Digital Factory Podcast #18: Jeff Immelt

John, great to be with you.

Yes, so John, just, you know, one of the things I wanted to do in retirement was to continue to pursue a couple of my passions, only do it in partnership with entrepreneurs and using disruptive ideas and technologies to places that I had worked a lot in my career and, you know, really cared about, in healthcare and in advanced manufacturing. In both cases, as I see dramatic needs for, you know, kind of business model and technical innovation. In the case of manufacturing, there are more emerging technologies today than in any time in the past 35 years. Manufacturing has been, you know, revolutionized by clearly by automation and by process ideas like lean manufacturing and things like that. But now with analytics and AI and automation of manufacturing all kind of coming at us, I think there's a real manufacturing Renaissance that is underway, not just in the US but around the world. So, you know, John, that's one part of it. I think the other part of it is that I've always had this notion that if you're not a CIO, it always helps if you know the art of the possible with digital tools. And in my experience, you know, kind of the frontline manufacturing leader has had digital delivered to them but hasn't had the opportunity to be the actual shaper of their digital future. And I think that's going to have to change. And I see that as the main purpose for the conference.

It's exactly what some of those natural and to be expected, right? But if you think about the last generation of digital tools, whether it was ERP systems or MES systems and things like that, those were basically sold in the CIO's office. And a really good CIO would know how to implement it in the factory floor, but, you know, that couldn't be assumed, right? And frequently the handles were missed and the systems were inflexible and things like that. Today, when you think about kind of analytics, when you think about machine learning and AI, even when you think about automation, you know, those are really going to be user-driven. They're going to be driven by the process engineer and not by the CIO. And so I just think the nature of the tools and the fit for purpose are dramatically changing. And it's not that the CIO doesn't need to be involved, but you really have the opportunity for the manufacturing person to be the consumer of digital versus just being the, let's say, being the recipient of digital tools.

I think it's exactly right. Like, I think if you're a CFO of a Fortune 1000 company today, you have a pretty good digital foundation because finance people for 15 or 20 years have been a consumer and a buyer. I think Marc Benioff and Salesforce.com really liberated the sales team. And then you have, you know, all the company's GitHub, I could go down the list of digital marketing companies. And I think manufacturing, which is really what shapes the profit structure for the company, the speed, the availability for a company, is really kind of the last dominion of where I think a lot of these digital tools can take place. And I think the other thing I would say, John, is I've said frequently, what happens in the factories is going to shape what the sales and marketing people can do. So the demands for more late point identification, more flexibility, lower cost, more speed that are required by the marketplace have to be delivered in a setting that's not as structured, that's not as kind of one IT system driven, but where you're going to have to have more flexibility. So one of the things we're pursuing in this conference is the idea that innovation on the factory floor and in the product development process can drive entire new business models. You can do stuff with customization, stuff with your supply chain as you mentioned, you know, decrease risk and bring products to market faster and in more flexible ways that's really, you know, driven by the technology itself.

It's really a great question in terms of how the tools can be more relevant even as it pertains to sales and marketing. And I don't think anybody has kind of cracked the code for that yet. But one of the things we're going to show in the conference are companies like Align Technology, which has really revolutionized dentistry, if you will. And this is a company that exists because of additive manufacturing. You couldn't have a company unless you had the process tool, right? So you're going to see examples like that. You're going to have to disrupt. There's like some of the big logistics companies like FedEx who can use now automation and AI to really get closer to their customers and actually maybe even get in the service business for the product lines that they used to just be logistics supports for, right? So you're just going to see kind of people that are connecting the dots between, you know, what does it mean to make an investment in automation and what does it mean to guarantee to your, because of the automation, to be able to guarantee to your customers shorter delivery cycles, more flexible products, things like that. So I think one of the things we're going to try to do at the conference is connect the dots between technical innovation and business model innovation and show some companies that are really far along that path.

So look, I mean, I would say everybody of my generation grew up studying the Japanese companies. So, you know, we would always marvel at kind of lean manufacturing and things like that. I think if you flash forward to today, it's the ability to kind of manufacture really complex systems. So Boeing, even automotive companies where you are kind of literally taking sub-assemblies, thousands of sub-assemblies and perfecting them with kind of high quality levels, have always been, I've been very envious of those. And I would say those, you know, those are the two extremes of kind of like what I would say I admire most today is the ability to be scale-based but still be fast and high quality. I think that's going to be key. And then, you know, I think John, today if you look at what Apple has done in the context of consumer electronics, if you go to kind of the Consumer Electronics Show, your head just gets filled with, you know, kind of the way that technical innovation has really infused what we think of as being just kind of mainline consumer products like the cell phone. You know, I'm really excited to hear from Gary Johnson at the conference. He's the head of manufacturing at Ford, oversees all of the production and the labor at Ford. And that is a cool example of a company that's just become extraordinarily sophisticated with the supply chain, as you mentioned, parts coming from all over the place. And if you visit the River Rouge Factory, it's extraordinary. They can produce four different models simultaneously on a single assembly line. And if you compare that to what the automotive industry looked like a few decades ago, it's just completely different.

