Is Current the Future? A look at GE’s recently launched startup, ‘Current by GE’
GE’s energy services startup launched in 2015 promises to transform the energy sector through digital innovation, but will it live up to their claims?
General Electric is no stranger to changing times. Incorporated in 1889, the company has been prolific in the global industrial sector since the industrial revolution, and has observed and adapted as new technologies such as automobiles, radio, television, refrigeration, the internet, and the mobile phone have each moved from the periphery to mainstream.
However, in recent years the economy’s increasing reliance on software solutions and digitization has threatened GE’s traditional model. GE has responded by improving its in-house software capabilities, attempting to move its customer value proposition from products to services and by launching various digitally oriented sub-units such as GE Software.[i] In September 2015 Linda Boff was appointed Chief Marketing Office and given the responsibility of marketing GE as a “Digital Industrial Company”.[ii] One of Boff’s stated goals was to market Predix, GE’s predictive analytics software, to customers as a one-size fits all industrial software platform.[iii]
Less than 2 weeks after Boff’s appointment and the “Digital Industrial” branding, GE launched a new business unit named Current, Powered by GE. GE describes Current as a “startup”, but this is a misnomer as in fact it was the rolling up of the existing LED, solar, energy storage, and electric vehicle businesses, which together already generated over $1 billion in revenues (the vast majority from lighting), under one umbrella led by the former head of GE Lighting.[iv]
GE Current is offering the ability to reduce, produce, shift, and optimize energy usage to a variety of end users including hospitals, universities, retail stores and municipalities. They tout their primary competitive advantage as the continual optimization of energy usage, which is largely absent from the industry today. This will be accomplished through utilizing Predix to target new ways to profitably reduce energy, generate on site, or target new revenue streams through innovative technologies.[v]
The Predix software was developed to be a cloud-based platform enabling industrial scale analytics and performance management. The system features apps that can be adapted for any industrial need to drive transformational improvements in efficiency through automation – essentially doing for factories what iOS did for cell phones.[vi] [vii] It can be thought of as adding a brain to industrial processes that previously required manual work.
On the surface, Current is a terrific opportunity for GE to transform to a digital industrial company focused on service rather than products. The structure and multi-product approach of Current enables “partnering” rather than “selling” to customers and promotes long-term relationships and cross-selling/up-selling of new technologies. Furthermore, Current promises value to customers through a one-stop shop integrated energy service provider looking horizontally across organizations to tailor optimal energy solutions given individualized needs. That said, their website is convoluted and does not clearly present the customer value proposition. They should re-evaluate how they are communicating their value and improve their promotional messaging.
It is clear that GE is attempting to brand Current as a startup. It appears that their primary reasoning for this is to imply that the organization will be granted greater autonomy from the GE parent company and flexibility to quickly pursue new innovations in the energy space. Furthermore, it is intended to support the organization’s goal of shifting the business model toward energy end-users. [viii] This branding is also likely partially a marketing ploy given the relative sexiness of startups in the current market.
Current has been charged with expanding revenues 5x by 2020 (to $5B)[ix], but there is limited information on their strategy for accomplishing this goal. While they appear to be successfully enrolling customers onto their platform, these customers are primarily former GE Lighting clients pursuing incremental lighting improvements. At launch, previous GE Lighting customers such as Walgreens, JPMorgan Chase, and Simon Property Group signed on as pilot customers.[x] Furthermore, several cities such as San Diego and Istanbul have signed on to Current, but they too appear to be primarily pursuing lighting upgrades.[xi] For GE Current to succeed, they need to ramp up their non-lighting businesses and start working horizontally across customer organizations as their mandate states.
