Rewiring a Company’s Core

The Process That Changed Everything

In the early 2000s, General Electric (GE) stood as a titan of industry, boasting a vast portfolio that spanned aviation, energy, healthcare, and finance. Despite its global reach and diversified operations, GE grappled with a common challenge: fragmented and inefficient business processes. Each division operated with its own procedures, leading to redundancies, delays, and escalating costs. While robust in their time, the company's legacy systems struggled to keep pace with the rapid advancements in technology and the increasing demands of a global market.

Enter Gary Reiner, GE's Chief Information Officer from 1996 to 2010. With a background in economics and an MBA from Harvard Business School, Reiner brought a unique blend of business acumen and technological insight to the role. He recognized that to maintain GE's competitive edge, the company needed to undergo a fundamental transformation not just in technology, but in the very processes that underpinned its operations.

The Trouble with Legacy Systems

Before Reiner's tenure, GE's approach to process improvement was largely reactive. Departments operated in silos, leading to inconsistent practices and a lack of standardized procedures. This decentralization resulted in inefficiencies, such as duplicated efforts, prolonged cycle times, and increased operational costs. Moreover, the company's reliance on homegrown IT solutions meant that systems were often outdated, lacked scalability, and were difficult to integrate across different business units.

Reiner observed that many of GE's challenges stemmed from a fundamental misalignment between technology and business processes. Implementing new software solutions without first addressing underlying process inefficiencies often leads to suboptimal outcomes. As he noted, "Technology is there to support processes. We used to have a saying at GE, 'lean before digitize.' What that means is you need to do a ton of work improving the [current] process[es] before you roll out new technology."

This realization prompted a shift in strategy. Rather than focusing solely on technological upgrades, Reiner emphasized the importance of process optimization as a precursor to digital transformation. By streamlining operations and eliminating waste, GE could ensure that any subsequent technological implementations would be more effective, seamlessly integrated, and yield better returns on investment.

Implementing a Process-First Approach

Under Reiner's leadership, GE launched a comprehensive initiative to revamp its business processes. Central to this effort was adopting new methodologies that combined lean manufacturing principles with a focus on quality and process improvement. This approach aimed to reduce variability, eliminate waste, and enhance overall efficiency across the organization.

One key strategy involved standardizing processes across different business units. By identifying best practices and implementing them company-wide, GE could reduce redundancies and foster a culture of continuous improvement. Reiner also championed data analytics to monitor performance metrics, identify bottlenecks, and drive informed decision-making.

In tandem with process optimization, GE began integrating Software-as-a-Service (SaaS) solutions to modernize its IT infrastructure. These cloud-based applications offered greater flexibility, scalability, and ease of deployment compared to traditional on-premises systems. However, Reiner was cautious in ensuring that technology served as an enabler, not a driver, of change. He emphasized that "the strategic part [of this implementation] was the knowledge of the engineers that were designing it, not the tool itself."

To facilitate this transformation, Reiner assembled cross-functional teams comprising members from IT, operations, and other business units. These teams collaborated to map out existing processes, identify areas for improvement, and develop tailored solutions that aligned with GE's overarching objectives. By fostering a collaborative environment, GE ensured that changes were well-informed, broadly supported, and effectively implemented.

Tangible Outcomes and Lasting Impact

The shift to a process-first approach yielded significant benefits for GE. By streamlining operations and leveraging SaaS solutions, the company achieved substantial cost savings, improved efficiency, and enhanced customer satisfaction. For instance, GE's digitization efforts in the early 2000s led to over $1.6 billion in savings in one year.

The emphasis on process optimization laid the groundwork for more effective technology adoption. With standardized and efficient processes, GE could integrate new software solutions more seamlessly, ensuring that technological investments delivered maximum value.

Reiner's approach also had a profound cultural impact. By prioritizing process improvement and fostering cross-functional collaboration, GE cultivated a culture of continuous learning and adaptability. This cultural shift positioned the company to better navigate the rapidly evolving business landscape and maintain its competitive edge.

Lessons for the Modern Enterprise

Reiner's tenure at GE offers valuable insights for organizations seeking a digital transformation. His experience underscores the importance of aligning technology initiatives with process optimization efforts. By improving underlying processes before implementing new technologies, companies can enhance efficiency, reduce costs, and maximize the return on their technological investments.

Emphasizing cross-functional collaboration is also crucial in this process. The need for inclusive and holistic approaches to change management and engaging stakeholders from various departments ensures that transformations are well-informed, broadly supported, and effectively executed.

Reiner's "lean before digitize" mantra remains relevant as ever in an increasingly technology-reliant world. Organizations that heed this advice are better positioned to harness digital technologies' full potential and drive sustainable growth.