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GE’s CEO Reveals How To Transform Into A Digital Company

CEO's Discuss Future Of American Manufacturing In WashingtonCEO's Discuss Future Of American Manufacturing In Washington
GE's CEO Jeff Immelt.Photograph by Chip Somodevilla — Getty Images

There’s no greater indication of industrial behemoth General Electric’s desire to morph into a Silicon Valley software company than its annual technology conference.

During the company’s two-day show in San Francisco on Tuesday morning, GE’s CEO Jeff Immelt took the stage and asked the audience “Why not us. . . Why can’t we make ourselves into a digital company?”

The company is “all in,” Immelt says, on crafting itself in the image of a tech and computing disruptor, which includes becoming a “top 10” software company by 2020.

To achieve this goal, GE is investing heavily in building software and wireless capability to connect machines like wind turbines, trains, and jet engines. But it’s also buying the latest algorithms and machine learning know-how to better monitor and control those machines.

For more on GE’s CEO Jeff Immelt on his biggest mistakes watch our video.

In true Silicon Valley-style on Tuesday, GE announced that it had acquired two artificial intelligence startups, Bit Stew Systems and The move will enable GE to compete with IBM’s own artificial intelligent Watson product that can help customers make predictions and answer questions.

GE has acquired about $2 billion worth of tech startups over the last several years, including more recently cloud company ServiceMax and analytics company Meridium.

Tech conferences are de rigueur for the biggest San Francisco area Internet companies like Facebook, Salesforce, Google, and Apple. GE’s has the same bells and whistles including keynotes meant to inspire and slick visual presentations.

GE’s Immelt focused a lot on the term productivity in his kick-off speech. Essentially the type of technology used is irrelevant, but rather it’s whether GE’s customers like oil giant BP want to buy and use GE’s software to make their operations more productive.

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Some are starting to. Customers like BP are going through their own disruption, as BP’s Ahmed Hashmi said shortly after Immelt’s talk. “Our industry needs a transformation, and digital is our biggest lever,” said Hashmi.

GE calls its transformation the “industrial Internet,” and it’s a way that it can keep its machines connected, smart, updated and increasingly productive. A major investment to connect these machines is GE’s Predix software, which extracts and crunches data from machines and uses that data to make them more efficiently, saving GE’s customers money, time, and energy.

Over the last year, GE launched Predix externally to its customers, and before that the company was using it internally. GE also launched an energy efficiency system called Current and is investing in additive manufacturing, commonly called 3D printing.

GE hopes that its overall annual software sales, which includes sales of Predix, will grow from $5 billion in 2015 to $15 billion by 2020.

At the end of the day, using software and wireless connections to make machines more productive is all about combining physics and analytics, said Immelt. “The merger of physics and the digital world will lead the future,” he added.

For GE, it’s a huge investment. But it is also somewhat of a risk. This is a “transformation not a task,” and an “all-encompassing change,” said Immelt.