GE Digital Transformation_Jashanjot

1 Digital Transformation Failure at GE Digital Transformation Failure at GE: Problem, Solution & Learning Digital Transformation CMPT 641 (Winter24-10) University Canada West Instructor: Jeffrey Ha Jashanjot Singh Student ID: 2302042

2 Digital Transformation Failure at GE ACADEMIC INTEGRITY STATEMENT I agree that the work in this paper is my own work and that I have given credit to all sources of information used in my paper by including citations and references in the APA format. I acknowledge that I am expected to exercise the utmost academic integrity in all work submitted for this course. Jashanjot Singh

4 Digital Transformation Failure at GE Introduction "Is the titan of the industrial era falling victim to the digital age?" This question forces business practitioners and managers to study the failure of General Electric’s initiative for digital transformation. My study is also focused on the reason behind the failure and the shortcomings in the implementation that occurred at GE. To delve deeper into what happened at the company during its digital transformation initiative, I went through dear 10K reports from 2019-2020 and 2021. I also explored some of the online resources available in this regard to understand the challenges faced by the company and the missteps encountered. With all the information and knowledge collected through these studies, I could arrive at a reason why the company failed miserably in its initiative and came up with a solution. I also devised a structured evaluation matrix of GE's digital transformation efforts. The proposed solution targets strategic adjustments and operational overhauls in order to realign GE's digital initiatives with its core competencies and market realities. The assessment framework developed for this purpose should serve as an important tool and as a guiding strategy which can steer the company back onto the digital and industrial leadership journey. The findings of this research help understand and reveal both internal and external factors that contributed to GE's digital transformation challenges. This paper highlights the importance of cultural adaptability and strategic coherence. It also teaches us the need for a balanced approach to innovation and traditional operational excellence. The insights from my study give a clear picture of GE's journey and teach a valuable lesson to conglomerates who are navigating the tumultuous waters of digital transformation. The lessons learnt from GE's experience are important in terms of agility, foresight, and a deep understanding of organizational strengths and weaknesses. This may help any large organisation in the quest for digital change management.

5 Digital Transformation Failure at GE The Failure of GE's Digital Transformation Initiative In the past, General Electric (GE) represented the might of American industry. The business started a bold plan to rise to the top of the digital industrial sector. The CEO at the time, Jeffrey Immelt, oversaw this endeavour. His goal was to revolutionize GE by fusing its conventional sectors with digital technology. The initiative of GE Digital and a product named Predix, was the central idea of this endeavour. It was basically a cloud-based platform which was created to maximize the potential of the Industrial Internet of Things (IIoT). This concept was completely novel and faced several obstacles, such as the industrial market's acceptance and preparedness to recognize it as the new norm. Despite having highly ambitious goals and significant investments, GE's digital transformation initiative fell short of expectations. The initiative failed to achieve its expected impact and faced critical challenges. Some of them are listed below: Strategic Misalignment : GE's goal for digital transformation was forward-thinking, but it frequently looked out of sync with the company's fundamental skills and current market realities. The ambitious plan of becoming a top ten software firm appeared to go beyond GE's industrial identity and finally led to strategic perplexity. Execution Challenges : The company faces several challenges in implementing its digital plan. From integrating digital services with current industrial products to growing its new digital platform, It failed to provide a consistent, seamless experience throughout its digital and industrial market. Cultural and Organizational Barriers : The attempt to create a digital-first culture within an established industrial giant encountered strong resistance. Transformation from GE's traditional manufacturing operations to its digital aspirations proved more challenging than it was anticipated. It highlighted the difficulties of transforming organizational culture and structure at giant companies. (Morgan, 2023)

