I wrote about Siemens, and your post just confirms how the new proposition of companies like Siemens will add substantial values for their clients. Siemens has recently launched Sinalytics, a platform that aggregates data from Siemens systems installed across the globe to help clients optimize the performance of such systems. One critical feature of Sinalytics is exactly its ability to optimally forecast preventive maintenance needs and minimize equipment downtime. The algorithms and heuristics behind Sinalytics implement cutting-edge concepts to maximize equipment availability, while minimizing maintenance and power costs.
One of my main concerns with this type of solution comes from looking at the client side: to which extent does the client loses bargaining power – and even the ability to switch to a different provider – once Siemens starts to monitor its operations in such a high level of details? In your specific case, did your client (potentially, also a Siemens’ client) design the algorithms and standards to optimally forecast preventive maintenance? If so, do you think that partnering with the supplier (e.g., Siemens, SAP, GE) could help improve even more the outcomes?
I wrote about a very similar company (Siemens), that has had an approach towards digitalization very similar to GE’s. Siemens launched a tool called Sinalytics, with the same goal of collecting data from Siemens systems installed all across the globe and helping its clients optimize performance of such systems. My main concerns – applicable to GE as well as to Siemens – are the following:
1. How to ensure that the aggregation and the treatment of huge amounts of very sensitive data happen in a secure manner? Exchange of many terabytes of data between GE’s servers and client’s sensors should be dealt with the utmost care. Are investments in cyber security going to increase substantially?
2. How to attract and retain the human capital required to thrive in this new context? Once GE starts to become more of a “tech company”, it will need to attract a different profile of professionals (e.g., coders, software architects). These professionals, today, very likely feel more attracted to employers like Google, Facebook or Amazon. How can GE improve its value proposition for employees, to attract this new profile of people?
Itaú-Unibanco is a clear benchmark for other financial institutions in Brazil. As a client of their Personnalité branch, I can say that their value proposition has become much more solid with all the adjustments they implemented recently, trying to make digital tools increasingly available for their clients.
My main question is how/if they should adopt even more radical changes in specific areas of their portfolio of services. What they have done is quite interesting, but is clearly incremental vis-à-vis what they had before. If they keep improving incrementally, they will very likely become vulnerable for companies that come up with totally disruptive ideas or business models. One example of such disruptive idea is Nubank. Nubank went beyond the typical “digitalization” of credit card services (e.g., pay your bill online) and is definitely revolutionizing this segment in Brazil. Should Itaú-Unibanco be even bolder and focus on disrupting the segments in which they currently operate?
Quite interesting post. In my previous experience as a consultant, I supported a large benchmark about innovative initiatives of governments all around the world. Digitalization is a clear lever for increased efficiency and better performance across a wide variety of government services. However, given the sensitivity of information, oftentimes cyber security is also a critical dimension to be managed. Imagine if one could break into one of these systems and retrieve information that is highly confidential? Going forward, the evolution of the portfolio of digital services will highly depend on the ability of companies and governments to match security/confidentiality requirements with the technology available to deliver these services. I would love to understand how the Indian Government has dealt with these security requirements.
This article is very interesting. A few years ago, some companies in my country started to use technology-based solutions in this space – even though the solutions were much simpler (e.g., streaming the funeral via web, so that relatives or friends living in other cities/countries could watch it and be part of such difficult moment for their loved-ones).
I would be curious to know your opinions on how Minrevi could accelerate the adoption of its services. Do you think they can manage to grow aggressively? I do not know the Japanese context in details, but would guess it is tricky to market your services or even deliberately “explore” avenues for growth when you are selling funeral services.
The company I wrote about (Siemens) has had a very similar approach to IoT in the industrial equipment and services space.
I found it interesting to see how GE is using M&A to “acquire” the capabilities it will need to succeed. I reviewed Siemens’ Digitalization strategy and was not able to find anything similar.
