The power industry is undergoing significant disruption and digital transformation. On this episode, the Chief Digital Officer of GE Power guides us through these disruptions and explains how General Electric is changing as a result.

Ganesh Bell is Chief Digital Officer & GM, Commercial Software & Analytics at GE working across its largest industrial business Power & Water and GE Software. In this position he leads digital innovation and transformation – responsible for the digital solutions business and digital engagement to drive business growth.

Ganesh Bell has held leadership positions in strategy, products, engineering and marketing across a rare mix of large industry leaders, startups, and fast growth companies. Recently he was EVP, GM & Chief Products Officer at ServiceSource, pivotal in its growth and successful IPO by transforming the company to a multi-solution cloud and data services provider and the leader in Recurring Revenue Management.

At SAP he was VP of Product Strategy & Management for the business intelligence & technology platform group of Business Objects and NetWeaver and earlier as VP of Portfolio Strategy in the Office of the CEO. Prior to SAP, he led platform strategy at PeopleSoft integrating J.D.Edwards product portfolio after acquisition where he served as Chief Software Architect. As an entrepreneur, he created YouCentric’s leading CRM products and led its core development to successful acquisition by J.D.Edwards. Ganesh Bell holds a B.S in Mathematics from University of Madras, India and a M.S in Computer Science from North Dakota State University.

Transcript

Ganesh Bell:

(00:00) …founded by Thomas Edison and we’re in the business of electricity, power, renewables, grid transmission, aviation, healthcare, and many businesses, right. We’re a global company. We’re historically an industrial company and in the last several years we’ve been making the transmission to becoming an digital industrial company, and that’s one of the reasons why I’m here.

Michael Krigsman:

(00:29) So when you say a digital industrial company what does that mean? I mean GE has been around as you said for so many years and it’s such an old company, does so many things and I mean of lightbulbs and all of this stuff. What does it mean to be a digital company and what does GE power do.

Ganesh Bell:

(00:46) So I’ll use the power as an example. So if you think about power right, electricity, more than’ a third of the world electricity comes from GE machines. And we have several businesses, everything from machines that generate electrons to machines that transmit and distribute electrons, to machines that help professional consumption happen in energy, right. So we basically can say we do everything from generating electrons to consuming electrons to all the way in that value chain.

(01:21) Now we make machines and we make services around those machines for a long time. And we’ve been doing this for more than a decade. We’ve been doing software, doing software from a control perspective meaning software around a machine. But now over the last several years we’ve been doing a lot of data science, a lot of analytics. Improving the performance of those machine, and now taking those machines and their environments and settings, and we talk about it in the consumer world, we talk about it as Internet of Things. Now our things tend to be big, important, and heavy like things that power the world, move the world, cure the world. And when you connect all of those machines there’s new value, new revenue, new unlocking of potential for our customers and therefore productivity for our customers, and that means building a software capabilities.

(02:15) So we’ve been on a journey of building a software company and we thought that as one of the fastest growing startups inside GE. Last year we made more than $5 billion in terms of digital revenue. And this year we’ll have about $6 billion in terms of digital outcomes for our customers, and think of that as we’re going to be one of the fastest growing software companies in the world and we happen to be an industrial company.

Michael Krigsman:

(02:43) So when you say connecting these machines, can you be concrete about it. Tells us more specifically about the kinds of machines and when you say connecting what does that really mean.

Ganesh Bell:

(02:57) So let’s take an example in our business of generating the gas turbines, or steam turbines, or renewable turbines and machines such as that, right. So in a power plant you have a generator, boiler, pumps, and all kinds of machines. And all these machines have lots of sensors on them, and the senses historically collected data, and they’ve been put into time series data bases and they’ve all been for a long time. Now we are collecting all those machines to the cloud; all the way from the edge to the cloud. And we connect the machines and we can improve the performance of those machines.

(03:35) I’ll give you an example, in our wind business, we took our wind turbines and we’ve figured out just from analyzing all of the operating data, we could make them perform better individually, drive the performance 5%. That’s driving 5% more electricity from the same wind. Now when you collect it across and entire windfarm and connect it to our cloud which is called Predix, which is our platform for industrial internet and set of applications that we call acid performance management, we can drive over 20% more electricity from the same wind.

(04:10) Now the same

Ganesh Bell:

(00:00) …founded by Thomas Edison and we’re in the business of electricity, power, renewables, grid transmission, aviation, healthcare, and many businesses, right. We’re a global company. We’re historically an industrial company and in the last several years we’ve been making the transmission to becoming an digital industrial company, and that’s one of the reasons why I’m here.

