March 15, 2016 | Last updated on June 15, 2024

Can a Large, Mature Company Transform Digitally?

Written by Marc Alringer

For anyone who’s worked with a large, mature company knows one thing: innovation doesn’t come easy.

Within a large company, success is not gauged by how well it identifies a problem and matches it with a solution; success is measured by earnings and quarterly reports. More importantly, larger companies have to answer to shareholders, investors, and a board of directors.

When General Electric decided to transform their business into one that embraced digital technology, change didn’t come easy or without a plan, but it did bring value.

“Every industry will soon be driven by digitization and every winning company will be using algorithms, or mathematical rules for processing information, to shape the end-to-end customer experience,” writes Ram Charan, a business adviser to CEOs and corporate boards.

“If you’re not turning your company into a “math house” you’re headed for serious trouble,” he says.

In his article, “How to Transform a Traditional Giant into a Digital One,” Charan outlines how a company such as GE, a 124-year-old company, managed to transform their business to compete in the digital world without going bankrupt or losing their identity, and how digital technology can truly benefit a company.

The change did not just happen; GE’s leaders were methodical in their approach.

They thought like an entrepreneur.

Thanks to APIs and the Internet, everything talks to each other. When you are transforming your business into a digital one, you need to think about the bigger picture. Platforms and other entities can bring value to your products and services, and, more importantly, your customers.

To account for this ecosystem, GEO built a digital platform, giving software developers the space to create new products and allowing the company to become more efficient.

They recruited a digital leader from the outside.

The company was acutely self-aware. They lacked the expertise in the digital realm. What did they do? They brought in an outside hire to spearhead their new initiatives. In one of their first major hires for the new transition, GE brought in Bill Ruh, who came from Cisco, to head the software and analytics department. He developed Predix, GE’s platform that underlines all of the company’s operations.

They pinpointed where their domain expertise and digital expertise intersected.

While most of the “old” staff may not be well versed in the digital arena, they did not forget about what they did best. The team met once a week to discuss and plan out the details of how the digital platform needed to transform the customer experience. People with expert knowledge in marketing, finance, engineering, and human resources all meet and had civil conversations with each other on a weekly basis.

They focused the dialogue on how the transformation benefited the customer.

When you talk to a CEO or CFO about technology, you may get blank stares. You have to be able to answer the question: What’s the ROI? How does this help the customer? These types of discussions need to take place. If you don’t know how to answer these questions, you need to either get it or find someone who does. Even Tom Watson, Jr. — IBMs second President spent a considerable about of time at MIT learning all he can about the digital technology of his area.

They found money in the budget to fund the initiative.

When a company starts a new venture, like transforming themselves digitally, the operation will cost a lot. To fund this effort, you will need to cut costs somewhere and a lot of those costs will have to come from the “old” school business.

They cut people who were not on board.

Find ways to motivate long-term employees, and cut those that will not conform. More importantly, rethink the qualification for officers, and do not promote people who cannot grasp digital technology.

They opened up and over communicated.

GE cultivated a fluid and adaptable business by changing their mindset from “span of control” to “speed and collaboration.” By implementing their FastWorks program, the company leaned into startup principles to optimize the ability for employees to innovate and share their ideas. This mindset opened up the lines of communication to everyone involved— not just people within the company. Stakeholders outside the company’s walls were a part of the conversations too.

GE ensured board members, investors, and media personnel knew about the steps they were taking. Immelt reached out to both people both for and against f the decisions, like Nelson Peltz, who was wary of the initial digitalization. But after some dialogue with Immelt, Peltz eventually bought a $2.5 billion stake in the company.
This article was adapted from an article published in The Harvard Business Review.

Marc Alringer
Written by
President/Founder, Seamgen
I founded Seamgen, an award winning, San Diego web and mobile app design and development agency.
Top Application Development Company San Diego and web design company in San Diego

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