As an early stage b2b investor, I have been studying and investing in the digital transformation of the enterprise for a long time. But all new trends take time.

So I was excited by Christopher Mims’ recent article in the WSJ.

Nothing accelerates enterprise adoption faster than a CEO feeling threatened over his/her job.

CEOs getting fired for missing the Digital Transformation

Chris Mims said:

“Investors and boards are hunting for corporate leaders who can move quickly to fend off upstarts and place big bets on disruptive tech….

In an age of rapid disruption by software and tech industries, a leader has to pick up the tempo and make riskier bets sooner … or else…

[Like Mark Fields, the former Ford CEO], other CEOs are being dismissed as their businesses post losses in the face of tech-heavy competition. In the past year alone they include Ronald Boire of Barnes & Noble, GNC Holdings’ Mike Archbold and top executives at three of the six major Hollywood studios.”

Coincidentally, Khadeeja Safdar highlighted the same trend in another recent WSJ article, J. Crew’s CEO, “Micky Drexler, the fashion genius whose ability to spot trends reshaped how Americans dress, has a humbling admission. He missed what might be the biggest trend of all — how quickly technology would change the retail industry.”

But Digital Transformation is still early

For people (like myself) who focus on the digital transformation, we are already thinking about and investing in what happens after the digital transformation.

Jacques Bughin from McKinsey brings us back to reality: “All the talk of digital disruption turning incumbents into dinosaurs and unicorns into masters of entirely new domains might lead you to think this is already an old narrative — so 2016. In fact, digitization has barely started, and so has the accompanying upheaval.” Think digital is a big deal? You ain’t seen nothing yet.

After analyzing the digital penetration in various industry sectors, Bughin noted that the average penetration is only 37%, as shown below:

Digital Transformation starts with the CEO — and then the people

Any transformation requires the full commitment of the CEO, and then hiring the right people and changing the corporate culture.

In his article, Chris Mims highlighted one incumbent CEO, General Electric Jeff Immelt’s response to the digital transformation hitting CEOs. Chris noted Jeff’s rare skill of building disruptive business models while maintaining an existing business at the same time.

Jeff Immelt decided several years ago to “go all in” on the digital transformation. He explains that decision in an 2015 interview.

In the interview, he noted 15%-20% of the S&P 5o0 valuation is from consumer internet stocks that didn’t exist 15 or 20 years ago (eg Facebook, Google, …), and the traditional consumer companies got none of that. “If you look out 10 or 15 years and say that the same value is going to be created in the industrial internet, do you as an industrial company want to sit there and say, I don’t want any of that. I’m going to let a Newco or some other company get all that?”

“But that’s why I circle back and would say to any CEO, industrial or nonindustrial, that where we are right now is going to be the most important thing that you’re going to work on, at least in this era.”

In discussing the digital transformation, he gave this insight: “This is something I got wrong. I thought it was all about technology. I thought if we hired a couple thousand technology people, if we upgraded our software, things like that, that was it. I was wrong. Product managers have to be different; salespeople have to be different; on-site support has to be different. We’ve had to drill and change a lot about the company. And I just think it’s infecting everything we do. It’s infecting our own IT. It’s infecting our own manufacturing plants. It’s infected everything we’re doing, I think in a positive way.”

Below are some specific actions taken by GE to become a digital company.

GE started advertising that it is a digital company

The ad seems more targeted for potential and existing employees (and their families) than new customers.

GE is moving its corporate office from the Connecticut suburbs to college-rich Boston

GE’s CFO, Thomas Gryta, said: “We lived on a very beautiful property in Fairfield, but very isolated. Attracting talent there was a bit of challenge. For younger folks maybe not the most dynamic place in the world…. There definitively is an innate culture and tactical depth and talent here [in Boston, with upward of 500,000 kids who go to school in the Boston area.]” WSJ on “What’s Behind GE’s Move from the Connecticut Suburbs to Boston.”

GE is making its office experience feel like a modern university (Silicon Valley like)

“[Our new offices] will be very modern, green and open. Young talent today want to be in a vibrant, open, interactive, high-tech, fun kind of space. That’s how we thought about design in the new facility,” said Thomas Gryta.

I became a big believer in the office experience after we moved just a couple blocks into our new offices, which is also modern, green and open. The new office dramatically improved interaction, morale and recruiting.

GE is making its digital experience for employees feel like top universities

In addition to a physical experience resembling nearby Boston universities, GE adopted the same mobile campus app for its employees at corporate headquarters as the ones adopted by nearby Boston universities. GE, Harvard, MIT and UMass are all customers of Modo Workplace™.

GE is building an expert network

The expert network from RallyTeam helps a GE executive find the right external expert from the corporate approved network.

GE and Storm Ventures’ Portfolio

At Storm Ventures, GE has been the teaching customer for several of our portfolio companies.

‍

‍