GE Digital’s CEO Addresses Digital Transformation During a Pandemic

Listen to GE Digital’s CEO Pat Byrne provide his thoughts on digital transformation during a pandemic with ARC Advisory Group’s Craig Resnick.  Pat covers what he is hearing from GE Digital’s customers, and how they are responding to the unpredictability and disruption caused by the pandemic.  Pat will address ideas how its software can help companies keep their employees safe and operations running during the pandemic, and the use of digital technologies to make industrial companies more resilient.  Pat will also discuss his thoughts on what will the future look like, how will the world change, and how will customers apply the lessons from COVID -19 going forward.

Transcript

Speaker 1: 0:16

[inaudible].

Speaker 2: 0:20

Hello, this is Craig Resnick coming to you from the ARC advisory group. And with me today is my special guests, Pat burns, chief executive officer at GE digital. How you doing today, Pat?

Speaker 3: 0:31

You're doing great. Thanks very much Craig.

Speaker 2: 0:32

You know, certainly as we, as we come to you during these unprecedented times of the pandemic, we've all been spending an awful lot of time talking to our customers. I know you've been talking to your customers. What are your, what are you hearing from your customers and how are they responding to the pandemic?

Speaker 3: 0:48

Yeah, you do. I've spent time with customers a lot over the last month, you know, when you're off the airplane, so you actually get some more time sometimes to just reach out and in a number of different industries, the utilities industry, the power generation industry and manufacturing and all over all over the world as well. And having, the way that conversation goes is it kind of got three parts to it. The first one is, is how are you doing? You know, it's amazing how this is such a shared experience where everybody's at home. People are thinking about their elderly parents or, or their own health, their own communities. And so that's the, that's inevitably the first part of every conversation. The second thing that usually happens in the conversation is talking about, so what does this mean for your short term? How are you adjusting? And what I'm hearing from customers is, this is now a few weeks ago, but they're really stabilizing their organizations. They're thinking about how to get the right people in the right places. They're figuring out the new barriers that exist, how they operate their business and making adjustments. I talked to one customer just got plants all over the world and a couple of them are in hotspots. And so he was really figuring out how were they going to support the business while keeping their employees safe. So that comes up, how do I make an adjustment and how do I operate the company? Software's a big piece of the answer and I'm sure we'll, we could talk about that, but be able to use our software to help continue to operate the company when their companies, when there's remote work. So kind of last thing we inevitably talk about is what does the recovery look like? What's the new normal and when is the new normal. And I'm sure we'll get a chance to chat about that a little bit more, but that's kind of what it this look like out the back. If this is winter, what does springtime look like as the business recovers? But overall customers are trying to be resilient, trying to focus on their customers,

Speaker 2: 2:37

you know, are you seeing things where that I would say common denominator where there is similar experiences between some of the customers you talk to. Are there, are you seeing some unique things that are different amongst the different customers? So how do you, how is that coming up in your conversations?

Speaker 3: 2:52

Yeah, so what I would say is that is that there are customers that are first kind of first order in the main. Their business has not really impacted by coven. So for example, a regulated utility is still delivering electricity and the demand is similar to what it was before. There are some exceptions to this, but the demand is for them. The main thing is how do I adjust my workforce? How do I make sure that I can continue to run when people, your people, your GE people can't come into our business as easily or our people can't come into that. So that's one pattern and that's mostly about our restabilizing and then enabling that workforce to work remotely, productively. There's a second set of customers where the demand signal is really been changing. So for example, we sell to consumer packaged goods companies that we sell the one company for example, it makes toilet paper and as you sort of a global run on toilet paper, so there's a lot of demand. We're trying to figure out how to deliver that demand. And so you know, more people go into grocery stores. On the other hand, there's other customers we've got with the demand signal has changed. They're, we're really in a period of time where where it's really uncertain and they're making adjustments and they're trying to shift capacity. And so that, that's what I mean, that's where it really, I see about resilience is how do they create more flexibility? How do they mobilize to where the demand is in their business while keeping their employees safe. But those are sort of two different kinds of customers.

