4 years, 3 months ago

GE Safe-Fail, Siemens Fail-Safe?

Link: http://horsesunicorns.blogspot.com/2016/12/ge-safe-fail-siemens-fail-safe.html

This post is not an episode of the ACME E&L story – that’ll continue soon.

Last week, The Economist published “Siemens and General Electric gear up for the internet of things” with the tagline: “The American industrial giant is sprinting towards its goal. The German firm is taking a more deliberate approach”.

It seems the German company is sticking to its traditional Horse model, while GE is finding its Unicorn – a few quotes from the Economist’s article grabbed my attention:

“… the two firms are also taking very different paths towards digitisation. GE is completely reinventing itself, whereas Siemens is staying close to its roots. What works best will be closely watched by other companies in all sorts of industries.”

“…GE is also using Predix as a way to shake up its internal organisation. It set up a separate software unit in San Ramon, near Silicon Valley, to develop it.

“ …‘We incubated the unit separately because it would otherwise have been killed by the main organisation,” explains Bill Ruh, who heads GE Digital’.”

“GE is changing its culture in other ways, too. As an industrial conglomerate, the firm was known for its near-obsession with the Six Sigma management method. This uses statistics and incremental improvements to drive everything a company does close to perfection. Now GE wants workers to take a leaf from the world of startups and start making mistakes—an approach it is calling “FastWorks”. The idea is to experiment more and to develop so-called minimum viable products that can be discarded quickly if they fail to take off”. 
GE’s “FastWorks” project seems to be embracing the “Safe-Fail” business model that Alicia Juarrero talks about in “Think Safe-Fail to thrive under conditions of uncertainty”,  and Dan Ward describes in F.I.R.E. as “a manifesto for creating great products and projects using the methods of rapid innovation”.

GE also appears at the top of the list of  “Horses adopting the Unicorn’s technology stack” in my presentation to the Hong Kong British Chamber of Commerce earlier this year. 

It seems they’ve seen that the born-digitals understand a direct correlation between ”Safe Fail” business, and the adoption of design patterns like microservices, event-sourcing, practices like DevOps, and Cloud platforms & Open Source Software – all of which make  “Fail Fast, Fail Cheap” a reality.


In contrast, it would appear Siemens traditional engineering mindset continues to keep them on, a “Fail Safe”, low risk, and slower, path to digitisation. And there are probably good reasons for that: 

  •        Company culture
  •        Revenue base
  •       Customers & Markets
  •        Reputation & Brand, among others.

Siemens, however, has made some significant, if tentative, changes:
“Siemens has also started sending senior employees on so-called “learning expeditions” to startups to see how things can be done differently. Its employees are now encouraged to communicate across organisational boundaries and directly with bosses. The company would have to do much of this regardless of its priorities in the digital sphere; a reputation for being risk-averse and overly hierarchical is not the best way to attract young talent as Germany’s population ages”.
And In June the firm created “next47”, which is part incubator, part investment firm. According to the Economist’s article:
“It has hired an American to run it, but rather than basing it in the German capital, which boasts a thriving startup ecosystem, it will remain in Munich”.
It’ll be interesting to see how things develop with the two firms; one galloping full pace towards Unicorn ways – and the other, seemingly, taking a slow canter towards change, and being more protective of their core Horse values.
Mimicking the digital-native Unicorns is likely to be the wrong approach for many traditional firms. Certainly, no one size fits all. However, this is more obvious across different industries with significantly different markets; for example, Retail versus Manufacturing. In contrast, it’ll be interesting to see how, two very similar businesses in similar and overlapping markets, take different approaches.
Siemens’ more conservative style might prove more successful with their customers. But could we predict faster-paced, evolutionary change and innovation from GE compared with their German rivals? Let’s see!

Thanks to Tim Inglis for pointing me to the Economist’s article
and to Wayne Pales for his editorial suggestions.

See also Making Sense Of A Pluralistic World

Here’s a first-cut H&U comparison table for discussion, debate and refinement – your comments & suggestions invited.

H&U Table

Please follow me on LinkedIn or Twitter for future posts.