The 124 Year Old Startup

Jeff Im­melt may re­turn GE to a glory it hasn’t seen since me

Bloomberg Businessweek (Asia) - - FRONT PAGE - By Devin Leonard and Rick Clough

“Peo­ple didn’t think this man­age­ment team would drive an ag­gres­sive trans­for­ma­tion of the busi­ness. But that’s ex­actly what’s hap­pen­ing”

in Ossin­ing, N.Y., there’s a grassy, 59-acre cam­pus owned by Gen­eral Elec­tric. It’s an ex­ec­u­tive train­ing cen­ter where the com­pany holds man­age­ment and lead­er­ship classes, some of them led by the chief ex­ec­u­tive him­self. Jack Welch, who ran GE in the 1980s and ’90s, would ar­rive by he­li­copter. He’d make his way to a win­dow­less au­di­to­rium known as the Pit where a group of man­agers waited. They used to call him “Neu­tron Jack,” be­cause he was known for fir­ing so many peo­ple that only the build­ings were left stand­ing. Neu­tron Jack and his ex­ec­u­tives would en­gage in an ag­gres­sive form of cor­po­rate group ther­apy, rais­ing their voices as they aired their frus­tra­tions with the com­pany and each other. Later, they would have drinks at the White House, the cam­pus bar. It drove busi­ness mag­a­zines wild with ex­cite­ment. “The class sits trans­fixed as Welch’s laserblue eyes scan the au­di­to­rium … , ” wrote Busi­ness­week in 1998.

To­day, GE ex­ec­u­tives—sorry, team mem­bers—take classes in yoga and med­i­ta­tion and sum­i­na­gashi, the Ja­panese art of paint­ing on still wa­ter. The White House has be­come a low-key place where vis­i­tors can sip ar­ti­sanal coffee rather than mar­ti­nis. The Pit has a win­dow through which the sun shines.

It’s part of a much larger trans­for­ma­tion at GE or­ches­trated by Jeff Im­melt, Welch’s suc­ces­sor as chief ex­ec­u­tive of­fi­cer. Most no­tably, GE is mov­ing its head­quar­ters from sub­ur­ban Fair­field, Conn., land of golf and bonuses, where it’s been since 1974, to Bos­ton, the Athens of Amer­ica. The com­pany is sell­ing off its divi­sion that makes re­frig­er­a­tors and mi­crowave ovens. Now it’s fo­cused on elec­tric power gen­er­a­tors, jet en­gines, lo­co­mo­tives, and oil-refining gear. And it’s made a sig­nif­i­cant bet on de­vel­op­ing soft­ware to con­nect th­ese devices to the In­ter­net. There’s a term for this trend of adding net­work con­nec­tions to hard­ware not usu­ally con­sid­ered com­put­ers: the In­ter­net of Things. GE be­lieves its op­por­tu­nity lies in what it calls the In­ter­net of Re­ally Big Things.

In the past five years, GE has hired hun­dreds of soft­ware de­vel­op­ers, cre­ated its own op­er­at­ing sys­tem, and fash­ioned dozens of ap­pli­ca­tions that it says will make planes fly more ef­fi­ciently, ex­tend the life of power gen­er­a­tors, and al­low trains to run faster. GE’s plan is to sell this soft­ware to other man­u­fac­tur­ers of Re­ally Big In­dus­trial Things, and to be a top 10 soft­ware com­pany by 2020. That would put it in the same cat­e­gory as Mi­crosoft, IBM, and Or­a­cle, an am­bi­tion that some have dif­fi­culty swal­low­ing. “Top 10? No way,” says David Linthicum, se­nior vice pres­i­dent of Cloud Tech­nol­ogy Part­ners, a con­sult­ing firm in Bos­ton.