Michael Krigsman:

(00:29) So when you say a digital industrial company what does that mean? I mean GE has been around as you said for so many years and it’s such an old company, does so many things and I mean of lightbulbs and all of this stuff. What does it mean to be a digital company and what does GE power do.

Ganesh Bell:

(00:46) So I’ll use the power as an example. So if you think about power right, electricity, more than’ a third of the world electricity comes from GE machines. And we have several businesses, everything from machines that generate electrons to machines that transmit and distribute electrons, to machines that help professional consumption happen in energy, right. So we basically can say we do everything from generating electrons to consuming electrons to all the way in that value chain.

(01:21) Now we make machines and we make services around those machines for a long time. And we’ve been doing this for more than a decade. We’ve been doing software, doing software from a control perspective meaning software around a machine. But now over the last several years we’ve been doing a lot of data science, a lot of analytics. Improving the performance of those machine, and now taking those machines and their environments and settings, and we talk about it in the consumer world, we talk about it as Internet of Things. Now our things tend to be big, important, and heavy like things that power the world, move the world, cure the world. And when you connect all of those machines there’s new value, new revenue, new unlocking of potential for our customers and therefore productivity for our customers, and that means building a software capabilities.

(02:15) So we’ve been on a journey of building a software company and we thought that as one of the fastest growing startups inside GE. Last year we made more than $5 billion in terms of digital revenue. And this year we’ll have about $6 billion in terms of digital outcomes for our customers, and think of that as we’re going to be one of the fastest growing software companies in the world and we happen to be an industrial company.

Michael Krigsman:

(02:43) So when you say connecting these machines, can you be concrete about it. Tells us more specifically about the kinds of machines and when you say connecting what does that really mean.

Ganesh Bell:

(02:57) So let’s take an example in our business of generating the gas turbines, or steam turbines, or renewable turbines and machines such as that, right. So in a power plant you have a generator, boiler, pumps, and all kinds of machines. And all these machines have lots of sensors on them, and the senses historically collected data, and they’ve been put into time series data bases and they’ve all been for a long time. Now we are collecting all those machines to the cloud; all the way from the edge to the cloud. And we connect the machines and we can improve the performance of those machines.

(03:35) I’ll give you an example, in our wind business, we took our wind turbines and we’ve figured out just from analyzing all of the operating data, we could make them perform better individually, drive the performance 5%. That’s driving 5% more electricity from the same wind. Now when you collect it across and entire windfarm and connect it to our cloud which is called Predix, which is our platform for industrial internet and set of applications that we call acid performance management, we can drive over 20% more electricity from the same wind.

(04:10) Now the same example of say a gas-fired combined cycle power plant, a single power plant we have potential to generate up to $50-$250 million of value over the life of a single power plant. And many of our customers have hundreds of power plants, and when you connected across the entire industry it’s massive in terms of savings. That’s billions of dollars of productivity a new value to be unlocked from all of these machines. That’s everything from reducing the on planned downtime to doing predictive maintenance, to reducing losses, to improving productivity your employees and business processes around these machines.

Michael Krigsman:

(04:50) And when you talk about disruption what does that mean in this context?

Ganesh Bell:

(04:59) So in this context for example right, when we talk about electricity value chain, that is either you are a power producer, or utility or grid operator, or an energy service provider, that entire value chain is actually changing a lot right. On one side you have the fuel mix that is changing the world. Renewables are becoming mainstream in many parts, we’ve got a boom in shale gas in North America. We’ve got coal that is a big source of power, and we’ve just made an acquisition just two days ago with a company in Boston about how do you decarbonize and make coal cleaner.

(05:39) There is a lot of analytics that you can apply. When you look at this entire value chain, most people will talk about is digitization of the electricity value chain, and when you think about that we’ve seen numbers like 8% of electricity that gets generated in the world never reaches the consumer.

(05:55) And if you optimize just a few percent of that, that’s like powering whole new nations. And 78% of failures can actually be predicted and they are about 8% of another loss. There’s about 16% of loss that’s happening in the electricity value chain, that we can actually fix using digital technology. In fact the World Economic Forum did an analysis and said across the electricity value chain, just by applying digital there’s about $1.3 trillion of value to be created.

(06:29) And when I look at that, that means new business models are going to be borne right. For our customers, they’re going to get disrupted because their core business model is under threat, and you see consumers of electricity becoming producers of electricity; rooftop solar you know, industrials putting on site power generation, micro-grids, decentralization – all of this is happening. And the utilities at the same time have to deal with decarburization and atomizing the fuel mix.

