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General Electric (GE) remains one of the leading competitors in the global technology industry. In 2011, the company embarked on a new journey aimed at improving its digital capabilities. This transformation focused on several goals such as embedding sensors in most of its products, introducing a superior software platform, and promoting a new business model. This paper gives a detailed analysis of the strategy and offers recommendations to improve GE’s performance.
GE’s Change in Strategy
The article “Why So Many High-Profile Digital Transformations Fail” by Thomas H. Davenport and George Westerman explains how GE changed its business strategy by introducing digital models and products. According to many experts, this new strategy would improve the corporation’s performance and productivity. However, GE’s digital transformation led to declined stock prices. Its decision to lure programmers and software engineers from companies such as Amazon, Google, and Apple did not deliver meaningful results (Lohr). These outcomes explain why GE should have stayed as a manufacturer instead of changing its strategy.
Such an approach would not have affected its business model (Herbert 37). Instead, the company should have utilized its assets and financial resources to manufacture and market superior products to its global customers.
Competing in the Digital Arena
The presented case indicates that GE’s strategy was ineffective and incapable of delivering positive results. However, the company can consider various initiatives to compete against corporations such as IBM, Cisco, Yahoo, and Google. The organization can begin by examining the nature of emerging technologies and merge them with its customers’ needs (Funke 2). Appropriate decisions should also be made regarding the short-term and long-term objectives of the intended digital transformation. The corporation should consider “steady progress toward the right end state without making costly mistakes” (Davenport and Westerman 5).
Its leaders can go further to focus on superior technologies that can be fitted in its products to meet the needs of different clients. The introduction of digital products is something that should be supported by the current business model (Westerman et al. 87). This means that GE’s digital transformation does not require a new or improved model. Such a strategy will ensure that the organization competes successfully with rivals in the digital arena such as IBM.
General Electric’s digital transformation of its services and products was a move that expanded its business environment or segment. This decision led to the production of new software. Its internal business processes and supplier relationships also changed significantly. Such an initiative required a superior business model to make the company competitive and successful. However, the strategic change was less productive since GE’s stock price plummeted within a few years (Parviainen et al. 68).
Consequently, the corporation had to incur numerous expenses before starting to compete with its rivals such as United Technologies and Siemens. It is agreeable that the business models of such competitors remained uninterrupted or unaltered. The departure of GE’s CEO and other key persons made it less competitive and incapable of achieving most of its objectives.
The above discussion has revealed that many giant companies that decide to pursue high-profile digital transformations tend to record negative outcomes. The example of GE should, therefore, be studied carefully by firms that want to reap the benefits of emerging technologies. Steady progress supported by efficient decisions can address this problem and eventually deliver desirable results.
Davenport, Thomas H., and George Westerman. “Why So Many High-Profile Digital Transformations Fail.” Harvard Business Review. 2018, pp. 2-5.
Funke, Peter. “The Digital Transformation.” German Research, vol. 36, no. 1, 2014, pp. 2-3.
Herbert, Lindsay. Digital Transformation: Build Your Organization’s Future for the Innovation Age. Bloomsbury Publishing, 2017.
Lohr, Steve. “G.E., the 124-Year-Old Software Start-Up.” The New York Times, 2016. Web.
Parviainen, Päivi, et al. “Tackling the Digitalization Challenge: How to Benefit from Digitalization in Practice.” International Journal of Information Systems and Project Management, vol. 5, no. 1, 2017, pp. 63-77.
Westerman, George, et al. Leading Digital: Turning Technology into Business Transformation. Harvard Business Review Press, 2014.