GE is also re­vis­ing its man­age­rial rhetoric, some­thing it’s also his­tor­i­cally pro­duced in prodi­gious quan­tity. The com­pany was of­fi­cially founded in 1892 when Thomas Edi­son merged his op­er­a­tion with a ri­val elec­tric light man­u­fac­turer. In the 1950s, CEO Ralph Cordiner pro­moted the the­ory of de­cen­tral­iza­tion, which turned 120 busi­ness heads into mini-CEOs. In the 1970s, Regi­nald Jones cham­pi­oned “strate­gic busi­ness plan­ning,” which treated the com­pany’s many ven­tures as an in­vest­ment port­fo­lio. As a slo­ga­neer, no one matched Neu­tron Jack’s fe­roc­ity. He was an evan­ge­list for Six Sigma, a num­bers-driven qual­ity-con­trol method that he didn’t orig­i­nate but grabbed hold of and turned into a board­room craze. He wanted GE to be a “learn­ing en­ter­prise” with “a bound­ary­less cul­ture.” He also called it “the great­est peo­ple fac­tory in the world,” one that welded to­gether man­agers who could run any­thing from the plas­tics divi­sion to a tele­vi­sion net­work. (Welch spent sev­eral years dis­pens­ing man­age­ment ad­vice in the pages of this mag­a­zine a decade ago, af­ter re­tir­ing from GE.)

Im­melt, who took over in 2001, tried to pro­mote his own man­age­ment meth­ods. He brought in cul­tural an­thro­pol­o­gists to study em­ployee be­hav­ior. He tried to get his ex­ec­u­tives to sub­mit “imag­i­na­tion break­throughs” that would gal­va­nize GE and gen­er­ate growth. GE held “idea jams” to foster cre­ativ­ity.

Noth­ing seemed to work. GE’s shares were mauled in the re­ces­sion of the early Aughts. Mean­while, its GE Cap­i­tal divi­sion mor­phed into one of the world’s largest providers of com­mer­cial real es­tate debt and air­craft leases. Dur­ing the fi­nan­cial cri­sis of 2008, Im­melt was forced to seek the pro­tec­tion of the Fed­eral De­pos­i­tory In­sur­ance Cor­po­ra­tion, which guar­an­teed about $60 bil­lion of GE Cap­i­tal’s debt. The same year, af­ter GE missed its quar­terly earn­ings pro­jec­tions, Welch de­clared dur­ing an ap­pear­ance on CNBC that Im­melt had “a cred­i­bil­ity is­sue” and threat­ened to get a gun and shoot him if he did it again. The Fi­nan­cial Times re­ported that Im­melt com­plained to a group in Wash­ing­ton that he had the mis­for­tune of man­ag­ing GE in a tur­bu­lent time. “Not only could any­one have run GE in the 1990s,” Im­melt groused, “his dog could have run GE. A Ger­man shep­herd could have run GE.”

By then, Im­melt had seen the share price fall from $60 in 2000 below $6. GE was stripped of its triple-A credit rat­ing by Stan­dard & Poor’s, and Im­melt cut the div­i­dend for the first time since 1938. In 2012 this mag­a­zine re­ferred to Im­melt’s first 10 years as “GE’s Lost Decade” and cal­cu­lated that in­vestors had seen a to­tal re­turn of zero dur­ing his ten­ure.

Inevitably, an ac­tivist took an in­ter­est in the strug­gling con­glom­er­ate. Last Oc­to­ber, Nelson Peltz’s Trian Part­ners re­vealed that it had pur­chased $2.5 bil­lion in GE shares, be­com­ing its ninth­largest in­vestor. In an 81-page anal­y­sis, Trian said GE had pre­vi­ously been an un­fo­cused, overly bu­reau­cratic mud­dle. But rather than call for a breakup of the com­pany as Peltz has done in the past with DuPont and Pep­siCo, he in­stead en­dorsed Im­melt’s strat­egy.

