GE CIO says IT leaders need to focus on customers’ revenue
Understanding how GE’s customers make money has shaped CIO Jim Fowler’s leadership philosophy — and helped him carve out big goals as GE transforms into a digital industrial company.
By Brian P. Watson
When Jim Fowler served as CIO of GE’s power-generation services unit he understood the business well. But in a meeting with the division’s sales team, he realized he didn’t fully understand its customers.
For example, Fowler had not realized that producing software that helped customers in certain municipalities save fuel wasn’t driving any great returns. It wasn’t a priority for customers, he learned — they would just pass the cost of fuel onto its own customers. Then there were customers who sold into the spot market, who cared most about producing as much power as possible in peak seasons. Little else mattered.
The lesson from that meeting, in fall 2013, according to Fowler, “blew my mind.” He learned one of the most important guiding principles for his leadership roles: Not only do CIOs have to understand their business, they have to understand their customers’ business.
The IT leaders real mission: Know how your business makes money
Most IT leaders will characterize their mission as enabling business, transforming their companies or driving innovation. Fowler agrees with those aims, but he frames his objective as CIO in simpler terms. “I tell everybody who works for me: Start your job every day by understanding how your business makes money, and how customers of your business make money,” he says. “Build your strategy and vision for what IT should look like around that.”
Fowler was already years into leadership roles at GE when that mindset hit him. “And it stuck with me,” he adds. As Fowler tells it, he carried that thinking to his next job, as CIO of GE Power and Water, then as CIO of GE Capital, to his role today as global CIO for the storied $117 billion company. Since that epiphany, he has framed conversations with business and corporate leaders around making money for GE or its customers — or, ideally, both.
When he moved to GE Capital in June 2014, he spent the first 30 days visiting leaders from each product line. He wanted to know how they drove revenue, and why customers chose GE Capital over traditional banks.
People in the leasing division said GE was more willing to take on risk to lend to companies the banks wouldn’t touch. But the cost of capital had dropped in the subsequent years, and interest rates were at historically low levels. So, Fowler asked, if GE had cheap money, and the banks had cheap money, why were customers choosing GE? What really was the differentiator?
At the time, Fowler inherited an initiative to implement an out-of-the-box software product from a large vendor to replace its existing leasing platform. The project was taking too long and costing too much money, partially because the solution had to be customized significantly. While other banks issued the same exact lease types — which were covered by the solution — GE offered more flexibility.
In the end, they discovered that GE’s competitive advantage was its platform. The custom, homegrown legacy system delivered more value to customers than any vendor package could. “All of a sudden, it clicked for people that we were making money because we were willing to structure products like no one else in the industry could,” and because they had to the technology to make that happen, Fowler said. “That was the differentiator.”
Setting big goals
GE’s IT organization was well-respected before Fowler took the reins in October 2015. Its track record of innovation and results is impressive, and its legacy of producing Fortune 500 CIOs is unparalleled.
But early into his tenure, Fowler heard from some senior leaders a criticism that many CIOs have heard before: IT was communicating in terms the business didn’t care very much about. Describing how the organization simplifying ERP and application landscapes is important, as is reducing security vulnerabilities, but the business partners wanted more substance.
So Fowler — driven by the lesson learned in his power-generation days — has changed the conversation. When GE CEO Jeff Immelt asked Fowler how GE should think about IT, the CIO said, “Think about me the same way you think about any other business leader.” What was Fowler and his organization doing to drive revenue growth? What were they doing to drive productivity? How were they driving cash generation? “Those are the things stockholders care about, and those are the things you care about,” Fowler recalled saying to Immelt. “So I need to have skin in the game and be signed up to deliver on those.”
Based on his goals for the year, the message was received. Fowler has a $50 million sales target. Over the next five years, he aims to sell about $1 billion worth of GE products commercialized for the marketplace. And he has pledged to deliver on $500 million in productivity improvements across GE. (The productivity target is $1 billion over the next three years. Fowler says he raised his hand and took ownership of it when Immelt announced the goal in an executive planning session.)
Fowler says his focus on financials has not only changed the conversation with business leaders, but with his IT team as well. Take, for example, a recent situation in which a team member came to Fowler about a project to sunset a legacy COBOL system. The decision to retire the system came from simple logic: It’s old.
Fowler asked why. In the discussion that ensued, they realized — just like in the power-generation services scenario — that the system was actually a differentiator, regardless of its age. It was working well, and it helped GE sell more products.
Right then and there, they wouldn’t get rid of the system. Instead, they would invest in it. “Let’s not sunset this,” Fowler recalls saying in that discussion. “Let’s take it to a place we had never intended.” The point, he says, was about adding more features and functionality to a working system that was a source of competitive advantage.
When he moved the conversation to how GE made money, and how it differentiated from the competition, the mood changed. Framing decisions in financial terms takes the emotion of the conversation, Fowler says. It also eliminates IT-speak. That’s a powerful combination, and one that is yielding results.
That change in focus comes in parallel to GE’s transformation from being an engineering-focused culture to one that is leaner, more innovative, and more customer-focused — a shift for which Fowler credits Immelt’s leadership.
CIO enters tech talent war
As GE reinvents itself, Fowler is, in a sense, taking steps to reinvent GE’s IT organization. He currently has about 8,000 IT employees, but 17,000 contractors. In its previous era, as the poster-company for Six Sigma and extreme competitiveness, GE leaders saw outsourcing a shrewd strategy.
When Fowler looks at the table stakes today, he thinks the company went too far in giving up its technology capital. He’s hired about 3,000 more IT and engineering pros into GE in the last two years, but he’s looking to add another 2,000. He wants his internal/external balance to hit 50/50 by 2018 — no small measure in a talent war unlike any before, or for a company undergoing extreme change.
Speaking of extreme change, much of GE’s transformation into the digital age is overseen by Bill Ruh, CEO of GE Digital and the company’s chief digital officer (CDO). While some cognoscenti predicted CDOs would overtake CIOs, the evidence today is scant. GE is an exception: Fowler reports to Ruh.
When he took the global CIO job, Fowler heard from peers asking why he was sticking around, due to the reporting structure. “I told them, ‘I’m sticking around because the job I’m asked to do is important, challenging and, frankly, pretty cool,’” Fowler says.
“There used to be a gap between internal IT and our customers’ IT. Going forward, they’re not different anymore,” he continued. “Our systems are interlinked in a way that is different than anything we’ve seen before. If IT doesn’t have that commercial connectivity, we’re going to fail from our customers’ perspective.”