GE and GM: How to get the most out of convergence

As information, energy, building and transportation technologies converge, General Electric is responding with its own in-house convergence. Whereas GE technology – and engineers -- used to sit in different silos, "we are trying to bring those technologists together," Mark Vachon, vice president of ecomagination at GE, said during a webcast hosted by GreenBiz Group and PwC today.

Mixing its many knowledge bases has been a core requirement as GE has worked toward, for example, delivering a wind turbine at grid parity cost, he explained.

In the webcast -- which was timed with the release of a joint white paper on the future of business -- GreenBiz and PwC discussed the paper's findings with representatives from General Electric (NYSE: GE) and General Motors (NYSE: GM), two of the 15 large corporations interviewed for the report. (You can download the report here or read more about it in GreenBiz Executive Editor Joel Makower's blog post, "5 principles for a converging world," here.)

The report highlights five management principles that these corporations -- including behemoths such as IBM, Google, FedEx, Autodesk and Ford -- are following as they work toward "modernizing cars, buildings and the grid." In other words, this is how companies are positioning themselves for what we call VERGE.

Those principles include thinking systematically, rethinking what it means to innovate, getting ready for multiple potential outcomes, improving asset utilization and harnessing the value of data -- the kind of "big data" that businesses are starting to generate through ubiquitous computing and the "smart" cars, buildings and grid systems that these companies are creating.

For GE, these principles are manifesting through the new more multidisciplinary approach to technology development mentioned above. In addition, in order to accelerate adoption of new technology -- such as electrification of fleets -- GE needs to work closely with partnering organizations to study the implications of the convergence of transportation, buildings and energy production.

For example, GE is working with FedEx, as well as with researchers at Columbia University and Con Edison, to perform real-world testing on electric delivery trucks, along with GE's charging infrastructure to support them. The tests are meant to reveal what the introduction of the new technology will mean for FedEx and Con Edison, in terms of power requirements and business processes.

Vachon also finds that as technologies and services converge, GE is focusing more on local needs. "We used to have one global research center in New York, but we learned over time that we have to be much more local and design for local market, whether that market is Beijing, Rio or Bangladesh." In terms of energy, this also means reacting to changing power preferences, which might mean a move away from nuclear power in some regions or an increasing interest in compressed natural gas for transportation in others.

Don Reed, director of U.S. Sustainable Business Solutions at PwC, noted that while the technology advances being made via smarter buildings and transportation systems are impressive, their adoption is still driven by market forces. "It's not just about the technology," he said. Customers are "looking for higher quality, lower cost, greater effectiveness."

For General Motors, this rings especially true as the carmaker brings new technologies to customers who have a certain set of expectations, said Mary Beth Stanek, director of federal environmental and energy regulation affairs at GM. "As consumers take advantage of new technology, they don't want to give anything up," she said.

The high vehicle cost and limited all-electric range of electric and plug-in-hybrid vehicles, therefore, have been barriers. That's not true for early adopters, who are willing to pay a premium and adjust to new fuel sources. But as GM "goes to the masses" with new technology, such as the Chevy Volt, those challenges become bigger.

But the answer to converting the masses, Stanek noted, isn't necessarily technological. For example, GM is changing the way it communicates with customers: "We are doing a lot more information sharing with customers," she said, and "we're asking them to opt in, show us where and when they're fueling."

With the Volt, GM is watching to see how Volt owners are changing their driving habits and what behaviors they're willing to change. "We thought customers would want very fast charging, and expected they'd all be using 240 volt outlets [at home]. But most are using 120 charging, overnight. So what we thought was essential [level 2 chargers], is proving to be just nice to have."

That underscores another theme that Reed called out, based on the white paper's findings. "We heard unambiguously that while the new [transportation, energy, building] systems are complicated and involve complex groups of players, customers have little appetite for that level of complexity," he said. "They are looking for simple, uncomplicated services that meet their needs. They want them optimized to their industry, and they want them to be easy to access."

In other words: converge our transportation systems, buildings and energy grids using disruptive technology and generating a level of energy efficiency never before attained…and make it easy.

That's a tall, tall order. But the report's five guiding principles are, at least, a starting point.

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