(06:58) So when they look at that, my goal is that I don’t want my customers to be disrupted. I don’t want our customers to be Ubered or AirBnBed. And that’s really the bigger opportunity for a company like GE. We can help our customers reinvent their business models and drive productivity and profitability.

Michael Krigsman:

(07:17) So your mission in a sense is to help your customers adapt the competitive environment that they’re facing, is that correct?

Ganesh Bell:

(07:31) Absolutely. That’s the right way to say it. Because our customers are going through the same thing, and if you take our customers across all the industries, they are becoming a digital business themselves. And when they become a digital business, that means they have to digitize everything from how they work, and that’s taking part with traditional IT companies. But how their products, services, and core operations will work is something only a digital industrial company can help them with. And so we want to be customers' strategic partner in their own digital transformation and creating new business models for themselves.

Michael Krigsman:

(08:09) What are some of the challenges that you had to face as you were changing this part of General electric? I mean this is a very significant change coming from the traditional power generation side of this into this new modern world where Internet of Things, connected machines, data science is crucial to what you’re doing, so what are the components of the change.

Ganesh Bell:

(08:39) So that’s a great question and I joined GE a little more than two years ago, and I was the first Chief Digital Officer ever in GE. And at that time we didn’t even have a job description what this means, except we knew that we had to transform our self digitally. And I tell people I have two jobs.

(08:58) One is I’m responsible about the digital transformation for the entire business, and power alone is about a $32 billion business. It’s the largest industrial business in GE. But also getting to work across all of our businesses with GE Digital, which is a unit formalized last year, which was a virtual collection of all of the digital businesses in GE, which is how we get this $5 billion in revenue and why we are able to drive $6 billion of orders, because we are going horizontal to go deeper into the vertical.

(09:20) And I would say components have changed. And step one is anybody who drives digital transformation, first you have to have enough knowledge that you need believership right at the top. And believership is for us, comes right from our Chairman. It’s a healthy obsession of what we want to do for our customers in terms of productivity. And also a paranoia and optimism about the market, because somebody else is going to do this and disrupt our customers, so we’ve got to help them and we’ve got to do this for the industries that we’re in.

(10:02) And the second is you’ve got to have knowledge that this journey is different. Your traditional talent is not going to alone make that journey, right. And an interesting thing we’ve heard people talk about is when you drive big transformations like this, your existing talent almost self-selects themselves. So we’ve got a lot of believers inside who have self-selected themselves, because they want to be the change agents to drive the digital transformation.

(10:28) And the third is knowing that the businesses that we’re trying to create in digital are actually different businesses. The traditional GE businesses, as I mentioned, GE is a collection of a lot of big companies and many of our existing CEOs run a company that is sort of big to bigger. Right, the metrics associated with that are very different. It’s about you know revenue delivery. It’s about contribution margin. It’s about taking cost down, and improving productivity and delivering quarter after quarter, and predictable growth. Whereas digital, mirrors more like we all can fix experiences in the SaaS world. But SaaS metrics alone don’t cut it, you have got to have knowledge that you need new sets of metrics to drive that transformation.

(11:10) So it’s adapting those metrics and understanding that digital businesses are about new to bigger. That means, and the second part of my job is actually running the digital solutions within power as a CEO. So I am structured no different than a traditional CEO of a software company in a full responsibility of driving that business forward. That means, we had to bring not just software talent but we had to bring a lot of digital talent and industrial talent into this scene. So it’s a mix of both traditional GE talent, as with those people from Silicon Valley and enterprise software companies and consumer software companies coming together to create this new business.

Michael Krigsman:

(11:50) So what are some of the practical steps that you took in order to facilitate this transition from a traditional industrial business to a industrial digital business as a way to put it.

Ganesh Bell:

(12:09) Yeah, so I would say one of the first things I want to touch upon is you’ve got to have the right environment and the climate for this change. I mentioned our chairman having the believership right at the top, and we also had lots of initiatives in the company that set up the right environment. So let me talk about that first right, which is we understood that the traditional manufacturing life-cycle of multi-year product development, even in the hardware world is extinct.

(12:43) We have to adapt to new leaner methodologies, so we actually rolled out something called FastWorks. You can actually Google it and we have lots of task force champions across the company. Basically it’s a movement from the lean start of movement that we all know from Eric Ries, right.

(12:50) We brought Eric Ries in and we created this FastWorks, and rolled that across the entire company. Now it’s being used across all of the hardware business. So, it’s almost like hardware businesses and services business now know that we can identify methodologies and practices from the software world.

(13:16) The second is making a shift from our old company, we changed a lot of things in the last few years. We changed, you know how we talk about our GE values to a new set of things that we call GE Beliefs, because we are moving from a control based company to a risk based company, so that means driving new belief with our employees, it’s a culture change for our employees.