A year ear­lier, this would have been hard to be­lieve, but by last fall, Im­melt’s pro­gram was be­gin­ning to suc­ceed. He had an­nounced a plan to shed $200 bil­lion of GE’s prob­lem­atic fi­nan­cial as­sets, which have weighed down its share price. The com­pany says it had soft­ware sales of $5 bil­lion in 2015, a sign that the In­ter­net-of-re­ally-big-things ap­proach must be taken se­ri­ously. And, by all ac­counts, Im­melt’s cam­paign to re­make the com­pany’s in­trin­si­cally rigid cul­ture is work­ing. In the past year, GE’s stock has out­per­formed the Stan­dard & Poor’s 500-stock in­dex. “A lot of peo­ple didn’t think this man­age­ment team would drive an ag­gres­sive trans­for­ma­tion of the busi­ness,” says Steven Wi­noker,

Im­melt en­ters a con­fer­ence room at GE’s 53rd floor of­fice in Rock­e­feller Cen­ter in New York. He’s 60, 6 feet 4 inches with wavy white hair, and still ex­udes youth­ful con­fi­dence and self-dep­re­cat­ing charm. He’s a for­mer Dart­mouth foot­ball player and fra­ter­nity pres­i­dent who once told this mag­a­zine that he won the Earl Hamil­ton Var­sity Award for friend­ship and char­ac­ter, adding that it prob­a­bly went to the cam­pus beer-drink­ing cham­pion.

Al­though he of­ten wears jeans to the of­fice, Im­melt has a board meet­ing later this Fe­bru­ary morn­ing, so he’s dressed in a light gray suit, pink shirt, and green tie. Af­ter some breezy small talk, he starts go­ing into GE’s trans­for­ma­tion, which be­gan in the depth of the fi­nan­cial cri­sis. To hear him tell it, he didn’t spend time se­cond-guess­ing ear­lier de­ci­sions. “I never sat there and said, ‘Oh, crap, why do we have so much com­mer­cial real es­tate?’ ” he says.

In­stead, he started think­ing about data. Many of GE’s cor­po­rate cus­tomers were putting sen­sors on their ma­chines to col­lect in­for­ma­tion about them. That of­ten meant a lot of in­for­ma­tion: A jet en­gine, for in­stance, spits out roughly a ter­abyte’s worth of ev­ery­thing from fuel us­age to heat lev­els to the size of the specks of dirt that fly through the en­gine on a trip across Amer­ica. What were GE’s cus­tomers sup­posed to do with all that data? Im­melt con­sid­ered team­ing up with a tech com­pany to cre­ate soft­ware that would an­a­lyze vast amounts of the stuff, but when the tech com­pany fig­ured that out, what would it need GE for? He thought GE would be bet­ter off de­vel­op­ing this soft­ware on its own. If noth­ing else, the com­pany would be able to use the tech­nol­ogy to im­prove its own pro­duc­tiv­ity; if things went well, GE would be able to sell it as an add-on to ser­vice con­tracts with in­dus­trial cus­tomers. “I said, ‘Look, we need to start build­ing an­a­lytic ca­pa­bil­ity, big data ca­pa­bil­ity, and let’s do it in Cal­i­for­nia,’ ” Im­melt says. “That was as so­phis­ti­cated as my orig­i­nal think­ing was.”

His own knowl­edge of the soft­ware busi­ness was lim­ited. Along with do­ing what­ever it took to win a char­ac­ter award at Dart­mouth, he grad­u­ated with a dual de­gree in eco­nom­ics and ap­plied math in 1978. Af­ter get­ting his MBA at Har­vard, he turned down a job at Mor­gan Stan­ley to work at GE. He ended up run­ning the health-care divi­sion in the 1990s, which opened a soft­ware cen­ter of its own in Wis­con­sin. Be­cause of that, he says, he knew enough to ask the right ques­tions about soft­ware.

