We think about this as digitization of the industrial world. We as a company didn’t go to bed one night and say, “We can’t be an industrial company anymore. We need to be more like Oracle. We need to be more like Microsoft.” It happened more on an evolutionary basis, really based on the industries we’re in and the technology we serve.
You think about a jet engine today or a locomotive or an MRI scanner. A new jet engine might have a hundred sensors on it. These sensors have the capability to take continuous data about the heat of an engine, fuel consumption, the wear of the blades, the environment it’s taking off in—a series of things. And one flight between New York City and Chicago produces a terabyte of data.
So industrial companies are in the information business whether they want to be or not. This is going to happen in the industrial space. Now, add to that a series of decisions every company needs to make: “Do I outsource all of that? Do I do it myself? Do I change my business model accordingly?” The decision we’ve made is that we just want to be all in.
We want to treat analytics like it’s as core to the company over the next 20 years as material science has been over the past 50 years. We can hire the talent. We can evolve our business model accordingly. We need to treat our service agreements to share outcomes with our customers the same way an IT company might approach that in the future. So, in order to do that, we have to add technology, we have to add people, we have to change our business models. We have to be willing to do all those things.
But the point I’d make to people is, if you think about today, 15 percent or 20 percent of the S&P 500 valuation is consumer Internet stocks that didn’t exist 15 or 20 years ago. The consumer companies got none of that. When you look at retailers, banks, consumer-product companies, they got none of that. If you look out 10 or 15 years and say that same value is going to be created in the industrial Internet, do you as an industrial company want to sit there and say, “I don’t want any of that. I’m going to let a Newco or some other company get all that”? Is that really what you’ve relegated yourself to?
So I think all these things led us to say, “Let’s build it. Let’s see if we can be good at it. We may be wrong. We don’t think so, but we may be wrong. But let’s not sit back and just say, ‘Look, that’s somebody else’s job,’ or ‘We’re not good enough to do it,’ or ‘We can’t change.’” We’re unwilling to take that as a fait accompli.Reference: GE’s Jeff Immelt on digitizing in the industrial space.