Calhouns Cockpit

Today's leading-edge CEO doesn't have an executive suite-he has a cockpit.
From the captain's chair he can watch his head-up display, projected in a broad panorama across the office wall.

And should any part of the company fail to function properly, the warning lights flash.
This is not fantasy, but David Calhoun's fly-by-wire management of GE Aircraft Engines. A seemingly natural progression from measuring performance with "dashboards," he and his team have built a massive flat wall panel display that constantly monitors and displays the condition in green, amber or red of 59 metrics vital to running the company.

"I use it to monitor everything in our business," Calhoun told Show News. "It tells us on the top line what our order rates are, our deliveries, so we know if we're a day late for an engine shipment (and I can tell you for the last year and a half we haven't been); and in the spare parts world we know what we're shipping every day, whether we're hitting request dates from customers-it breaks down to all the measures."

It even tracks how long it takes a customer to call up GE's web center for service, and flashes red if the system begins to slow.

When Calhoun sees an alert he reaches for his cursor control and double clicks on the warning light, opening up that part of the business to closer scrutiny. He can keep on clicking, driving deeper and deeper into the problem. And his executives, who have similar cockpits for their own areas of responsibility, can do the same.

The result? GEAE can respond rapidly to an undesirable trend before it becomes a problem.

Calhoun's cockpit is replicated to a large extent in every GE business, stemming from an initiative by Jack Welch to completely digitize the analog company. In theory, Welch could sit in his Fairfield HQ and play chief air traffic controller. All cockpits are expected to be fully operational this year.

The analogy with airplanes is perfect. The latest airplanes are fully digital, fly-by-wire machines; relying on artificial intelligence to spot and flag anomalies automatically.
GE Aircraft Engines is very much the same.

Two years ago it moved aggressively to prevent the dot.coms coming between it and its customers with "spare parts" pages by launching its own e-business initiative.

"For about a year that's what we were all engaged in, then when we all figured out that fulfillment was what mattered most to customers we realized that digitization was better applied at efficiencies within our four walls," Calhoun explains.

"So over the last 12 months we have just been racing full speed to digitize all the touch points that exist inside our business where one person hands off some information to somebody else and it has to be worked on, massaged and analyzed."

GEAE has targeted $180 million in savings this year, and the same amount next year, from increased productivity from digitizing the company-and yes, that metric is on Calhoun's cockpit display! He estimates the company has invested $80 to $100 million developing its e-business over the last two years, so the returns are pretty dramatic.

There is also a manual override on the cockpit display. A manager can turn a dial to red if he or she anticipates a problem.

"There's no more passing along reports with measurements at the end of each quarter," Calhoun says. "So the second someone is worried about something we can all focus on it and throw every resource to fixing it."

The first job in building the cockpit was deciding which measurements to include. The next was to digitize all of those inputs deep through each business, so nobody would have to accumulate information just to feed the cockpit.

Eighty percent of the measurements will be digitized by the end of this month, and the remainder by the end of the year.

Is there a danger of information overload with the ability to know so much about everything?

"Oh sure," says Calhoun. "For a while we will swim in too much data, but that will be OK. We each have to impose our own limits -- we want to get to the few inputs that matter the most and not worry about all the other stuff that everyone likes to accumulate and measure and manage that really doesn't make a difference.

"As we work our way through this we'll finally get down to ten vital axis where we know if we are on top of those ten, then everything is working."

How far will digitization go? "I'm not sure we will ever reach 100%, but I'm not sure it will ever end, either. It's like digitizing Six Sigma," Calhoun says.

By John Morris