Several challenges and questions remain about the future of GE’s startup. It does not appear that Current has yet made significant headway toward attracting non-lighting customers. Additionally, for customers to take advantage of the full platform, Current will need to work with various departments and levels within the customer organization, which will likely make the sales process slow and complex, particularly for municipalities with limited budgets and bureaucratic structures.[xii] Furthermore, it is unclear if a GE subsidiary will be able to maintain a startup culture as it scales to $5B, but also unclear if this startup culture is truly key to their success. It will be challenging for Current to live up to its initial hype, but nobody ever said that transforming the energy sector would be easy.
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[i] Marco Iansiti and Karim R. Lakhani. “Digital Ubiquity: How Connections, Sensors, and Data are Revolutionizing Business.” Harvard Business Review. November 2014.
[ii] “Ge Names Linda Boff Chief Marketing Officer.” (General Electric Press Release, Fairfield, CT, September 22, 2015). Accessed electronically, [http://www.genewsroom.com/press-releases/ge-names-linda-boff-chief-marketing-officer-281775].
[iii] Kate Maddox. “GE’s New CMO: How to Market a Digital Industrial Company” Advertising Age. October 7, 2015. [http://adage.com/article/cmo-strategy/ge-cmo-a-digital-industrial-company/300780/]. Accessed November 14, 2016.
[iv] “GE Introduces Startup Current To Transform Energy Sector.” (General Electric Press Release, Fairfield, CT, October 7, 2015). Accessed electronically, [http://www.genewsroom.com/press-releases/ge-introduces-startup-current-transform-energy-sector-281940].
[v] ibid
[vi] James Paseri. “GE Expects Predix Software to Do for Factories What Apple’s iOS Did for Cell Phones”. The Street. [https://www.thestreet.com/story/13174112/1/ge-expects-predix-software-to-do-for-factories-what-apples-ios-did-for-cell-phones.html]. Accessed November 15, 2016.
[vii] Dan Woods. “What Is GE Predix Really Building?” Forbes. [http://www.forbes.com/sites/danwoods/2016/09/28/what-is-ge-predix-really-building/#615bda74822a]. Accessed November 15, 2016.
[viii] Dan Sampson. “The Current Climate”. NYSE.com. [https://www.nyse.com/network/article/nyse-current-by-ge]. Accessed November 15, 2016.
[ix] Ibid
[x] “GE Introduces Startup Current To Transform Energy Sector.” (General Electric Press Release, Fairfield, CT, October 7, 2015). Accessed electronically, [http://www.genewsroom.com/press-releases/ge-introduces-startup-current-transform-energy-sector-281940].
[xi] Current by GE Company Website. [http://hub.currentbyge.com/h/c/242785-municipalities]. Accessed November 15, 2016.
[xii] Katherine Tweed. GE Launches $1B Energy Services Company, Current. Greentech Media. October 7, 2015. [https://www.greentechmedia.com/articles/read/ge-launches-1b-energy-services-company-current]. Accessed November 15, 2016.
Is Current limited to competitive energy markets in which consumers – retail, commercial, or industrial – are able to choose which company will provide their energy and other digital products and services? If so, how will it compete with established players who have already figured out ways of conveying a similar value proposition but in a more convenient and user-friendly manner? If not, how will it be able to provide its products and services to customers if they are unable to switch?
BAL,
This is a great post. I feel as though you are correct that “Current has yet to make any significant headway” towards its goal, but feel that this begs the question of what is the company’s ultimate goal. As a startup within GE, it doesnt need to achieve the same scale as its parent. Rather, I believe, the goal of Current is to prove whether a new commercial model can work within this sector as the larger organization starts to move towards a more entrepreneurial sales approach. In this way, I think of Current as a recon drone, sent ahead of the rest of GE to determine how the market is being shaped by digital transformations.
It is interesting how GE is moving its business model, and delivering services and not just products to use technology and digital information to improve their customer’s experience and increase loyalty. I think it is a good move for GE as Current can be a source of competitive advantage in the next years.
I agree that at this point many questions emerge and that the sustainability for this new business is unclear, however, I think this transformation will not be completed in the short term, and that the progress they’ve made with the partnerships are a good starting point to improve their value proposition in the future.