Speaker 2: 4:28

I remember in the first question, you had talked a little bit about utilities and we all know how important it is that GE digital, the software that you provide to kind of help utilities, you know, stabilize the grid. You know, especially in this age of high supply variability, which is, you know, kind of caused by renewables. Are there any models from the past to draw her on to manage the durability and disruption that's caused by the pandemic? Especially as regards to the utilities?

Speaker 3: 4:54

Yeah, so I think that the best utilities have really worked on this idea of resilience. If you think about if you were used to storm patterns and winter storms, hurricanes, tornadoes, that sort of a, an impact on your operations and you're running a grid, you've really built resilience into your model, you've tried to make sure that, that if the demand changes or if people need to be in a different place, you have an early warning, you can mobilize them, you can enable those mobile workers to be highly effective. So I think that's the closest model to this is the built in resilience and the built in pre-planning and flexibility that they've tried to build into their organization. Now there's another wrinkle to this, which is how do you keep it highly compliant, highly secure, right? That the grid is one of the largest machines in the world. It's very complicated. It's very distributed. And so that's another thing that is coming up in this. How do you protect it from a compliance and security point of view as we're facing this? But you know, I do think that some of these weather are probably the closest proxy for the grid operators.

Speaker 2: 6:00

Yeah. That that's for certainly for sure. You know, one of the things, and you certainly know this so well as a, as a CEO is, is you know, one of the most important tasks you have is keeping your employees safe and at the same time trying to keep your operations running. How are you finding that the companies are using your software to, to do that? Right now?

Speaker 3: 6:20

Many, many customers, the majority of our customers are thinking about how do they, how do they extend the value of our software, right? What our software does is really help operate assets. We operate, we analyze, we optimize operations, people's businesses around critical assets. And so that is right in the heart of operating these businesses at. And of course we use software and operation centers on factory floors, customers are doing, and we've released a number of versions of software that, you know, a number of our businesses would last weeks to ensure that our customers can use that software, that capability, and get as close to full access as we can deliver as if they were in their own operations center as if they were on their own factory. And so there's a number of examples of that, but really in each of our businesses where we're figuring out how to make this more virtual so that the, the management, the supply chain folks, the people that are operating the critical assets can be seamless and be at home. And of course everybody's used to working at home now where people that are using collaboration software, but this is really industrial strength software used to operate critical infrastructure. And in doing that and remotely securely comply in a compliant way with virtual teams is really what we focused on since this pandemic and our customers are really delighted with our response and engagement.

Speaker 2: 7:41

You know, you brought up the whole point of supply chain and that's something that, uh, we've, we've certainly had continuous, uh, continuous questions regarding from a lot of our customers here. How are your customers using the digital trick technologies to secure their own supply chains? And, and, uh, what can you do to kind of help them make their supply chains more resilient?

Speaker 3: 8:01

Yeah. So we've, um, supply chains ended up under a real strain these businesses, because the demand signals are changing as well as the supply chain are real companies with real people working in them. They've got delivery networks, they have scheduling systems, they have inventory positions. And so that is one of the key questions people are asking. It really starts with, it really starts with what is the demand look like because they're trying to make sure they can respond to their own demands. So that's the first thing we're helping them with is to make sure across, to work with them across their network to integrate their overall demand. Many customers are trying to understand it enterprise view of their demand so that they can plan their supply accordingly if they grew up with through acquisition or through just the way they operate in many silos. That's more of a challenge. So one of the key things we've done is with our, with uh, manufacturing data cloud and other offerings, we've been able to provide an integrated view for our customers so that they can see a more holistic picture and in that holistic picture be able to be able to go back into their supply chain and say what are the new bottlenecks? And for many customers that data is critical for really the war rooms they've got or the working systems they've had to build to be more resilient. They're going to be more effective working with their supply base because of understanding better what the requirements are going to be and the timing of those requirements. So I'd say that that integrated enterprise for you, by the way, that's also true in power generation. It's also true in the oil and gas market. It's also true on electric grids is enterprise view of supply and demand gives you much more tools to be resilient and to focus on the critical bottlenecks. And I think that's where we're at in the pandemic. As this has gone on now a number of weeks, we've gone from disruption to stabilization to really now understanding the underlying supply and demand profiles.