If GE was go­ing to set up shop in Sil­i­con Val­ley, Im­melt wanted a lo­cal to run the op­er­a­tion. He went af­ter Wil­liam Ruh, then a vice pres­i­dent at Cisco Sys­tems. Ruh was as­ton­ished to get a call from a re­cruiter who was coy with him about the com­pany she rep­re­sented, ask­ing him to guess which one it might be. “I named a name, and she said no,” he says. “And I named an­other name and she said no. She said, ‘Name an­other.’ I said, ‘No, I can’t name any­more. Just tell me, who is it?’ And she said, ‘GE.’ I said, ‘It can’t be. They don’t know any­thing about soft­ware.’ ”

Ruh found it hard to be­lieve that GE would be will­ing to in­vest the kind of money it would take to build a suc­cess­ful soft­ware busi­ness. Sil­i­con Val­ley is full of lit­tle star­tups, but cre­at­ing soft­ware at an in­dus­trial scale would re­quire bil­lions of dol­lars. He also couldn’t see GE, with more than 300,000 em­ploy­ees, mak­ing the cul­tural changes needed to com­pete in the Val­ley.

De­spite those qualms, he trav­eled to Fair­field in

Jan­uary 2011 to meet with Im­melt. Ruh says he was im­pressed by Im­melt’s vi­sion and his will­ing­ness to ad­mit that he didn’t fully know what he was do­ing. “Ba­si­cally, Jeff said, ‘Look, we’re on Step 1 of a 50-step process, and I just need you to help me fig­ure out what to do be­cause I can only see out one or two steps,’ ” Ruh says. He took the job, and sev­eral weeks later his new boss promised to in­vest $1 bil­lion in a soft­ware op­er­a­tion in San Ra­mon, Calif. GE’s am­bi­tions were greeted with skep­ti­cism in the Val­ley. In 2012, when Im­melt pro­moted the soft­ware ven­ture in San Fran­cisco dur­ing a com­pany-spon­sored event with Marc An­dreessen, the star ven­ture cap­i­tal­ist and a friend of Im­melt’s warned that it would be dif­fi­cult for a hard­ware com­pany like GE to assem­ble a team of data sci­en­tists that could per­formp the kind of tasks that GE had in mind. “It’s hard to be re­ally good at that,” An­dreessen said. “It’sIt re­ally com­pli­cated.” (Bloomberg LP, which oowns Bloomberg Busi­ness­week, is an in­vestor in An­dreessen Horowitz.)

Jen­nifer Waldo, GE’s head of hu­man re­la­tion­stions in the San Ra­mon of­fice, says re­cruiters had a hhard time just get­ting peo­ple to come in for an in­ter­view.in­ter Nine out of 10 soft­ware de­vel­op­ersers they con­tacte­con­tacted had no idea GE was in the busi­ness or that it even had op­op­er­a­tions in Cal­i­for­nia. Nor were they nec­es­sar­ily in­ter­este­d­inte in learn­ing any­thing more: Al­most all had jobs and couldn’t see any up­side to work­ing for an East CoastCo mi­crowave oven man­u­fac­turer. In 2013, Waldo ap­pealed to Im­melt for help when he vis­ited San Ra­mon. “I walked him through all those is­sues,” she says. “I needed to com­pen­sate dif­fer­ently. I needed to in-source my re­cruit­ing team. We were com­pet­ing in a mar­ket­place where we’re not even a rec­og­nized player.” A for­mer GE re­cruiter says the com­pany of­fered stock op­tions to job can­di­dates, but not ac­tual stock, the norm in Sil­i­con Val­ley. There were also no nap rooms, no on-site child care, no dogs wan­der­ing around the of­fice.

Waldo and her team found they could make head­way by telling prospects that they would have a chance to de­velop trains and power equip­ment rather than some in­con­se­quen­tial so­cial-net­work­ing app. “I had a can­di­date in the early days,” she re­calls. “She came in and said, ‘I’m sit­ting there try­ing to fig­ure out how to put a Pin­ter­est but­ton on some­thing, and I get this phone call from GE, and you’re talk­ing about mak­ing air­craft en­gines fly more ef­fi­ciently.’ ” (A GE spokes­woman says the com­pany now in­cludes stock in its com­pen­sa­tion for soft­ware de­vel­op­ers, too.)