(13:42) And even compensation. We’ve moved from a really old bonus system which has been around for decades of GE, to a new compensation model that mirrors more like more software companies and you know Silicon Valley companies.

(13:57) We also got rid of our annual performance management system to a more continuous development system. So a lot of those things are in the environmental setting for the change. When it comes to specifics of how we drove this change even establishing by bringing people like me. And for the last six quarters that I was in, we established what a digital business in GE is. Now we have Chief Digital Officers across all of the different industries that GE is in, because we ratified the model, and we’ve created this GE Digital as a overall company who drive horizontal; drive the platform, so we changed everything from how we sell to go to market, right. How we position the products, and also I’ll talk a little bit about how we are innovating on business models.

Michael Krigsman:

(14:48) That’s a very interesting point. Tell us about what you’re doing with business models but as you do can you weave in the type of culture change that is required and how did you manage through that culture change, and can you describe sort of where you are in the lifecycle or the maturity of the change.

Ganesh Bell:

(15:13) Sure, so I’ll take sales and I’ll probably touch on a little bit about the product as well. Historically we’ve sold hardware. We had a great salesforce that sells some of the biggest and most important hardware, and they sell services around the hardware.

(15:31) The services transition and many people inside GE who have been here for a long time tell me that this transition is very similar to a transition that the company went through about 15 years ago. From being a hardware company to being a hardware and a services company, and that means selling warranties, contracts, and outcomes around the machines that we sell.

(15:49) And that really was the key, common thread, which was outcomes. We looked at we promise our customers, not just the machines, but we price our customers' outcomes from those machines: heat trade, efficiency, output, productivity, fuel reduction, emissions.

(16:08) Now, what if we take those same outcomes and expanded beyond the machines that we provide for the entire environment. With just our turbine, can we do that across the entire power plant? Can we do that across all the environment? Can we do that across the entire enterprise? Now, that is a transition to solution selling where you’re selling the outcomes.

(16:30) So we had brought in an external leader, Kate Johnson who was our Chief Commercial Officer for digital, who came from Oracle and software world, and she led a sweeping change across the company and educating people about how you do outcomes selling, how you do solution selling. So we had thousands of our salespeople trained on solution selling.

(16:51) That doesn’t mean they can go sell a digital deal, and close a software deal; they have become great door openers. And I just spent the first quarter of this year going across all the world training about 2000 salespeople across all of the power industry, to be dangerous enough to talk one page of all of the software portfolio that we have. That means they open doors, and any time they are in a conversation they’re opening doors and they have goals and objectives that are aligned with my salesforce, and my salesforce is an overlay to them and they go and shape deals.

(17:27) And what we have learned in the process over the last year and a half is customers resonate with those outcomes. And also customers resonate with how we are structuring the deals where we share in the value of those outcomes. We promise an outcome. We promise an economic value whether its value associated with increased power output or reduced fuel consumption. All of that adds up to millions of dollars in our environment, and we said we can share that value with you and we are almost seeing this evolve from not just selling software-as-a-service, but because we know the physics of the machine and we know the operating of our customers, we are calling this outcomes as a service.

(18:11) That’s a new business model for us where we’re combining software, hardware, and our expertise in operations and services doing these outcomes as a service.

Michael Krigsman:

(18:22) That’s very interesting, what an enormous shift that is because in the past you sold an item, a machine and then your job then essentially was done. Of course you had sales, and you had cross-sales service and that relationship but now the machine is a step along the way to the ultimate goal, which is the customer getting some type of economic value, economic benefit. So maybe talk about some of the practical implications, what does this imply, again what you had to do, the mechanics, the operations inside GE as well as the relationship with the customers; it’s so different.

Ganesh Bell:

(19:11) It is, it is very different and this has actually opened our addressable market right, and I can tell you just in our business, so we’ve had, last year we did an acquisition called Alstom. It’s the largest acquisition in GE history. Combined with Alstom is more than a third of the world’s electricity comes from our machines, and Alstom has also given us a footprint into other categories of power generation and a larger install base.

(19:46) So if I look at this, step one was you know, earlier on our hardware business was about our hardware, and the services business was services around our hardware. With Alstom coming in we have now opened our addressable market to be about all the hardware. So even the services business has expanded its addressable market, because of this new vision because our customers are asking are asking about outcomes at the enterprise level. And to truly deliver those outcomes at the enterprise level, you have to be agnostic from the machines.

