How GE Creates and Captures Value in the Industrial Internet Era

GE showcased their latest “Industrial Internet” advancements at the annual Minds + Machines conference in San Francisco last November.  Below is a sampling of some of the sessions showcasing how the combination of sensors, wireless networks, and big data is transforming 100-year-old industries.  

GE announced their biggest software deal yet, and though terms were not disclosed the deal ranks in the top 3 in GE’s history:  


On its way to closing this blockbuster deal, GE had to work hard to prove the value of its new technology.  You can just imagine the level of scrutiny that executives at Exelon went through before signing the deal that would put GE’s Predix software in all 91 of their power plants.   

So how did GE do it? It is all about value, quantified value.


I personally feel privileged to have played a small but important role in helping GE’s marketing and sales teams leverage value-based frameworks to dollarize the value they deliver.  About 12 months ago, I supported GE’s value quantification efforts by developing value models for customers in the power industry. These value models would later become the foundation of a pricing strategy designed to enable GE to capture the value they were able to deliver. 


Selling Value

GE’s impressive industrial internet software technology could not just be sold to the IT department, they had to sell it to the plant owner.  By creating analysis like the illustrative example below, we are able to put pen to paper on what drives value for customers in the power industry.  GE is selling efficiency, transparency, and intelligence and charging for business outcomes. To close successful deals, GE focused on the need understand and quantify the dollar value they deliver.



New Pricing Models

Customers set a specific need or goal and the vendor provides whatever technology is necessary to accomplish it. In the new wave of IOT technology, vendors must be able to prove their value through pilots and result-driven case studies. Technology is not only accelerating change in the production floor but also in how customers evaluate and purchase solutions. 


To deliver outcomes vendors do not just sell individual sensors, software, machines, circuit breakers, or transformers, or even the services to put them in. This creates complexity and the need for collaboration. So to capture value, vendors like GE must align their price with how customers make money.  In the case of a power producer, it may mean charging a monthly fee per MW of energy produced.  These outcome-based pricing models are still being refined but technology is driving us towards an “as-a-service” world.  Are you ready?


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