Strategic Divergence and Performance Disparity: A Comparative Case Study of Siemens and General Electric’ IIOT Platform strategies

Abstract

Industrial Internet of Things (IIOT) is considered as a cornerstone of the fourth industrial revolution, which promotes the deep digital transformation of those established industrial companies. Siemens and General Electric (GE) are two giants in industry. They started this journey with similar goals, resources and opportunities, and launched their own IIoT platforms-Mind Sphere and Predix respectively. However, their paths are quite different. Siemens has made continuous growth, but GE's plan has encountered difficulties. This paper discusses the puzzle of performance differences through a theoretical-driven comparative case study. This study uses the theories of platform strategy, organizational ambidexterity and dynamic capabilities with a view to analyzing the different strategies and organizational choices made by each company. It is found that Siemens' success is due to its gradual and integrated strategy, which has handled the tension between its traditional hardware business and its new software business. This method promotes the co-evolution of its platform and organizational structure. On the other hand, GE made a particularly radical and separate strategy. They wanted to learn from Silicon Valley's startup model and set up a "GE Digital" department. As a result, their digital goals were out of touch with the industrial core, which led to strategic confusion and finally failed. This research contributes to the literature of digital transformation, which emphasizes the key role of organizational integration in realizing "ambidexterity" and shows how dynamic capabilities support the successful implementation of industrial platform strategy.