7 Digital Transformation Failure at GE Moreover, GE's competitive landscape is characterized by rapidly changing technology, necessitating ongoing research and development. The company acknowledges the criticality of product quality and efficiency and the importance of adhering to numerous regulatory standards, which further complicates the digital transformation process. The long product development cycles and the need for significant research and development expenditures underscore the challenges in aligning and executing a unified digital strategy across all business units. These are a few pieces of evidence, which support my view: 1. Global Presence and Diverse Operations : GE has operations spread across 35 countries and several segments. Each of them has its unique competitive, regulatory, and technological challenges. Managing digital transformation across such a vast and diverse landscape requires an exceptionally tailored and researched approach. Most importantly, if it's not well-researched, there is a high possibility of encountering significant hurdles. 2. Competitive and Technological Landscape : The Company admits that it has aggressive competition from the existing market players. This acknowledgement in the company’s 10-K report tells about the necessity for continuous innovation and challenges in implementing a one-size-fits-all digital strategy. The various technological needs and competitive pressures from its competitors in various business segments demanded a very comprehensive approach 2 digital transformation initiatives. 3. Impact of Global Economic Factors : GE's acknowledges in its report that there are so many factors which me affect its digital strategy. The factors included world economies, commodity prices call mom foreign currency volatility, export and import regulations and other trade policies involved. These factors required any such

8 Digital Transformation Failure at GE initiative to be agile and able to be customizable on demand. As per the report, there is no proof that these factors have been addressed properly. 4. Regulatory Standards and R&D Importance : The focus on regulatory requirements, as well as the importance of R&D spending, highlights the significant stakes involved in changing GE's operating operations. Any failure to integrate the digital transformation plan with these key characteristics might result in substantial failures. 5. Human Capital : With approximately 205,000 employees all around the globe, the human resource angle of digital transformation at GE cannot be ignored. The initiative's success depends on effective change management across the workforce of this magnitude. It is always a daunting task to conduct meticulous research and a well-communicated strategy. In toto, the digital transformation initiative at GE failed because its diverse operations, competitive and technological environment, global economic effects, regulations, and large workforce all created a highly complex environment. If the company had A targeted, flexible, and sector-specific approach based on careful research and planning, it could have overcome these challenges. Failure’s Impact of Digital Transformation in Large Enterprises GE's case acts as a critical case study in the challenges of digital transformation, particularly for large and established enterprises. It becomes more important for organisation with operations spread in several geographical areas and in various segments. The failure of GE's initiative highlights several key lessons:

10 Digital Transformation Failure at GE strategic and innovative step to execute digital transformation in the organization. I strongly feel that the challenges faced by a company of this size are unique and diverse; the solution should also be tailored, agile and innovative. 1. Conduct a Comprehensive Digital Audit Across All Business Units : To understand the unique digital adaptability and requirements of each business unit, start by taking a close look at them. Evaluating existing technology, procedures, digital competencies, and the particular competitive environment for each unit should all be part of this. Finding digital gaps and chances for innovation and integration that are unique to the many markets that GE serves is the goal (Kane et al., 2015). 2. Develop Business Unit-Specific Digital Roadmaps: Make customized digital transformation plans for every business unit based on the audit. These roadmaps have to take into consideration the particular difficulties and chances found in various industries and regions. To make sure that activities are clearly linked to addressing the unit's difficulties, they must contain specific milestones like digital skill development, process automation, data analytics deployment, and acceptance of digital tools (Sebastian et al., 2017). 3. Establish a Central Digital Transformation Office (DTO): Establish a central DTO with the power and duty to manage GE's digital transformation. This office, which will be in charge of maintaining uniformity, exchanging best practices, and encouraging collaboration between business divisions, need to be staffed by executives with expertise overseeing intricate, worldwide digital revolutions (Singh & Hess, 2017).