Speaker 2: 9:58

Well, it sounds like you've certainly had a lot of a great in depth discussion with you, with your customers and giving them some good tools. How to pull through this whole pandemic crisis. Do you have any more specific examples, let's say from the utility side or maybe from another one from an industrial manufacturing side that you'd want to take a little bit deeper dive into as far as how you're helping the customers?

Speaker 3: 10:21

I think on the power generation, first order, which should expect with power generation is that people are still consuming power, but the fair amount of power generation is actually used in industrial output. So another thing that we're working with our customers, if you think about springtime, and it's a real example of springtime, is really the period of time where regulated utilities and other power generation customers are doing planned outages. They actually take assets off the grid. They maintain those, they upgrade them. They obviously keep the grid running, but they cause the springtime, it isn't winter where heat is needed, it isn't summer when air conditioning is needed and it's really advanced mission months. So right now annually, there's a lot of those maintenance activities being planned during this period of time. But we have sort of a unique situation where the demand is changing there because for example, if the power was going to industry and those industries are not using as much power, you actually have a bigger opportunity right now to do more of those kinds of maintenance and maintenance and upgrades and position yourself if you're a power generation customer, positioning yourself for coming out even stronger. And so the, this is not just a pandemic that happened at, you know, what happened in the month of March and April. So that's the other thing going on is we serve seasonal businesses and they're seasonal demand patterns and seasonal things that are happening. So that's the other thing I would say. So it's a good example there is just managing through the power cycles and how to really strengthen the business. That's what I think the executives are starting to ask, what's the recovery pattern looked like? But how do I be sure I invest now smartly so that as I recover, I'm actually in better condition, take advantage of the fact that there are some downturns or you know, some, uh, short term impact for the business. You know, at the same time they've got to do that more remotely. They've got to do with keeping employees off sites. And so it takes a lot of work with customers to work through how to do that most effectively. On the one hand they want to go fast and the other hand they've still got to manage it in a very kind of disruptive environment. They're really looking for the help, the guidance as well as the practical help to get themselves in a good condition in their business.

Speaker 2: 12:39

The one of the questions that I have, and it's really regarding both GE digital as a software company and GE overall. And, and how are you using software both to, uh, continue the successful operations of GE digital and, and how is GE corporate leveraging software? Uh, you know, if for the same, for the same purpose

Speaker 3: 13:01

all our teams went remote. You know, right at the time that most of the United States where of course this was started in Europe before, so that was happening earlier. We have a significant operation in the middle East and Asia. It depends. If I just use the U S as the example, about a month ago, a little more than that, we all went to working from our homes and we're using all of our collaboration software. Obviously we're not traveling, we're conducting our operating reviews. We're conducting our problem solving. We're doing training this week for example. We're training hundreds of people on lean tools this week using collaboration tools to be able to do that. That's really, we very quickly pivoted to that and then we're using the same tools our customers are using. Even if I think about our manufacturing customers and the ability to work remotely, the same tools, the effects and simplicity products are our skate automation software supports these same clients. And we have employees that are right in the middle of water and wastewater and, and manufacturing and operation support. The pharmaceutical industry in each of those industries. It's the same software our customers are using. We're helping implement, upgrade, install. So just like our customers to make the transition, we're using that software as well as all of our collaboration and really keeping the business running. Our goal is to not miss a beat, not be distracted, but stay focused, meet our customer's needs, and think about our customer's customers. How can we help our customers serve their customers better?

Speaker 2: 14:31

You know, that's a, that's certainly a great point. You know, we all, we all look forward to the day when this pandemic will pass, but certainly we've heard many smart people saying, you know, the world may never be the same. And from your point of view, what do you see the future looking like and how do you see the world changing as a result of the pandemic?