(20:19) Yes, we make the best machines in the world and they are the most connected, and they are the most you know, smart machines or intelligent machines that connect and improve with analytics and continually learn from our cloud. But it’s also about delivering outcomes across the entire landscape. So to me, from a digital business I’m somewhat agnostic of the machines that our customers have. Because we have machines across our competitors connecting to our cloud, because our customers want outcomes that are delivered across the entire enterprise.

Michael Krigsman:

(20:50) Everybody, you’re listening to Ganesh Bell who is the Chief Digital Officer of GE Power. And we have a Tweet chat going on right now on Twitter with the hashtag cxotalk. Ganesh, we have a question from Arsalan Khan who’s wonder about the Chief Digital Officer role. Now where does the Chief Digital Officer report to and does this matter, why does it matter where it reports to and tell us more about that CDO role.

Ganesh Bell:

(21:26) Yeah, so we’ve seen the evolution of this and personally you seen this in media companies with the Chief Digital Officers because people came up through marketing. That was the first thing people automated or digitized if you will.

(21:45) I think CDOs in media companies are very different that CDOs in non-media companies or software companies, so I think of it as something very simple which is we all come to work to create products and services that we market, sell, and engage with our customers. How we work has to become digital. Our products and services has to become digital. How we market, sell, and engage with our customers have to become digital.

(22:11) And when you look at that for most businesses that means way beyond digital marketing. So if you’re a CDO and you’re doing digital marketing that is non-digital transformation. You have to look at the entire business model. Ultimately that is about reinventing your business model and looking it as a strategic asset and looking at all of the assets that you have. We are an asset intrinsic industry in GE.

(22:34) So just to give you an idea, I report to the CEO of GE Power and my peers are all CEOs of the various hardware and services businesses. So we have six lines of business, like I mentioned the five CEOs who run everything from gas, power system to power services, to nuclear and I run digital as a business and a CEO of the digital business. So I do think it matters because it is about what you trying to do. If the Chief Digital Officer reports to the CMO, then it’s really about digital marketing. That’s really not digital transformation of a business and this is the profession of marketing, and you need that, that’s important; that’s the first step in your experience.

(23:18) But if you’re thinking about re-imagining and transforming your business, you need believership at the top, and I believe this is the CEO, and some companies would see CDO to become CEOs, just like I’m the CEO of the digital business.

Michael Krigsman:

(23:32) Now what about your relationship to the CIO, this is clearly you’re in a business role but this involves technology. And at GE Power you’re CIO is the great Clay Johnson, who used to be at Boeing. So what’s the connection then or the interrelationship between CIO and CDO, and if you want to talk in CMO that’s fine to.

Ganesh Bell:

(23:57) Yeah so Clay and I work very closely together. Infact at GE when we set up GE Digital, GE Digital is a collection of all of the IT and software businesses because we acknowledge that-  infact our digital journey started with doing it first for ourselves right.

(24:19) We started collecting data, analyzing data, operational data to build better machines and understood that we could deliver outcomes on top of that, that really started as an IT journey right. And doing it for ourselves gave us deep domain knowledge, deep insight into what we had to build as products for our customers. Then we did the same thing for the entire industries that we’re in.

(24:41) So Clay and my partners is very simple. I talked about how we work has to become digital; that’s Clays responsibility. I work with Clay in the strategy, but Clay owns and executes on how entire work environment, how we do manufacturing becomes digital, so he calls it the digital thread of how we work. Everything from manufacturing to sourcing to all of our IT systems to a modern collaborative mobile workforce that we have is Clay’s responsibility.

(25:09) When it comes to digital solutions I own that and oversee and Clay provides me the infrastructure for those environments, so our DevOp environment sits on our environment in our cloud. And also he’s a partner to me in how we market, sell, and engage because Clay’s team create the infrastructure on top of which we have our digital engagement platform and how we connect with our customers.

(25:33) So it’s a clear partnership and the easiest way to think about it is digitizing internally, digitizing how we work is Clay’s responsibility. Digitizing our customers, and our products and solutions is my responsibility.

Michael Krigsman:

(25:49) And where did these things overlap. I mean there has to be clearly it’s a distinction but there needs to be overlaps as well.

Ganesh Bell:

(26:01) Yeah, so the overlaps starts with for example we have something called monitoring and diagnostic centers right. We connect and they’ve been operational for more than a decade where machines from all over the world connect to us, and we provide this monitoring and diagnostic capabilities for all of our machines to all of our customers and IT provides them and where they sit. But one of the key things that we’re partnering is this notion of data. We have you know lots of data from our machines and from our internal operations.

