystems of business partners with common goals help the company to operate everywhere and in areas GE wouldn’t have been able to on its own. Ruh explained that GE built this network because the firm knows the value of reach and distribution, and its own capacity for developing.
How do you get started in digital transformation? Ruh said to start with outlining success metrics, the patterns of outcomes you want to see. This could mean predictive maintenance, or something completely different. Start with identifying outcomes that you track, he said, become the person who can create efficiency, and build a platform to do that.
Watch video clips from last month’s events on the Center for Digital Transformation’s YouTube channel. For more information, visit www.centerfordigital- transformation.org/reinvention-2016/.