GE also tar­geted startup veter­ans who’d spent years putting in hours for low pay hop­ing to be the next Mark Zucker­berg. “They went around to guys who were in their se­cond and third startup and had been eat­ing ra­men noo­dles for eight years,” says Nick Hey­mann, an an­a­lyst at Wil­liam Blair. “They said, ‘Look, how would you just like to have a nor­mal life­style, live an hour out­side the Bay Area, make a quar­ter of a mil­lion bucks a year, and give your kids a re­ally good education?’ ” At the end of 2013, GE had 750 peo­ple work­ing in San Ra­mon.

By then, GE had de­vel­oped an early ver­sion of Predix, an op­er­at­ing sys­tem like Win­dows or An­droid but for the In­dus­trial In­ter­net. The com­pany de­vel­oped ap­pli­ca­tions for Predix en­abling it to in­gest and an­a­lyze vast amounts of data from sen­sor-equipped ma­chines much like Ama­zon.com, Face­book, and Google do with in­for­ma­tion gen­er­ated by their hu­man cus­tomers. Im­melt wanted to speed Predix’s de­vel­op­ment and use it on GE’s own equip­ment. That meant the en­tire com­pany had to em­brace the new op­er­at­ing sys­tem, even the power divi­sion, which usu­ally took years to de­sign tur­bines. There didn’t seem to be much need to rush out new mod­els; GE’s power cus­tomers typ­i­cally buy steam- or gas-pow­ered tur­bines and use them for three decades.

The more Im­melt watched what was hap­pen­ing in Sil­i­con Val­ley, the more he be­came con­vinced GE needed a cul­tural rev­o­lu­tion. He sought as­sis­tance from Eric Ries, a tech en­tre­pre­neur and au­thor of The Lean Startup, a book that es­pouses the im­por­tance of re­leas­ing early ver­sions of prod­ucts, get­ting cus­tomer feed­back, then “piv­ot­ing” or chang­ing them if nec­es­sary to im­prove them. In 2012, GE asked Ries to speak to Im­melt and some of his top ex­ec­u­tives at the Ossin­ing train­ing cen­ter.

Ries was so ner­vous that he wore a suit. When he ar­rived at the train­ing cen­ter, he says he felt like he was en­ter­ing an al­ter­na­tive uni­verse. The day be­fore, he’d been in Wash­ing­ton vis­it­ing mem­bers of the Obama ad­min­is­tra­tion. Yet when he men­tioned the White House with the GE peo­ple, they thought he was talk­ing about the build­ing on cam­pus where the bar used to be. “I’m a startup guy from San Fran­cisco,” Ries says. “I was just like, ‘What on earth is hap­pen­ing here?’ ” Ries was ex­pect­ing Im­melt to be a brusque, Jack Welch-like char­ac­ter. Then the CEO showed up in jeans and kid­ded him about be­ing over­dressed. “‘I thought you were from Sil­i­con Val­ley,’ ” Im­melt told him. “‘What are you do­ing in a suit?’ ” Ries was charmed.

Af­ter Ries gave his pre­sen­ta­tion to the group, he opened the floor to ques­tions. There was an awk­ward si­lence. “Jeff turns around, and he names one of his vice pres­i­dents, and he says, ‘How come you’re not al­ready do­ing this?’ ” Ries re­mem­bers. “The guy was like, ‘Um, mum­ble-mum­ble-mum­ble.’ All of a sud­den, there were a lot of ques­tions in the room. It was like, ‘Mes­sage re­ceived. Jeff thinks there’s some­thing here.’ ”

That af­ter­noon, Ries started giv­ing work­shops for ex­ec­u­tives. He later helped GE tai­lor its own ver­sion of his meth­ods, which the com­pany calls Fast­Works. He says Im­melt wanted change, telling him: “‘I’m tired of hear­ing five-year plans.’ ” GE has since handed out thou­sands of copies of The Lean

Startup and has trained tens of thou­sands of em­ploy­ees in the process. Ev­ery­one in up­per man­age­ment seems to use Sil­i­con Val­ley-com­pli­ant vo­cab­u­lary, par­tic­u­larly the word “pivot.” “We en­cour­age peo­ple to try things, pivot, try them again,” Im­melt says. “It’s a bet­ter way to run the place than cen­tral­ized com­mand and

con­trol, process-laden.” It’s a sign of his per­sonal charisma that, un­like many of his em­ploy­ees, the boss can speak cor­po­rate jar­gon and make it sound pro­found.