(26:34) So the overlap we’re looking at data as a strategic asset. It’s the same data pool or the data lake as we think about it. But the use cases as what I look at it versus what Clay looks at it is different, but it’s fundamentally the same data and we together create it as a strategic asset. Infact we’re going to be staffing a role for that across us as a Chief Data Officer or thinking about it, because of how you look at data as a strategic asset.

Michael Krigsman:

(27:03) So how do you look at data as a strategic asset?

Ganesh Bell:

(27:07) So it’s a combination of all internal data, a combination of our customers machine data, a combination of our manufacturing data, a combination of even external data. For our customers that means weather data. That means energy market pricing data. It means benchmarking data, synthetic data, it mean an empirical limit of what our machines was designed to do. We call that for example a digital thread.

(27:33) When we design a machine we know the optimum performance of that machine that we designed to, and we can also figure out where’s the right performance of that machine in that right environment and setting. And we can actually now compare our customer’s performance to that ideal digital thread.

(27:48) So there is so many use cases from that what we can drive to our customers and drive productivity. A the same time Clay can use that to drive internal productivity, and how we drive our services business, how we’re closing our books, to how we’re manufacturing, how we can do part and inventory optimization, and how we can do supply chain optimization.

(28:09) So looking at all of those use cases as a continuous connected thread requires you to look at the entire sphere of data. And we also look at analytics for example that go across all of this data. So we’re building right now a catalog of analytics where it’s a taxonomy, whether it’s used for internal/external purposes, it’s in one single analytical catalog. So those are the use case we’re working on when you think about data as a strategic asset.

Michael Krigsman:

(28:36) When you say taxonomy of data can you elaborate on that.

Ganesh Bell:

(28:40) Sure, so in our customer’s world that means we have a lot of analytics around machines that combine together to form this idea that we call a digital thread. A digital thread is a virtual representation of a physical copy of the actual machine that runs in our cloud. That means there is a lot of analytics around those machines, everything from heat rays to thermal models to vibrations, to sensors that provides all of this data.

(29:08) And now cataloging all of these analytics and they can be cataloged n ways. You can say these are all internal analytics. These are all vibration analytics. These are all you know efficiency analytics, these are productivity analytics. But we can also classify them by machines. By different class and types of machines. By different source of fuel by gas. Set of analytics around gas fired power generators. A set of analytics around wind renewable power generation, a set on analytics around an entire windfarm, a set of analytics around even our competitor’s machines, so that’s what I mean by taxonomy of connecting all of these things in a hierarchy.

Michael Krigsman:

(29:44) So do you need to then be the data hub so to speak, in order for you to make use of this data and apply your data science to the technique, do you then have to be aggregating data from both your machines as well as the entire plant. And where do you draw the line there because you business is developing – correct me if I’m wrong, but your business at least historically was developing the machines as opposed to the data aggregation point.

Ganesh Bell:

(30:12) Yeah, so our customers own the data right. Our customers have lots of machines across their environment; all of those machines generate data. And just to give you a sense of size of data, a single gas turbine blade can generate up to 45 gigabytes of data a day; that’s a lot of data. And also these devices are being increasingly more connected, and when they become more connected you can collect more data from these machines.

(30:41) By 2020 we will have more than 7 billion devices across the entire electricity value chain. I’m not counting bulbs and switches and end user devices, just the electricity value chain of things that help you consume at an endpoint.

(30:59) Now all of these data belongs to you know, in a power plant the data is our customers' data but they’ve been in silos for a long time. Every machine has its own data store. None of them were connected, so now we’re allowing our customers to collect all of this data into our cloud and get insight from them. So our customers own the data, so the line we draw is very simple, our customers own the data. They give us right and access to the data to provide services and value, so we can apply the analytics, we can apply the machine learning. And actually give them advisory services on how best to operate these machines and what they are leaving on the table in terms of value. 

Michael Krigsman:

(31:41) Can you give us a sense of how you go about structuring the relationship with the customer in terms of you know how that value is expressed. So in other words in the past again, you sold the machine, you got paid for the machine and now you are sharing on the outcome, which is pretty abstract so can you make this more concrete for us.

Ganesh Bell:

(32:06) Sure, absolutely. So our customers like you said you know a machine is a cap ex-purchase and they buy these new machines for a long time. And these are big complex deals and there’s financing involved and we help our customers in lots of creative ways.

(32:27) And then there are services that we provide in our business and the services are like a subscription if you will. So they are already used to engaging with us and what we call multiuse agreements around warranty and maintenance and parts around these machines and in some ways they (unclear 32:43) but I have time, but it’s still a multi-year agreement; it’s more like a subscription. And with the introduction of software, and they have been buying software from us and now they are onto buying subscription to our applications.