Look, I've always had incredible respect for the automotive industry in terms of what they do at scale. I think the interesting thing in the conference, or the interesting thing that I see today, is just the wave of technology and how pervasive it's going to be. You know, what I mean is when you look at where kind of these new technologies are coming, they're not going to differentiate between big companies and small companies. And in some ways it's going to allow people to achieve scale in lower runs than before. It's going to allow big companies to be more flexible than ever before. So it's not clear that small beats big or that big beats small. I think what's clear today is that smart beats dumb. You know, and that's, you know, the people that know how to use these new tools and skills are going to be far ahead in the end.

Yeah, look, I mean, I think it's allowed me to kind of continue the passion. So one of the things I like are kind of like healthcare services and mainly in healthcare. And, you know, picture, you know, I would consider let's say Google is a horizontal company, GE, Boeing, we're vertical companies. I think what you're seeing today is kind of companies that are supported by horizontal technology that are able to deliver as a unit of one. And I'm seeing those in healthcare, which is quite interesting. And then on the manufacturing side, I usually talk about kind of the four A's, which are artificial intelligence, automation, analytics, and additive manufacturing. And at NEA, I've had a chance to participate in every one of those technical areas and it's quite exciting.

Yeah, well, I mean, I think it's kind of clear that either software or the output of software, being computational analytics, are going to be key. I'm also like really keen on things like additive manufacturing where you have a materials flow, you've got precision components like lasers, you've got a hardware aspect, you've got a software aspect, you've got a design aspect. And if you look at robotics and some of the other things, I think people that kind of can do these hardware-software intersections, which is rare, it really is, because I think to a certain extent, you know, I'm in California right now, people just hate hardware, right? They might do well, you know, if you can combine MIT with Stanford, you're pretty graceful. If you can get the hardware and the computational stuff out of MIT into computer science and some of the software skills and the West Coast, right, that's where a lot of these manufacturing winners are going to come from.

One thing that's good about business is when things are hard and not easy. It's hard to do hardware and it's even harder to do hardware when you have to blend it with computational tools, software, things like that. But there's going to be a big pot of gold for whoever figures out how to do that. You know, and again, it's not a direct analogy, but one of the things I admired about Uber is, is Uber a tech company or an operating company? Right, well the answer is both. So I think to a certain extent the companies of the future are going to be more systems-oriented. They're going to be able to do both horizontal and vertical and not one or the other. And that's, you know, I think that's going to be really interesting. And, you know, again, you and I hope to bring that to life in this conference in May.

Haha, my favorite tool. Okay, I'm going to say the elliptical trainer. No kidding. So it's a, you know, I've lived a life of kind of working 100-hour weeks, being away from home 200 nights a year, traveling the world, high stress, high pressure. And for me, kind of exercise is the relief valve. So when you get to be my age, it's harder to go outside and run outside and things like that. But the elliptical is the perfect blend of exercise and brainlessness.

Exactly right. So whether it's been in Shanghai or Astana or Joburg or Paris or New York City or Boston or Mexico City, I've been on every elliptical trainer known to mankind.

Yeah, there's a Peloton store here at the Stand. From all that I kind of walked in because you can see, you know, you can't miss the ads, particularly if you watch football, right? And it's quite compelling, you know, the ability to actually have a trainer or to compare yourself to other people no matter where you are is, you know, an extremely compelling idea.

Well, you know, it's changed in retirement. You have more control a little bit over your own time. I think my goal in retirement was to work almost as hard as I did in my previous life, but to only pick the things that I want to do. And so far that's been good. It's been, you know, splitting time between Boston and California and really getting a chance to pick the things I want to work on. And I wanted to, I would say, be helpful. And I think, I guess in my own mind, the best way to be helpful, I think, is to try to help this next generation of great entrepreneurs. And that's really what I want to try to do in the rest of my working career.

Right, exactly. Yeah, you know, it's very fun and rewarding, I would say.