From Fit4More to Fit4 2010 – Programs for sustainable development and value creation
By focusing on Fit4More over the past two years, we laid the groundwork for our future success. Now, we intend to make further strides by systematically implementing a new Siemens-wide program: Fit4 2010. Our aims remain the same: to provide outstanding benefits for our customers, position our businesses for long-term market leadership and further increase the value of our Company.
Fit4More successfully implemented
Achieving the Fit4More targets that we set in April 2005 provided us with a solid basis for long-term profitable growth. Our financial results clearly demonstrate the effectiveness of the program’s tools and levers. All our Groups reached their margin targets by the second quarter of fiscal 2007. Growth over the past two years totaled more than 15 percent. What’s more, we fulfilled the aims of all four of our Fit4More pillars:
- Performance and Portfolio –To create a portfolio that would guarantee our future success, we pursued a two-pronged strategy. First, we completed the strategic realignment of selected activities – including, in particular, our Information and Communications business area. Second, we continued to expand – through acquisitions, where appropriate – our strong core businesses like energy and environmental technologies, automation systems, public and industrial infrastructures, and healthcare solutions.
By implementing the other three Fit4More pillars, we established new standards and processes Company-wide and further developed our proven strategies:
- People Excellence – Implementing targeted measures, we made additional progress in creating and maintaining a high-performance culture – a worldwide strategy that’s enabling us to identify and nurture the young people who will one day lead our Company and to provide our key experts with new career paths. Our motto is “World-class leaders for world-class results.”
- Operational Excellence – As part of our top+ initiative, we established standardized processes and procedures throughout the Company while concentrating intensely on Innovation, Customer Focus and Global Competitiveness.
- Corporate Responsibility – Our rigorous, highly focused corporate responsibility program increased our Company’s value and earned us a place on the Dow Jones Sustainability Index once again in fiscal 2007.
Strengthening our competitive position and increasing Company value
Fit4More was a resounding success. But there’s still room for improvement and a need for further action – particularly in the areas of compliance and asset management. Our conduct must meet the highest professional and ethical standards. And to succeed, our businesses must achieve ambitious goals for growth, profitability and cash flow. In particular:
- We intend to grow twice as fast as the global economy.
- Retaining our system of Group margin ranges, we’ve set tough profitability targets for our Groups and for the Company as a whole. Taking into account their individual business strategies, market positions and competitive environments, we’ve raised the target margin ranges for eight of our ten Groups. In addition, we’ve introduced a new performance yardstick focused on optimizing capital efficiency – return on capital employed (ROCE). This metric is calculated by dividing income before interest expense by capital employed. We’re aiming for an ROCE of between 14 - 16% percent for the entire Company by 2010.
- In the area of cash flow, we’re employing another new yardstick, the cash conversion rate, to determine how much of our profit is converted into cash that can be used to finance our businesses. The cash conversion target we’ve set is “one minus the Company’s growth rate.” This indicator is adjusted for our growth rate because growth always requires investments.
To reach our Fit4 2010 goals, we’re rigorously implementing four drivers:
- Portfolio – We’re building on our strengths in order to capture and maintain No. 1 or No. 2 positions in attractive markets and further boost our businesses in our three Sectors Industry, Energy and Healthcare through organic growth and acquisitions.
- People Excellence – We’re creating a high-performance culture, strengthening our leadership development and promoting top talents around the globe.
- Operational Excellence – We’re continuing to push innovation by applying our proven top+ methods and top+ toolbox while sharpening our customer focus and enhancing our global competitiveness.
- Corporate Responsibility – We’re closely aligning our business performance with our commitment to society and the environment in order to safeguard and increase the long-term value of our Company.