11 Digital Transformation Failure at GE 4. Implement Agile and Cross-Functional Teams: Within each business unit, build flexible, cross-functional teams with individuals from several regions to focus on the digital projects specified in the roadmaps. These type of teams should have a required autonomy so they can easily adjust to the demands of the local market. Also, they can do so while staying in line with the larger digital strategy(Denning, 2016). 5. Leverage Data for Decision-Making: Making correct use of data analytics to learn about market trends and customers behavior. This should use combining information from several company divisions and geographical locations to support strategic choices and tailor services to a range of client bases (Bughin et al., 2017). 6. Focus on Digital Skill Development and Talent Acquisition: Employing digital talent and putting in place focused training programs are two ways to minimize the digital skill gap. Give top priority to competencies like data science, digital marketing, and cybersecurity that are essential for the modern world. Adapt these plans to the unique requirements of various business units and geographical areas(Kane et al., 2015). 7. Pilot and Scale Digital Initiatives: Start modestly by implementing digital projects in a few chosen marketplaces or business divisions. Gather feedback from these pilots, make revisions, and then expand the successful projects to other areas of the company. With this strategy, before implementing it widely, what functions well in various settings may be tested and learned (Bharadwaj et al., 2013). 8. Strengthen Customer-Centric Digital Offerings: Create and improve digital products that satisfy changing consumer demands in various markets. In order

13 Digital Transformation Failure at GE transformation, one that includes precise metrics, deadlines, roles, and anticipated expenses. This comprehensive strategy considers the special structure and difficulties faced by GE: Phase 1: Planning and Roadmap Development This is the first phase of the transformation process. This phase focuses on establishing the foundation for GE's digital transformation process. Phase 1: Planning and Roadmap Development Duration 6 Months Expected Cost: $5 million Responsibilities & Team Members : Chief Digital Officer (CDO): Oversee the planning phase, align digital strategy with business goals. Digital Transformation Team: Creation of DT Team, conducting assessments, and developing the digital transformation roadmap. Key Progress Milestones : Completion Status (Y/N) Digital maturity assessment completion. Completion Status (Y/N) Digital transformation roadmap approved. Phase 2: Pilot Projects and Initial Rollouts In this phase, GE initiates pilot projects within select business units to test the digital transformation strategies in real-world settings, allowing for adjustments and learning before a company-wide rollout. Phase 2: Pilot Projects & initial Rollouts Duration 1 Year

14 Digital Transformation Failure at GE Expected Cost: $20 million Responsibilities & Team Members : CDO & Business Unit Heads Select pilot projects, oversee implementation IT Department Support technology integration and security protocols Key Progress Milestones : Completion Status (Y/N) Successful pilot project completion in each business unit Completion Status (Y/N) Evaluation and adjustments based on pilot project outcomes Phase 3: Full-Scale Implementation During full-scale implementation, GE expands its digital transformation efforts across all business units, leveraging insights from the pilot projects to ensure smooth integration and operational efficiency. Phase 3: Full-Scale Implementation Duration 2 Years Expected Cost: $100 Million Responsibilities & Team Members : Chief Digital Officer (CDO): Lead the full-scale implementation, monitor progress. Business Unit Heads Ensure alignment with unit-specific objectives Change Management Team Facilitate organizational change, employee engagement Key Progress Milestones :

16 Digital Transformation Failure at GE Digital Transformation Assessment Matrix for Agility & Success I have crafted the Key Metrics & KPIs section specifically for General Electric (GE), focusing on agility throughout our digital transformation journey. Assessment Matrix for Digital Transformation at GE Assessment Parameters Rating Scale (1-5) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Digital Adoption         Power 2 3 4 5 Renewable Energy 2 3 3 3 Aviation 3 3 5 5 Health Care 1 1 2 2 Financial Services 5 5 5 5 Total 13 15 19 20 Operational Efficiency         Power 2 3 4 5 Renewable Energy 2 3 3 3 Aviation 3 3 5 5 Health Care 1 1 2 2 Financial Services 1 2 2 2 Total 9 12 16 17 Innovation Index         Power 1 2 3 4 Renewable Energy 0 0 1 1 Aviation 1 2 2 2 Health Care 2 2 2 2 Financial Services 1 2 2 2 Total 5 8 10 11 Employee Digital Literacy         Power 3 4 5 5 Renewable Energy 3 4 5 5 Aviation 3 4 5 5 Health Care 3 4 5 5 Financial Services 3 4 5 5 Total 15 20 25 25

