General Electric's Chief Digital Officer William Ruh is also the CEO of a digital business set up by the manufacturing giant to help the company transition into the digital world. Here he explains how to unite digital with physical in the enterprise.

"You could say I'm the bandleader," explains Ruh, General Electric's first ever Chief Digital Officer and CEO of GE Digital, on directing digital strategy for the fourth largest business in the world.

General Electric: selling everything from toasters to trains for 100 years

Over 100 years ago, Thomas Edison's coterie of electronic business interests merged with the JP Morgan-backed Drexel, Morgan & Co to become General Electric (GE) – one of the original 12 companies listed on the Dow Jones stock index.

Today, it sells everything from toasters to trains. And nestled in next to this organisation is GE Digital, a relatively recent creation that's become essential to the company's wider strategy. Just what does being in charge of all that entail?

"When I originally interviewed with our chairman and CEO Jeff Immelt, it was really amazing because I never saw myself, as a software person, coming to a place like GE," Ruh explains. "I saw three things that got us here."

With 30 years in software under his belt, Ruh was previously a vice president at Cisco, and has also held senior positions at Software AG, The Advisory Board and MITRE. He joined General Electric in 2011 to lead the firm's industrial internet strategy, overseeing that its output would harmoniously unite the physical with digital. This is where his focus remains today.

In his early conversations with the CEO, Ruh says Immelt recognised data and analytics would be deeply embedded in the future for design, manufacturing and product delivery.

"The second thing was he was very honest," he continues. "He didn't know how this would be monetised, what the business models would be, and what kind of capabilities would be necessary." It wasn't a 'blank sheet', but an opportunity to begin a journey with a CEO who knew the business was on the second point in a 50-step process.

"The third thing is Jeff was willing to invest in a big way. From the beginning, he talked about a billion-dollar investment over three years."

GE Digital runs concurrently with General Electric – Ruh describes the organisation as "like an L shape", where GE Digital cuts across all sections of the business. "That's the idea of the company-within-a-company mindset we've come up with."

The difference between a CIO and a CDO

It's up for debate whether the CDO and CIO roles differ greatly enough to warrant the titular letter-shifting, but at least at GE, the CIO – Jim Fowler – reports into William Ruh. Fowler, then, is also part of the executive team for digital, and his responsibilities are being expanded.

"I don't get too caught up on the title," Ruh adds. "In some cases the CIO will fulfil this kind of role and may not change the title. I do see that.

"What I would say is this: what's more important is traditional CIOs have long talked about having a seat at the table. Some have; the ones with a business mindset have managed to do that. But by and large, the IT function has been relegated to when it sits under a CFO, when it sits under a COO. It had been relegated to a back-office function."

The challenge, he argues, is bringing these roles into the front office.

"What you're really talking about is a recognition that there's a need for a company not to treat digital as just: 'I'm going to automate my inside stuff'," he says. "It's: 'I'm automating the inside and connecting it to how I make my money. And, by the way, my products are going to become more digitally oriented, I'm going to collect more data from them and I'm going to provide new kinds of services'."

You can see this in motion at GE. The group's old CIO, Jamie Miller, went on to become chief executive at GE Transportation. And this is indicative of opportunities for CIOs to move from having a seat at the table to having the seat at the table.

At least from GE's perspective, Ruh says, rotating CIOs into another position on the board will require a "deep digital background". But he thinks they will come in, and we will see CIOs running businesses. "That's what we're already doing," he says. "There are a ton of people who are commercially oriented, and so the ability to leverage that, we think, is going to be key to the future."

In fact, GE is reimagining its training programmes to push IT and digital to the forefront of the business.

"If you silo old IT from the business product line, which is the way most companies have done it if they happen to have digital products, the business leaders often silo those from IT," Ruh explains. "You don't develop the muscles that are necessary to be able to do that effectively. Then you get individuals who move roles, but it's not a systemic thing. For us, we see it as a systemic thing.

"When we talk about a digital organisation, you'll see us continue to evolve and grow to where people will move based on their capabilities and desires – from traditional IT into running business and back and forth. I think the blending of this will happen naturally."

But what does 'digital' really mean?

Digital as a term can mean everything and nothing all at once. According to Ruh "being digital" means deciding exactly what it means to have a smart product. "Let me articulate our strategy," he begins.

"When you're industrial and you're making a product, you have to really think through what kind of sensors and automation you want to put on a gas turbine or in a locomotive."

So, the first part of being digital means thinking through your strategy, and he hints that digital is on its way to being embedded across the entire organisation.

Simply deciding to bolt a data centre on to a product isn't enough. Businesses need to think about the purpose of their product, how it will be monetised and the way in which they could change the business model.

Secondly, an understanding of digital is an understanding of the app economy – that industrial companies won't be running a single app for a single purpose, but hundreds of apps to fit their customers' environments.

"For us, it's where we're putting applications on the gas turbine to optimise it, there are applications we have that extend to power plants," he explains. "We are building out a portfolio of applications that surround a locomotive, surround a power plant, surround a hospital and so on, oriented towards connecting smart machines, and building these analytics-based applications."

And lastly, for GE digital means building out a platform of its own – in this case, the industrial cloud platform Predix – to allow partners to build and distribute their own applications.

"Not everybody will have that in their strategy because it's an expensive proposition," Ruh says. "But for us, being digital means that we're making our machines smarter. We're rethinking our whole internal infrastructure as a digital thread – connecting all the capabilities that usually were stove-piped: engineering, manufacturing, supply chain, service shops, services, all together into a digital thread.

"We're automating and integrating all of that, so it supports the strategy of how we go to market. That's the inside and the outside, coming together into a single capability that is changing the nature of what we are."