Hiring enough tech talent to facilitate digital transformations typically tops the list of challenges CIOs face. They could do worse than follow the blueprint crafted by 125-year-old General Electric.
The company has lured top tech executives from Apple, Google and Microsoft by underscoring the huge role GE plans to play in the so-called Fourth Industrial Revolution, an era defined more by software platforms and APIs than heavy metal. It has also overhauled a talent recruitment practice that was more suited for the industrial giant of yore by bringing in technical recruiters who offer the kind compensation packages pitched by Silicon Valley titans.
“Some people might say '[GE is] old and slow, industrial, how can you have an interesting mission?' GE Digital CEO and CDO Bill Ruh tells CIO.com. “I think the reality is it’s much more interesting when you build big machines.”
Those big machines are part of GE's Industrial Internet, in which it blends hardware, software and analytics into cloud systems that can collect and generate insight into machine performance. GE’s value proposition is that a 1 percent boost in, say, jet turbine productivity, can save a company billions of dollars. The company believes that the market for a platform and applications in the industrial segment could reach $225 billion by 2020.
As such, the company pumped $1 billion into a software development facility in San Ramon, Calif., and hired more than 1,800 engineers and supporting staff to build out Predix, the company's operating system for the Industrial Internet, as well as Predix-based applications.
GE's pivotal point came in September 2015 when CEO Jeff Immelt launched GE Digital, a move that would grow GE's software and analytics business from $6 billion in 2015 to a top 10 software company by 2020. Immelt promoted Ruh to lead GE's digital transformation and the company installed a CDO for every business line.
It takes a techie to recruit a techie
Ruh and his colleagues are wooing elite engineers with the promise of getting the chance to crack game-changing challenges. But GE made a crucial move in 2013 when it insourced talent acquisition and hired several recruiters who had software domain expertise, says Jennifer Waldo, GE Digital's chief human resources officer. "They speak the software language and know the business and technology deeply," Waldo says.
These recruiters, many of who came from technology companies, began hunting for candidates at tech companies. They spiced up the compensation packages with bonuses and equity, a rarity in the industrial sector. And they played up the fact that successful GE leaders often leapfrog across the company’s business lines on their way up the company ladder.
Initially, Waldo says it was an "uphill battle" as roughly 90 percent of candidates GE targeted didn’t know the company was conducting a massive digital transformation. The perception began to shift in 2015, after GE ran a marketing campaign anchored by commercials, rooted in real experiences GE software engineers experienced in Silicon Valley, poking fun at the company’s fledgling software business.
Once viewed as a legacy leviathan building big machines, GE began cultivating an image as a startup building a digital analytics platform with considerable support from the corporate mothership. By mid-2016, GE began attracting top-tier engineers, such as Darren Haas, former head of cloud engineering at Apple who helped create Siri. A New York Times feature published in August 2016 called more attention to GE’s quest.
Steve Martin spent most of the last decade helping Microsoft build out its successful Azure cloud business before joining GE as chief digital officer of its energy connections business in November. Martin says that he was drawn to GE by the opportunity to transform an energy sector that has been largely unchanged for the past 120 years. Now energy companies are creating virtual power plants comprising solar panels, batteries and software to store energy.
"A lot of what we've built for energy has to be rethought so software is used to capture and store energy," Martin says. "The ability to put digital solutions atop those and drive new transformation in this market that is being disrupted, particularly on the energy side, for me that was a gravitational pull that is inescapable. GE is uniquely positioned to take advantage of this."
Martin envisions GE playing a key role in using renewable energy resources and software to power autonomous ships from, for example, Singapore to Los Angeles -- without any humans aboard the vessels. Such challenges are a big reason why joining GE wasn't a hard sell.as Microsoft’s cloud business matured he’d been looking for the next big thing. When he connected with GE's Ruh through a recruiter he knew almost immediately “I wanted to do it."
Tapping new vertical markets is key
It's a feeling that many elite engineers working for technology companies are likely to have as they bring horizontal cloud systems to a stable state, according to Forrester Research's Ted Schadler.
Schadler says top-tier talent is increasingly drawn to vertical automation platforms such as those created by GE and its industrial rivals Siemens and Bosch. Such technologies leverage data analytics, automation and IoT. "There is opportunity for real differentiation at the industry player level and you will see the big giants that get it and move quickly -- like GE -- and those that lag and struggle to build their platforms," Schadler says.
Patrick Franklin left Google last October to lead software engineering for GE's Brilliant Manufacturing unit, where his challenges include determining throughput in a plant's production and quashing quality defects in real-time.
Franklin, who worked at Amazon before Google, was hooked by one of GE’s holy grails: Connecting automated machines. "Once you realize it’s not a solved problem, it becomes really interesting," Franklin says.
Franklin said that while he enjoyed Google’s perks, including free food, Ruh and Immelt won him over by outlining the impact he could have on the business, as well as the autonomy to do the job. To help with this endeavor, Franklin is looking to double his staff from 500 to roughly 1,000 engineers in 2017.
"There’s also an absolute commitment to this space,” Franklin says. “Jeff [Immelt] gets it -- certainly Bill [Ruh] gets it."
GE’s success is a double-edged sword, though perhaps not an unwelcome one for a company that appreciates competition. The publicity machine hawking GE’s software chops, coupled with the fact that it isn’t bashful about hiring engineers from tech companies, means it can no longer poach in stealth mode. In fact, Waldo says that technology companies are now targeting GE’s engineers. “It’s like, ‘uh oh, we’ve arrived,’” Waldo says. “People now want our talent.”
The cutthroat competition for talent has also forced GE to look beyond Silicon Valley, Ruh says. It’s one of the reasons it moved its headquarters from Fairfield, Conn., to Boston, whose concentration of universities makes it a prime hunting ground for new blood. “The world is changing and we’ve got to go where the talent is,” Ruh says. In addition to California, Massachusetts and New York, GE is trying to identify concentrations of talent in other cities, Ruh says.
Consultants from Deloitte to McKinsey posit that successful digital transformations are led from the top. Ruh attributes GE’s recent software successes to Immelt’s willingness to constantly learn and adjust to market forces on the fly.
"It does require that the Jeff Immelt and [the rest of the C-suite] sell the message even better than I do because they believe the idea of the mission cannot be underrepresented," Ruh says. “We’re at a time when that mission has become clearer to everyone and the company is behind it.”