In addition to using M&A and partnerships, I think that both companies will need to come up with innovative human capital strategies, to ensure they attract top talent over the coming years to fuel growth of their digital portfolios. When it comes to software development, human capital is extremely critical. It becomes even more critical when you are competing for talent with Google, Facebook or Amazon – companies with a high degree of desirability as employers.
Very interesting post! Oil & gas operators, such as GNPC, have a very difficult challenge ahead.
I like the suggestions, but would like to highlight one things: the shift to natural gas is not completely under the control of GNPC, but rather dictated by market conditions and supply/demand needs all around the globe. At this point in time, with depressed oil prices, it might look as a real “choice”. However, if oil prices rise again – and knowing the capitalist character of the business – GNPC will highly benefit from having oil producing assets in its portfolio. Instead of shifting to natural gas, GNPC could try to push sustainable practices to its suppliers (i.e., operators typically hold a very high bargaining power – as they have huge expenditures with suppliers), as an alternative to be more climate friendly and offset its own impact.
Having worked for an oilfield services company, I believe BP could consider partnering with its main suppliers (i) to foster climate friendly practices across its supply chain and also (ii) to leverage the extensive expertise and knowledge of its partners to develop mitigation alternatives. In my opinion, the shift from oil to natural gas – or to even cleaner alternatives – is highly difficult to predict, which should drive BP to consider mitigation (in addition to prevention), in case oil remains relevant. Given the technology intensity of the oil & gas industry, I think it is highly feasible to expect BP and its partners to come up with very innovative solutions to counter climate change, even if we remain largely dependent on oil.
Very interesting perspective on coffee. When suggesting potentially applicable initiatives for the company I researched about (Starbucks), I thought of developing partnerships with academia to understand better the impacts of climate change on coffee crops. Such collaboration could help identify genetically modified variations of coffee, more resistant to certain climate conditions, or even fertilizers or additives that could make coffee more adaptable to different climate scenarios. I believe JDE could also consider this approach going forward. After all, more scientific knowledge about the issue can only be beneficial to guide future actions.
I very much like your post about airlines, as I had never thought about the potential impacts you mentioned.
I would just like to share that my perception is slightly different regarding where United should focus.
Clearly, operational improvements and internal initiatives could help – as well as the conversation with governments and international agencies. However, I think the greatest potential lies on integrating the entire airline industry value-chain in a coordinated effort to counter climate change. United could spearhead the creation of an association of airlines, airplane manufacturers, service providers and even other players to propose more disruptive solutions to the problem. For instance, such an alliance could help manufacturers move even faster towards the design of more efficient airplanes, or even partner with academia to find innovative mechanisms to reduce airplane emissions. In my opinion, these associations have much more power than one single company – and thus are able to move the climate change agenda much more effectively. To illustrate, here is the link for the website (http://www.ceres.org/bicep) of an organization that Starbucks helped co-found, to congregate several different companies concerned about climate change and environmental impact. Maybe it could inspire United…
I largely agree with your suggestions on how General Mills could strengthen its set of initiatives to address climate change.
However, having written about a similar subject (i.e., coffee) and having researched other food companies, I would like to add one additional dimension that could be explored: food innovation. Much has been done recently to identify more efficient sources (e.g., animals, plants) of basic nutrients (e.g., vitamins, minerals, proteins, carbohydrates) – sources that could yield similar amounts of nutrients with reduced impact on environment. Many start-ups are active on this space. Two examples:
1. Exo, a New York based company that identified crickets as a very promising source of proteins. According to their research, insects require less feed, less water and emit less gas and ammonia per gram of protein produced.
2. Similarly, ENERGYBits is a company trying to leverage algae to produce tabs that are nourishing, but also environmentally safe. Their production is much less harmful to the environment than similar types of food.
Clearly, these examples might not be applicable to a mainstream company such as General Mills (unlikely that they could start producing cricket-based or algae-based cereal), but given their size and reach, I think they should also consider food innovation as a relevant lever to minimize their environmental footprint. Coming up with innovative solutions to accomplish their mission of “making food people love” could be a smart alternative to help stop climate change.