17 Digital Transformation Failure at GE The application of a digital adoption and operational efficiency gains with exact benchmarks in each industry are included in this matrix. I have highlighted developments in healthcare technology and renewable energy through the Innovation Index, as these are important fields for GE. In order to keep the diversified workforce at the forefront of digital skills, I have also started specialized training programs to raise Employee Digital Literacy Levels. Using this performance monitoring sheet, I hope to provide agility to our transformation process so that we can quickly adapt to new information and changes in the market. Based on the sample performance matrix, here are some insights and trends that can be derived for use by management. These insights also provide idea about where the company needs to customize its efforts:  No Digital Adoption in the Healthcare segment is visible.  Despite a fair digital adoption, there is no sign of operational efficiency.  Constant Digital Adoption is visible in the Power and aviation segments.  In the case of innovation, only the power segments show a positive trend.  The training score is good for all the segments, but back home, the utility in the form of digital adoption and innovation is not satisfactory. All above sample insights at the end of a year, give actionable insights to the Management & Digital Transformation team. They can improvise the plan, halt any particular initiative, or invest more time and resources in the non-performing segments. Further analysis of the Assessment Matrix will also lead to the exact root cause of the non-performance of any particular indication and segments thereon. This will help management rethink the strategy.

19 Digital Transformation Failure at GE as per current market trends and technological advancements (Rigby et al., 2016). I am sure that this kind of flexibility in implementation is particularly beneficial for a large company like GE. Measurable Outcomes and Continuous Improvement: Another important aspect of my methodology is that I have given required importance on measuring the outcomes of strategies at regular interval. An assessment needs to be conducted at the end of each quarter across all 5 segments of the company. As per the industry practices, these measurable key performance indicators (KPIs) are aligned with the strategic goals of GE(Davenport & Westerman, 2018). This approach is based on data and allows for regular assessment and improvisation. This also ensures that the digital transformation process is always aligned with the goals of the company and delivers expected result (Davenport, 2013). It's evident that the solution, phase-wise implementation schedule and assessment matrix that I have designed for GE's digital transformation is a strategic framework built for GE's. It will help GE handle operational nuances and the challenges of digital innovation effectively. With help of customization, agility, and measurable progress, this approach is not just justified but full-proof for GE. It will help the company to remain competitive and successful in the digital era. Root Cause & Learning from the Failure at GE As per my research, the most evident and primary cause of GE's digital transformation failure is the misalignment between its digital strategy and its diverse, global operational structure. There are a lot of learnings from this case. First of all, it shows the importance of a tailored digital strategy which should always align with the company's core operations. It should also be flexible enough to adapt to the diverse needs of different business units.

20 Digital Transformation Failure at GE Secondly, it highlights the necessity of proper research and grounwork on the company's intricate global operations before making and deploying a digital transformation plan. Lastly, it emphasizes the need for a phase-wise and agile approach to digital transformation. The approach should include continuous evaluation and adaptation to ensure relevance and effectiveness across all sectors of the business. Conclusion My detailed analysis of GE's failed digital transformation shows that many factors led to its unsuccessful execution. The complexity of GE's varied operations and a strategy that was not well-researched were major obstacles to the project's success. GE's large global presence, covering many countries and industries, made it difficult to apply a unified digital strategy across all its business units. Additionally, the competitive and technological environment, along with regulatory requirements, made the transformation even more challenging. Looking ahead, GE must understand the value of a detailed, industry-specific strategy that addresses its particular challenges. By recognizing the variety of its operations and focusing on in-depth strategic planning, GE can set itself up for a more successful digital transformation. Also, building a culture that values innovation and flexibility is key to keeping up with changing market trends and new technologies. In conclusion, GE's digital transformation failure is a warning but also a chance to learn and improve. By dealing with the main issues found in this analysis and using focused strategies, GE can create a stronger and more successful digital transformation in the future.