(32:57) So those are straightforward type of deals, but when you talk about these outcomes a a service, we actually create that as a subscription again, where we know the economic value that we can generate for our customers, we work with them in the value creation and the solutions architecture and put a proposal together on here is the total economic value of our offering. And here, you can buy the software as a service and subscribe to it and you can buy a platform as a service; extend, customize and configure it. Or you can buy what we call the outcomes of service, in which case it’s still a subscription fee.

(33:36) It’s no different than buying a software subscription, but it’s a value that we deliver and you know we have negotiations where we know we can deliver the value and there’s true ups are none.

Michael Krigsman:

(33:49) So where is your core competency now because of course historically you’re core was building these big pieces of hardware; big machines, and now it’s all about data aggregation and all of these things you’ve just been discussing. So what are you?

Ganesh Bell:

(34:12) So and that’s a great question. I still think we are – you know GE is a company of inventors, makers, scientists, designers, and people who take a lot of pride in creating some of the most complex – these new machines are a work of art. And if you’re in the office I’ll show you I have a turbine blade. It’s a beautiful piece of art the machine and people who take deep pride in creating these machines and that’s the heart of our business.

(34:44) But in addition we’ve also become data obsessed. We’re also a software company. Like I said, we are going to be having; we’ll be generating about $6 billion in digital and software revenue this year. And by 2020 we’ve stated our mission to be a $15 billion software company. That makes us one of the top 10 software companies in the world.

(35:04) So our core competencies is everything from machines, all the sensors in the machines. So I think you can describe it as machines, to sensors, to cloud. That’s our core competency. And we will see a new breed of talent emerge where we think the future material science in here is also a data science, right. The future, term of model engineers is also a data scientist and the future hardware designer is also thinking about the software experience that the hardware has to provide.

(35:38) So we are in that early stage of creating this discipline of that’s why we call ourselves ‘the digital industrial’. It’s not just a software company; we’re not just an industrial company. We’re creating a new breed of core competency that is at the intersection of physical and digital, and I think that’s where our differentiation is and that’s where we’re going to win and it’s going to be an interesting journey into that.

Michael Krigsman:

(36:02) We have about 10 minutes or a little bit less left. What advice do you have for other people in business who are facing this type of changing environment, so what lessons have you learned along the way as GE has changed so dramatically over the last number of years.

Ganesh Bell:

(36:27) So the first thing I’ll say is a journey like a digital transformation of a company needs to start a the top. And if you’re getting started, make sure your CEO, your Chairman they believe in this journey. And that beleivership only happens by a healthy obsession of the market and customers and what you can do for them. And also a bit of paranoia about what the world will be, because every industry, every business is getting reimagined with software. And you can extrapolate every one of those things in the industry we’re in, and some of the industries that we’re in like power for example is a digitally immature industry. Meaning historically has been underinvested or unserved with IT.

(37:16) ERPs and CRM software is not going to make digital run better. You need the new generation of operational intelligence and you have got to have a belief around that right from the outset. So create believers, focus first on creating believership is step one.

(37:31) Second a knowledge that requires new talent which is very different. But it’s also not just about new talent going and attacking the industry. You’ve got to bring in your existing people and put them together in that journey.

(37:45) And third it is hard. Change is always hard and I say you know, be prepared to actually coach your people through that change. And I say almost every Friday I give somebody a pep talk on why we need to do this. And the easiest way you can do that is look at the market, those market proofs, and our market opportunity is huge.

(38:11) Like I said, our purpose is very simple in our company, or GE Power is about 1.3 billion people in the world that don’t have access to power. And if all those people had accesses to power imagine the world that we could create. Imagine the economy that we would create. Imagine what new creativity we would unlock.

(38:30) That means that you’ve got to think of the bigger purpose, so have a purpose and get your employees motivated behind that purpose. It could be small, it doesn’t have to be all the big scale, but purpose is important when you have a change and the transformation that you’re driving.

(38:45) And more importantly, look at the positives in the market. Most of the challenges that people have in change and transformation is internal not external, because there’s always market opportunities that you can go, there’s always customer outcomes that you can go deliver, and those are the positives to get excited about.

Michael Krigsman:

(39:04) What about the timing of change, I’m sure there’s many people in companies who are looking at their business, they’re seeing yeah there’s changes that are coming down the pike but it doesn’t really affect our operations yet and we don’t want to rock the boat because we’ve got this steady revenue stream and we don’t want to screw that up, so what about the timing of all of this.

Ganesh Bell:

(39:29) Yeah, so I think that’s a really good point. You’ve got to understand in your markets where is the tipping point right. In our industry we believe it’s the right time and there’s a confluent of factors in the industry so you’ve got to understand a maturity model of the various industries that you’re in and understand from customers.