Speaker 3: 14:50

I think there's going to be

Speaker 2: 14:52

in the sort of medium term timeframe, there's going to be some, uh, some sort of a semi-open economy where all of us are fillers of vaccine until there's adequate testing and tracking. I don't know how long that lasts, but I think that's an interim period. But the longer this lasts, the bigger impact it is. The longer that semi-open period lasts, the more these, um, ways of working, these new ways of working become embedded and optimized and people make adjustments. So I think that more remote work, more digitally enabled critical workflows where you've got a critical business process that normally you'd be in a building, you'd be in an operation center, you'd be in a manufacturing plant, you'd be at, as I said, like a water wastewater facility. The more that becomes reloadable, the more it becomes, it becomes really new patterns of working. So the teams are more collaborative. I think that the team collaboration tools and the operating tools are going to get integrated over time. Right now the team collaboration tools and there's a number of vendors that have team collaboration tools. Those are largely it tools, not operations, technology tools, our tools, our operations, technology tools allow remote operations. The longer this goes, I think the intersection of those collaboration tools and those operations tools gets more attention to I think what, you know, what this looks like out the back and how will the world be changed. I think I like being a digital business cause I think software is the way that we're going to be able to create a more efficient and collaborative world. It'd be my other comment on this would be if people are remote then the things have to become remote. So machines have to be remote. If people are going to be remote, machines are going to have to be remote. And so the internet of things is all about machines. And so I think this just accelerates our digital transformation in industries. Yeah, you're so certainly right about the, that digital transformation acceleration cause you know, I can see how your customers as well as GE digital are going to be applying the lessons of, of covert 19. Do you want to elaborate a little bit on some of some other ways you think that gonna apply the Colvin 19 lessons just as a result of, uh, of what they've experienced or this pandemic. There's

Speaker 3: 17:10

certainly people are going to think about how to create more resilience because this thing, this thing went from business as usual to everybody's working from home in record time about our days and weeks. And so I think that that uh, strategies to do that strategy is to enable the full functioning securely in a compliant way with full operational performance is going to be a premium on organizations. How teams are organized, what roles there are in organizations, how do you create fundamentally create resilience, flexibility and organization. I think that as a result of coven, there will be new markets that'll emerge. There'll be new markets. We'll open up for the, and there'll be markets under pressure that's going to create a whole new set of innovations that'll come as a result of, of not only how people cope with this, but the opportunities that emerged from it. Probably the other thing is really around talent. So not only the technology but also the talent, the ability to solve problems, working remotely, the ability to solve problems that emerge very rapidly and you have to restabilize, you have to communicate, you have to create flexibility. That's one of the key things I think organizations are going to be looking for, not just a technology stack, but organization and talent development.

Speaker 2: 18:30

You know, uh, we that we've talked a lot about how, uh, your customers that working remotely, we've talked a lot about how GE digital is working remotely, you know, and that's my final question to you, Pat, is how has your own work changed and how are you working differently as a result of, uh, of the pandemic?

Speaker 3: 18:47

I'm on a lot less than airplanes, so I think I've canceled 10 10 trips, so a lot less airplanes that day. Start early because I'm on the West coast, the East coast wakes up. So the days start at four or five in the morning. There's more real time management where we're really learning new things every week. So the kind of the clock speed of the business has picked up. I actually have more time in my schedule and a lot of ways cause I'm not on airplanes. I've tried to spend that time reaching out to people either. This is a time you really, as a leader, you've got to reach out, reach out to customers, reach out to employees, understand what the barriers are to effective execution, help people become productive employees or customers. So we've really tried to focus on safety first. That's clearly, I mean I'm washing my hands dozens of times per day just like everybody else on cleaning door knobs, safety for ourselves, for our employees, for our families, for our communities and service. How do we serve? How do I serve the business? How do I serve our employees? How do we serve our customers? How do we really anticipate and help our customers serve their customers? And then strength, staying strong personally, um, getting rest and then making sure we're focused as a team so we can have an impact. Those are the three watch words we've really tuned into as we go through this and, and the adjustments that I'm making, trying to make sure that we've got our eyes wide open for our employees, for what's happening with our customers. And I do really think our, our, um, our position as a company is very strong that we can move through this very well. And so I'm very confident in the future.

Speaker 2: 20:24

Well, that's great, Pat. Uh, we really, uh, we really appreciate your, your philosophy and all that you're doing, uh, both with GE digital and as well as, uh, partnering with your customers during this unprecedented time. So I want to thank you very much, Pat, for being here today and, uh, we wish you a well be well, be safe, be healthy, and we wish, certainly everybody at GE digital, all of our right. Everyone

Speaker 4: 20:48

else that same, the same best wishes. This is Craig Resnick, McHugh from arc advisory group. Thank you so much. Have a great day.

Speaker 1: 21:11

[inaudible][inaudible].