{"id":14403,"date":"2020-01-20T19:19:22","date_gmt":"2020-01-20T13:49:22","guid":{"rendered":"https:\/\/cigniti.com\/blog\/?p=14403"},"modified":"2023-09-15T16:36:04","modified_gmt":"2023-09-15T11:06:04","slug":"digital-transformation-strategy-success-failure","status":"publish","type":"post","link":"https:\/\/www.cigniti.com\/blog\/digital-transformation-strategy-success-failure\/","title":{"rendered":"The Case of GE Digital Transformation – Discussing Its Success And Failure"},"content":{"rendered":"

Contrary to popular belief, digital transformation does not completely uproot existing business strategies and frameworks. Rather, the process is supposed to complement what is already there. A Bain & Co. research found that only 8% of global companies<\/a> have achieved their targeted outcomes from their investments in digital technology. The statistics related to digital transformation<\/a> are disappointing. In a McKinsey survey, the success rate for digital transformation was found to be less than 30%.<\/p>\n

Most companies adopt a digital transformation strategy<\/a> for digitalizing their existing business ecosystem to compete in the increasingly innovative and disruptive world. However, the significant gap between the failure and success ratios reflects a lack of common understanding of digital transformation. The lack of clarity in the definition leads to ambiguous strategic decisions, which may lead an organization on a downward spiral.<\/p>\n

GE’s ambitious digital transformation initiative ultimately met significant challenges and setbacks, resulting in what can be labeled a GE Digital Transformation Failure.<\/p>\n

The Failed Strategy of GE Digital<\/h2>\n

General Electric fancied to own the industrial internet. The American conglomerate spread its resources too thin in this endeavor, resulting in a failed digital transformation initiative. Formed in 2015 as a separate unit, GE Digital aimed to centralize all the IT operations of the company. With the vision to become one of the top ten software<\/a> companies by 2020, GE spent billions of dollars on its digital initiatives.<\/p>\n

Instead of individual units taking care of their respective digital needs, a separate entity in the form of GE Digital was formed to centralize the company’s digital initiatives. Although GE Digital was supposed to enhance the company\u2019s data analytics capabilities and position General Electric as a more technologically focused enterprise. The unit\u2019s objectives were strikingly different than the company\u2019s expertise. The hurried transition from huge machinery to cloud-based software solutions backfired on the company, leaving GE in a dark economic pothole. The quarterly P&L requirements prevented GE Digital from investing in long-term strategies, limiting themselves to short-term goals that did not add significant value to the overall business.<\/p>\n

Against the expectations of opening new revenue streams, GE Digital led to plummeted stock prices, a bad reputation, and economic losses. The new CEO, John Flannery, is now driving a more focused strategy for GE Digital, a 25% budget cut, and a sharp pivot in the digital strategy.<\/p>\n

What went wrong:<\/h2>\n