General Electric’s chairman and CEO, Jeffrey Immelt, addressed a crowd of innovators in San Francisco last week, talking about a new generation of products and services designed to radically improve customers’ efficiency and productivity, cut energy use and waste, and foster a new wave of innovation. For example, 1 percent improvement in the efficiency of gas-fired power generation would save $66 billion over 15 years.

GE, the ‘Industrial Internet’ and radical efficiency

By Joel Makower in GreenBiz.com (3 December 2012):

General Electric’s chairman and CEO, Jeffrey Immelt, addressed a crowd of innovators in San Francisco last week, talking about a new generation of products and services designed to radically improve customers’ efficiency and productivity, cut energy use and waste, and foster a new wave of innovation. He described the potential to cut billions of dollars of energy from sectors like aviation, railroads, power generation, and oil and gas development. He talked about ecosystems and intelligence and efficiency.

Ecomagination 2.0? Nope. Welcome to the Industrial Internet.

GE’s latest branding effort sounds a bit like its earlier, more green-focused campaign, launched in 2005. Except that this one shuns any mention of climate change or sustainability, let alone “eco.” I doubt you’ll see any daisies or dancing elephants in its marketing efforts, even though the new messaging sounds a lot like the “jet engines, trains, and power plants that run dramatically cleaner” that GE’s ecomagination ads once touted.

And yet this is not a rehash of the same old thing. Something important is going on here. GE’s new focus is about “the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the Internet.” It’s about how “the deeper meshing of the digital world with the world of machines holds the potential to bring about profound transformation to global industry, and in turn to many aspects of daily life, including the way many of us do our jobs.”

It’s fundamentally about data — Big Data — and how it transforms and, in many ways, revitalizes the dirty work of manufacturing, transportation, and energy production.

In many ways, GE’s new Industrial Internet push — articulated in a report issued last week (download – PDF) and at a high-profile San Francisco event — meshes with (and validates) our global series of VERGE events, which cover similar ground: the convergence of systems and technologies around buildings and transportation, and how data and IT create new platforms that enable radical efficiencies, breakthrough business models, and innovative products and services. Like VERGE, the Industrial Internet has a great deal to do with radical efficiencies, primarily of energy, as our friend (and VERGE 25 award winner) Katie Fehrenbacher reported last week.

GE sees this convergence as a very big business opportunity. According to its report, connecting devices to the Industrial Internet could boost global GDP by $15 trillion by 2030. That’s roughly the size of today’s U.S economy, according to the World Bank. The savings come from such things as lower fuel and energy costs; better-performing and longer-lived physical assets, like airplanes and power plants; and lower-cost healthcare. The authors claim that in the U.S. alone the Industrial Internet could boost average incomes by 25 to 40 percent over the next 20 years “and lift growth back to levels not seen since the late 1990s.”

For example, says GE, achieving a 1 percent fuel savings across the entire global airline fleet would save $30 billion over the next 15 years. A similar 1 percent improvement in the efficiency of gas-fired power generation would save $66 billion over that same period. A 1 percent improvement in railroad efficiency adds $27 billion to the total. (Note that these examples — planes, trains, and power plants, as well as healthcare devices — are GE’s bread and butter. GE’s report didn’t delve much into other parts of the industrial world, such as logistics, supply chains, and manufacturing.)

What the report makes clear is that industrial companies are no longer just about “big iron” — planes, trains, power generators, and the like. Today, software, intelligence, connectivity, analytics, sensors, diagnostics, integration, user interface, and materials science are key parts of industrial companies’ ecosystems.

All of which makes the Industrial Internet (and VERGE) a powerful platform for innovation. GE gets a bit hyperbolic on the subject, calling it the third wave of innovation, after the industrial revolution (machines and factories that power economies of scale and scope) and the Internet revolution (computing power and rise of distributed information networks). In the Industrial Internet, advances in software tools and analytic techniques provide the means to understand the massive quantities of data that are generated by intelligent devices.

GE sees vast potential in “thing that spin” — millions of rotating machinery around the world: motors, turbines, compressors, pumps, fans, blowers, generators, rollers, conveyors, and more, from simple electric motors to highly advanced computed cosmography (CT scanners) used in healthcare. Each of these assets is subject to temperature, pressure, vibration and other key metrics, which can be monitored, modeled, and manipulated remotely to provide safety, enhanced productivity, and operational savings.

This is already happening, says GE:

Companies have been applying Internet-based technologies to industrial applications as they have become available over the last decade. However, we currently stand far below the possibility frontier: the full potential of Internet-based digital technology has yet to be fully realized across the global industry system. Intelligent devices, intelligent systems, and intelligent decisioning represent the primary ways in which the physical world of machines, facilities, fleets and networks can more deeply merge with the connectivity, big data and analytics of the digital world.

As we’ve made clear with VERGE, all of this is a significant sustainability play, encouraging systems thinking across organizations and value chains, tapping into vast new opportunities for energy and operational efficiency, and rethinking and retooling business models and value propositions in ways that dramatically dematerialize and decarbonize the economy.

From what I’ve seen so far, GE seems to be deliberately downplaying the sustainability value proposition here, to the point of sustainability being conspicuous in its absence. At last week’s San Francisco event — which included presentations and panels with a number of big brains from the technology world — the words “climate change” weren’t spoken. If the S-word was mentioned, I

Neither was “ecomagination,” once a prime focus of the company. Despite the star power GE brought to the event — in addition to Immelt, there were at least three other GE corporate officers present — Mark Vachon, who heads ecomagination at GE, wasn’t there, nor were any of his lieutenants.

Perhaps this had to do with Immelt’s apparent souring on green messaging, based on Reuters’ report of comments the CEO made last year:

“If I had one thing to do over again I would not have talked so much about green,” Immelt said at an event sponsored by the Massachusetts Institute of Technology. “Even though I believe in global warming and I believe in the science … it just took on a connotation that was too elitist; it was too precious and it let opponents think that if you had a green initiative, you didn’t care about jobs. I’m a businessman. That’s all I care about, is jobs.”

So, is ecomagination over?

I asked Beth Comstock, GE’s chief marketing officer, about ecomagination’s absence at the San Francisco event. “It wasn’t intentional,” she responded. She went on to describe a variety of initiatives done under the ecomagination banner — a greener mining business unit and a battery storage play, for example, both launched in 2012 — explaining that “ecomagination is not a special campaign, it’s just the way we work.”

Perhaps. But at one time it was a special campaign. In searching press releases on GE’s corporate website as well as its ecomagination site, it appears that ecomagination has become a secondary messaging platform at best. Internally, it’s a program GE uses to validate environmental metrics (via third-party verification) in order to establish solid underpinnings for its marketing claims. Externally, the brand seems to have lost juice within the company.

Maybe that’s just as well. Given that “green” and “clean” (and “eco”) have become politically problematic language in some circles — at least within the United States — it may be wise for Immelt and his team to quash the sustainability talk. (It’ll be interesting to see if the messaging for the Industrial Internet is different outside the U.S.)

Indeed, it was significant, albeit not surprising, that Immelt — the first to take the stage at the San Francisco event — mentioned the word “revenue” within the first 20 seconds of his presentation. GE’s newest marketing message is all business: productivity, innovation, revenue growth, and a world-class opportunity.

Joel Makower is chairman and executive editor of GreenBiz Group Inc., producer of GreenBiz.com.

Source: www.greenbiz.com