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Summary:

General Electric, the mega-conglomerate behind machines from household appliances to jet engines, says there are huge productivity gains to be had by connecting manufacturing and test devices up to the “industrial internet.”

GE factory floor
photo: General Electric

General Electric, arguably the world’s biggest maker of diverse machinery from home appliances to CAT scanners to jet engines, released a new study showing that connecting devices to the “industrial internet” could boost global GDP  to the tune of $10 trillion to $15 trillion by 2030.

That’s a very big number — roughly the size of the US economy. The industrial internet is the manufacturing giant’s take on the “internet of things” in which myriad devices — from smartphones to sensors in everything from wrist bands to traffic cameras — communicate via machine language with each other without requiring human intervention.

The report, authored by GE Chief Economist Marco Annunziata and GE Director of Global Strategy and Analytics Peter C. Evans, of course plays to GE’s strengths. How better to boost productivity than by automating the communication and control of all those already-productive tools?

A couple key takeaways from the report:

  • Connected machines could eliminate up to $150 billion in waste across industries
  • a 1 percent increase in efficiency could save up to $30 billion in aviation, $6 billion in power generation and $63 billion in healthcare costs.

More data = better analytics

Knitting together all these machines and devices, the authors wrote, provides a bigger, better pool of aggregated information that will enable the harnessing of  “physics-based analytics, predictive algorithms, automation and deep domain expertise in material science, electrical engineering and other key disciplines.”

And, connecting machines also connects the people who run them “whether they be at work in industrial facilities, offices, hospitals or on the move, at any time to support more intelligent design, operations, maintenance a well as higher quality service an safety.”

Do more connected, productive machines mean fewer workers?

Clearly, GE is betting big on the industrial internet notion, as The New York Times reported recently. Of course, since GE has dogs in all those fights — aviation, power generation, heathcare equipment — it’s well positioned to talk on the topic but is hardly neutral on it. Whenever a company chats up automation-fueled productivity gains, the dark side tends to be job loss.  On this touchy topic, Annunziata and Evans wrote:

“But what about labor? Will a further wave of productivity-enhancing innovation destroy jobs? In the current situation of already excessively high unemployment in the US and other advanced economies, this is a crucial issue. There is no doubt that further innovation will make some jobs unnecessary—for example to the extent that some processes can be automated. But as some of the old jobs are no longer necessary, new, better jobs will be created.”

  1. Shocker indeed…
    The Internet of Things was missed by Microsoft, the company that was best prepared to work alongside industrial giants like GE to create the Industrial Internet (I like the term, but it is a bit narrow). We wrote about Microsoft here:

    http://successfulworkplace.com/2012/11/05/microsoft-missed-out-on-the-internet-of-things-are-you-ready/

    It is very good to see GE get into the game, but it will take many more manufacturers to either lead, follow (quickly) or go away before this sorts itself out over the next 5-7 years.

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  2. Fascinating projections noted here. Automation-fuelled productivity gains are one thing, but safety is another. Many of these industries have unique safety priorities and challenges. Technology improvements can save lives.

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  3. You cannot change things unless you can measure them. And in a world where things are changing faster, this approach only brings power to those that need to address today’s challenges. Whether, its the doctor pressed for time to meet his revenue requirements in a world driving overall healthcare costs down or its the fossil fired power plant that has to now cycle it’s load daily (not really designed for that) to make room in the grid for the highly variable green sources, this form of technology deployment provides quicker and better information. The thing to really focus on is “Then what?” It is the decisions that flow from this data that brings forwaard the need for people to make better decisions around risks and opportunities. Job destruction? Kinda. More like creative destruction: we will need people and teams to formulate and act on analytics to get to better resullts at lower costs. Sounds like a whole new means of achieving productivity gains to me.

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