Im­melt also thought it was time to re­vamp GE’s an­nual re­view process to make the com­pany more palat­able to younger, soft­ware-lit­er­ate work­ers. Un­der Welch, GE was fa­mous for an­nual re­views that ranked all its em­ploy­ees numer­i­cally ac­cord­ing to their per­for­mance. Then the bot­tom 10 per­cent were fired. “The big­gest cow­ards are man­agers who don’t let peo­ple know where they stand,” Welch told Bloomberg Busi­ness­week in 2012.

“It just didn’t make sense any­more,” says Su­san Pe­ters, GE’s se­nior vice pres­i­dent for hu­man re­sources, of the an­nual re­view process. The com­pany de­cided to scrap them al­to­gether, re­plac­ing them with a gen­tler sys­tem where em­ploy­ees are “coached” by their more ex­pe­ri­enced peers.

Un­like some of Im­melt’s ear­lier man­age­ment ini­tia­tives—the idea jams and the imag­i­na­tion break­throughs—the new ones seemed to have the in­tended ef­fects. Fast­Works, ac­cord­ing to GE, en­abled the de­vel­op­ment of a new gas tur­bine in a year and a half, rather than the usual five. “This is a bil­lion-dol­lar prod­uct line,” says Steve Bolze, chief of GE’s power divi­sion. “It’s go­ing to ex­pand to be one of our sin­gle big­gest launches in our his­tory.”

In April 2015, Im­melt an­nounced his plan to sell $200 bil­lion of its GE Cap­i­tal as­sets within two years, faster than Wall Street had ex­pected. Not sur­pris­ingly, he called it a “piv­otal day.” Pre­vi­ously skep­ti­cal an­a­lysts praised Im­melt dur­ing a con­fer­ence call when he ex­plained the plan. Even Bar­clays Cap­i­tal’s Scott Davis, who had spec­u­lated only a month ear­lier that Im­melt would soon be out of a job, was con­trite. “Con­grats,” Davis said. “I know we have all given you a lot of crap over the years, but this is pretty good stuff for re­demp­tion. That’s my best apol­ogy.” He added, “You can keep your job a lit­tle longer, I guess.”

Along with un­load­ing most of its risky fi­nan­cial busi­ness, GE struck a deal to sell off its ap­pli­ance divi­sion to Haier, the Chi­nese con­glom­er­ate, and in­creased its share of the global power in­dus­try with its 2015 pur­chase of Al­stom, a French en­ergy com­pany, for $10 bil­lion. As a re­sult, 90 per­cent of GE’s prof­its will come from in­dus­trial op­er­a­tions by 2018. (Dur­ing its glory years from the late ’90s into the mid-2000s, GE Cap­i­tal con­trib­uted as much as 40 per­cent.) Im­melt says this is the GE he’s been try­ing to cre­ate since the fi­nan­cial cri­sis, al­though he ac­knowl­edges that it might have been dif­fi­cult for out­siders to dis­cern.

In Jan­uary, GE an­nounced the move to Bos­ton, where the deer are few and the soft­ware de­vel­op­ers plen­ti­ful. “Sit­ting in a ru­ral set­ting, you can never be scared enough of what’s next,” Im­melt says. “You just can’t be. You can’t be para­noid enough. And I felt like it would be a good thing for the busi­ness just to be in the flow of ideas.” It could also help GE at­tract more young em­ploy­ees with tech­nol­ogy back­grounds, which re­mains a strug­gle be­cause most peo­ple still don’t as­so­ciate GE with soft­ware. GE has ac­knowl­edged this by run­ning TV ads fea­tur­ing a fic­ti­tious coder named Owen who gets blank stares from his friends when he tells them he’s been hired by GE.

