BERLIN (Reuters) - General Electric (GE.N) will not abandon its high-tech strategy under its new chief executive even if the transition to digital equipment proves “uncomfortable” for many of its customers, senior managers said on Tuesday.
“There is no plan B. We’re not going back,” Ganesh Bell, chief digital officer of GE Power, the group’s largest industrial business, told Reuters on the sidelines of a Berlin conference to promote its digital products.
Bell was speaking a day after GE named insider John Flannery as its next CEO, taking over from long-serving Jeff Immelt, who reshaped the company to sharpen its focus on technology but failed to deliver profit growth fast enough for some investors.
Flannery said on Monday that he will conduct a swift review of the conglomerate’s business portfolio with “no constraint”, but that digital efforts will be at the heart of its strategy.
Bell said that all of GE’s senior managers, including Flannery, are “believers big time” in Immelt’s push to invest billions of dollars to build a digital business that marries electronic sensors and analytic computing with industrial equipment.
“Investors are starting to get the story. What they haven’t grasped fully is that it is not just about making existing business more efficient but about a whole new franchise,” he said.
Beth Comstock, who runs the innovations unit at the maker of jet engines and power plants, noted that Flannery was part of the strategy team that drove the digital push and had seen positive results in his own healthcare unit.
“You don’t go digital at your own peril,” she said.
Immelt had been due to speak at the Berlin conference, but pulled out after Monday’ announcement, leaving Comstock to speak in his place.
Comstock admitted that it can be difficult to persuade GE customers of the need to digitize, even though 50 billion machines are expected to have online connectivity by 2020.
“The more we can show how we have digitized, the more likely they are to try it,” she said. “They want examples of others that have done it.”
Comstock said that such initiatives represent a huge opportunity for GE, with only 30 percent of European companies currently analyzing data from their industrial equipment to inform decisions.
She cited the example of DB Cargo, the logistics arm of the German railways company, which she said had improved fleet reliability since adopting GE’s software on its locomotives.
“We have to accept that the old is going away and the new has not yet fully emerged,” she said.
Editing by David Goodman