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Siemens Company: Innovation and Leading Positions Case Study

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Updated: Oct 19th, 2020

Company’s Background

Founded in Germany in 1847 by Johann George Haiske and Werner von Siemens, the company initially was connected with the telegraph and quickly gained momentum due to the growing popularity of such kind of business. Upon Siemens’s discovery of the dynamo-electric principle, the company began branching out to new industries like the production of light bulbs and electric trains.

In the course of the twentieth century, Siemens grew exponentially through alliances of its various branches. Furthermore, apart from building the first-ever line of telegraph, Siemens added to its contribution to the first power plant, commercial light, and, most notably, the x-ray. When the twenty-first century came, Siemens was regarded as the globally integrated technology company with offices in almost two hundred countries (Lakhani et al. 1).

Business Division

The company operated on the decentralized structure, which was made up of the four primary areas such as Industry, Healthcare, Energy, Sites & Infrastructure. Further, these areas were divided into eighteen divisions that were then differentiated into business units. The company regarded each area or unit as “global entrepreneurs”. Despite the fact that Siemens’ decentralized business structure offered an opportunity for entrepreneurship, the challenge was in aligning the entities and targeting their efforts in one direction (Lakhani et al. 3).

Innovation, Research, and Development at Siemens

Siemens has a longstanding tradition of innovation commercializing in the sphere of creating and manufacturing next-generation products. With the main goal to set market trends, the company engaged in a complex process of innovation that included the generation of ideas, their selection, and, subsequently, development. Open innovation projects were lead by Dr. Thomas Lackner who promoted the principle through various online competitions and innovation communities that invited the talent to work at Siemens; however, this strategy did not coincide with the decentralized division of the company. Furthermore, the process of open innovation was at large restricted by the concerns of intellectual property rights.

To deal with the issue, Lacker created a web-based platform that promoted massive innovation collaboration across all sectors, taking IBM’s “Innovation Jams” concept as the model. Due to the lack of communication between innovators across the globe, the next step was the creation of the TechnoWeb 2.0 platform with newly integrated social media features and self-defined networks.

Apart from the collaboration with innovators around the globe, Siemens was also involved with the “external knowledge brokers” and generated idea contests like OSRAM LED Emotionalize Your Light Contest, Smart Grid Contest, Sustainability Contest, and “Urban India” Idea Contest (Lakhani et al. 9).

Discussion

The promotion of open innovation is what distinguishes Siemens from many other global corporations that prefer to work only with their own resources. Through the creation of links with research and non-research establishments, the company positions itself as the one willing to collaborate with the public on a variety of levels, making sure to bring value to different units of its operation as a result of successful cooperation.

The open innovation strategy is the most distinguished aspect of Siemens’ corporate strategy since it has positive goals in mind. Its goals included enhancements of the renewable energy, exploring new solutions for energy storage, promoting the efficient usage of energy, exploring the sphere of imaging technology, and the creation of factories that would work solely on automation principles (Siemens par. 3).

The goals set by the company in relation to open innovation are examples of how a company can change the world through innovation and strive to improve people’s lives instead of just focusing on earning more without caring about what the global society can benefit. The open collaboration with all stakeholders makes Siemens attractive and interesting to the public since they see what processes occur, how they occur, and how is it possible to contribute.

However, there is a great disadvantage to this strategy, which is convincing the business units of the company to engage in open innovation. Therefore, open innovation will be considered a closed strategy if no evaluation criteria and scalable methodology are created to support the strategy (Lakhani et al. 10). The decentralized business division does not allow Siemens to create a unified system that will go in one direction towards achieving a set goal; rather, the management is challenged by operating many different branches that simultaneously want to achieve different objectives.

The most important advice Siemens can be currently given relates to finding the company’s true purpose and then build its operational strategy on its basis. Because open innovation and decentralized business structure clash, a new solution for bringing value both to consumers and the company can be made. Due to the fact that the decentralized approach has been implemented by Siemens for a long time, bringing all branches into one will be counterproductive.

On the other hand, open innovation facilitates collaboration with crucial stakeholders able to contribute to the company’s value. Therefore, open innovation approaches can be assigned to each business unit in order to match the needs and the goals of the unit with the innovative flow of ideas that come from the outside.

Works Cited

Lakhani, Karim, Katja Hutter, Stephanie Healy Pokrywa, and Johann Fuller. . 2013. Web.

Siemens. Taking Leading Positions in Technology. n.d. Web.

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IvyPanda. (2020) 'Siemens Company: Innovation and Leading Positions'. 19 October.

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