“Guys, I’ll be writ­ing a new lan­guage for ma­chines so planes, trains, and even hospi­tals can work bet­ter,” Owen says. “So you’re go­ing to work on a train?” a friend asks. “No, on trains,” Owen cor­rects him. “On trains.” “So you’re not go­ing to de­velop stuff any­more?” It’s rare for GE to laugh at it­self like this, but the com­mer­cials have helped re­cruit­ing. “The Owen ads have in­creased the num­ber of ré­sumés we get by eight times,” says Ruh, now GE’s chief dig­i­tal of­fi­cer.

Head count at the San Ra­mon of­fice is 1,300, in­clud­ing some refugees from Google and Face­book. It al­ready has avi­a­tion cus­tomers us­ing Predix ap­pli­ca­tions to mon­i­tor the wear and tear on their jet en­gines and cal­i­brate their main­te­nance sched­ules based on that data rather than an av­er­age for the en­tire fleet. It’s cre­ated smart wind tur­bines that tell each other how to shift their blades to catch more wind, which GE says can in­crease their power out­put by as much as 20 per­cent.

But Im­melt needs to sell vast amounts of ap­pli­ca­tions and Predix-based an­a­lyt­ics to reach his goal of mak­ing GE a top 10 soft­ware com­pany in 2020. That’s not a ran­dom dead­line. Tra­di­tion­ally, GE chief ex­ec­u­tives have served 20 years, so his time will be just about up by then. He says the com­pany al­ready has a suc­ces­sion plan in place. If he can com­plete his dig­i­tal reinvention of the com­pany, he could de­part in glory, the way Welch did.

GE says it’s be­gin­ning to sell Predix-based ser­vices to cus­tomers who de­sign their own in­dus­trial equip­ment. Pit­ney Bowes is us­ing Predix on its mail­ing-la­bel ma­chines and let­ter-sort­ing devices in cor­po­rate mail­rooms; Toshiba is us­ing it on el­e­va­tors. “The In­dus­trial In­ter­net is go­ing to be the dark mat­ter of the In­ter­net,” prom­ises Harel Kodesh, chief tech­nol­ogy of­fi­cer for GE Dig­i­tal, which is what the com­pany now calls its soft­ware divi­sion. “It’s some­thing you don’t see, but it is ac­tu­ally the bulk of what’s hap­pen­ing on the In­ter­net. Other than porn, I guess.”

That may be, but GE faces com­pe­ti­tion from all sides. Ama­zon and Google are get­ting into the In­ter­net of Things along with IBM and Mi­crosoft. There are dozens of small star­tups with sim­i­lar am­bi­tions that don’t need Eric Ries to tell them what to do. Then there’s per­haps an even big­ger un­known: Will other large in­dus­trial com­pa­nies turn to GE to man­age their in­for­ma­tion? “If you’re a man­u­fac­turer of some size and so­phis­ti­ca­tion, are you go­ing to say ‘Hello, GE. You can own the data on my busi­ness’? ” asks Brian Lan­gen­berg, an in­de­pen­dent an­a­lyst and founder of Lan­gen­berg & Co. in Chicago. “Or are you go­ing to say, ‘I think I’m go­ing to do it on my own’? I’m skep­ti­cal.”

Not long ago, Im­melt gave a speech in Dubai about the In­dus­trial In­ter­net. He wasn’t talk­ing to tech peo­ple “with spiked hair,” as he puts it. He was ad­dress­ing at­ten­dees who worked at oil com­pa­nies and air­lines—in other words, his kind of peo­ple. Im­melt could see them nod­ding their heads ap­prov­ingly as he talked. “It’s mo­ments like that when you think, ‘This might work,’ ” he says later. “‘This re­ally might work.’ ” <BW>

The In­dus­trial In­ter­net “is ac­tu­ally the bulk of what’s hap­pen­ing on the In­ter­net,” says a GE soft­ware ex­ec­u­tive. “Other than porn, I guess”

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Conn. an an­a­lyst at San­ford C. Bern­stein & Co. “But that’s ex­actly what’s hap­pen­ing.”

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