(39:52) And interestingly you find that the leaders in the industry are the first to move. For us, it’s not being the small companies. We’ve had a lot of wins with small and medium companies, but we started small with simple projects and simple products. And that grew into bigger offerings with our customers.

(40:12) But understand that timing in a market sometimes means going in with the leaders first, because they’re looking for the next step up in productivity or next competitor advantage. So find those first few customers and test, and that will give you the sense of what is the maturity model, how fast do you have to go with your customers.

Michael Krigsman:

(40:33) So you’re saying the way to begin is you start with the customer. You don’t make assumptions about the customer – well you have to make some assumptions right?

Ganesh Bell:

(40:45) You have to and so there is you know, your customers are also going through a journey, so you have an obligation to show them what is possible; the art of the possible right. So for example we have a big design center here in San Ramon that is all about design thinking. So we actually bring customers in and we start with what are the problems they’re trying to solve in a setting this beyond to start machines.

(41:11) So take a power plant, what are the problems you’re trying to solve? Come over to our design center and let’s work together, and the goal of that session is we want to solve the customer problem.

(41:19) It may just be that we won’t just sell them anything new; we just solve their problem but it’s still worthwhile to go through with because you will discover other opportunities and new questions to ask your customers and they’ll give you insights about creating a product.

(41:35)So it’s important to innovate from customer and market end but not necessarily do exactly what the customers are asking for, because you also have the responsibility to show the customers what is possible and that happens in most of the sessions that we have with our customers and then we apply design thinking, and agile, and fast works, and lean methodology. You tend to come up with small iterative minimum viable products, and those minimum viable products turn into bigger offerings and value for the customers.

Michael Krigsman:

(42:02) We have only just a couple of minutes but I think this is an important point. Recently I spoke with a salesperson, an enterprise salesperson who works for a large established company and he mirrored something what you just said which is, sometimes you have to go to the customer and talk with them and you’re not even trying to sell them anything, and this was bizarre to him. This was very strange to him. So just elaborate a little bit on why this takes place. Why do you have to do that?

Ganesh Bell:

(42:34) Yeah, so I would use an example like, if our hardware and services people for example who have great relations with our customers have only talked to the Head of Power Generation or the COO or the Chief Nuclear Officer, they would primarily only believe that we can only sell something to the customer when it has higher heat rate, higher efficiency or more energy production or more fuel saves.

(43:03) Whereas where you talk to the CIO, when you talk them they step back and take a look at the customers entire operations, they talk about I want no unplanned downtime. Not just across their machines but no unplanned downtime across my entire operations. I want lower operating costs. Not just for your machines, but lower operating costs the entire power plant. Or I want productivity gains, that means when I connect my people to the machines and the business processes I want to see productivity improve, but not just across your machines; the entire enterprise.

(43:37) Those conversations you will not unlock if you’re just doing the traditional sales calls, because you are trying to sell a widget and that’s what you’re out their selling every day. And the shift that I talk about when we went to the solutions selling was trying to understand what are the biggest pain point problems or pain points for customers, and we said what are the pain points across the entire enterprise. And those led to the conversations of okay, we can actually help them understand this and solve this. And sometimes we may not sell a solution for that, but to unlock new opportunities and outcomes for us to go after.

Michael Krigsman:

(44:10) So the default is solving customer problems; that’s the bottom line.

Ganesh Bell:

(44:15) It is. It is starting with customer outcomes.

Michael Krigsman:

(44:19) Okay well this has been a very fast 45 minutes. We have been speaking with Ganesh Bell who is the Chief Digital Officer of GE power, Ganesh again thank you so much for joining us, we really appreciate it.

Ganesh Bell:

(44:37) Thanks Michael., thanks for having me on the show.

Michael Krigsman:

(44:40) And everybody look at the CXOTalk website, we have got one of the largest libraries of content, executive content on digital business and digital transformation anywhere. Next week on Wednesday I am going to be moderating a panel at the Chief Digital Officers Summit in New York City, a panel of media executives talking about digital disruption and so if you’re there please come up and say hello. Ganesh thank you so much. Everybody who’s been watching thank you so much and we’ll see you again next week. Bye bye.

 

Companies mentioned in today’s show

GE                    www.ge.com

Twitter            www.twitter.com

Oracle             www.oracle.com

Google             www.google.com

 

Ganesh Bell    

LinkedIn           https://www.linkedin.com/in/ganeshbel       

Twitter            https://twitter.com/GaneshBell  @GaneshBell