SIEMENS

The 21st century is a very dynamic age. Globalization is continuing at a rapid pace, and global competition is intensifying as a result. This poses tremendous challenges — for companies as well as entire nations. According to international strategy consulting firm Booz & Company, expenditures on research and development in industrialized nations such as Germany and the U.S. fell by more than three percent in 2009 as compared to the prior year. China and India, on the other hand, increased their R&D budgets by a substantial 41.8 percent during the same period.

In other words, the balance of research and development power is shifting away from the established industrialized nations to the emerging markets. At the same time, this shift is offering R&D heavyweights in the industrialized nations a wealth of opportunities to continue playing a major role in the reshuffled world market. One such heavyweight is Siemens.

A Commitment to Innovation. For companies, a long-standing and effective method for gaining an edge in innovation is to bring different sources of expertise together. That’s one reason why, since 1984, Siemens has participated in framework research programs sponsored by the European Commission. These programs bring together the brightest European scientists and technicians from research organizations, universities, and companies in order to strengthen Europe’s international competitiveness. The amount of money the EU spends on these programs illustrates the high priority it assigns to Europe’s innovation capability. The initial program, which ran from 1984 to 1987, was funded to the tune of approximately €3.3 billion; the sixth program (2002–2006) received funding of €17.5 billion; and the current seventh program (2007–2013) has been allocated more than €50 billion. The EU-funded joint projects in which Siemens participates are extremely varied. The “Internet of Things at Work” project, for example, has scientists under the direction of Siemens Corporate Technology (CT) studying the Internet of the future, which will link machines rather than people with one another.

Other current projects are geared toward achieving the EU’s goal of firmly establishing energy production from renewable sources — and Siemens is participating in these as well (see article "Uniting European Expertise"). “The objective of the EU’s R&D funding programs is to consolidate Europe-wide knowledge in order to create a foundation for globally successful innovations,” says Dr. Ina Sebastian, a CT staff member in Munich who is responsible for managing Siemens’ participation in EU-funded projects. The company is involved in approximately 50 such projects at the moment. “The Commission works meticulously to ensure that knowledge is truly consolidated and that two organizations don’t end up studying the same thing. This is a key instrument for avoiding conflicts of interest and disputes involving the use of research results,” Sebastian adds. This approach also simplifies the clarification of questions regarding patent applications, ultimately ensuring that knowledge and intellectual property are sufficiently protected and that successful products can be created as a result (see article "Protecting Success").

Global Melting Pot. Siemens’ activities in EU programs are supplemented by its participation in other research programs around the globe. In the U.S., for example, the company is examining new technologies for separating and storing CO2 in a project funded by the U.S. Department of Energy. “Participation in such projects gives us access to diverse innovation and research activities,” Sebastian explains. “At the same time, the international networks that have been established through projects allow us to accumulate a great deal of new knowledge. All of this is part of the Open Innovation policy that Siemens has been extensively pursuing for many years outside the orbit of EU programs as well.” (see Pictures of the Future, Spring 2010, Open Innovation)

Indeed, Siemens establishes more than 1,000 new joint programs with research institutes, other industrial companies, and universities every year (see article "Meeting of Minds in Cyberspace"). The company also maintains strategic partnerships with several top universities that are geared toward joint research, fostering young talent, and establishing networks. Siemens has in fact set up “Centers of Knowledge Interchange” (CKIs) at these universities, each of which is headed by a Key Account Manager directly on site. The CEOs of national subsidiaries and business units, and even members of the Siemens Managing Board, also serve as advocates for some of the CKI universities.

The lines between business units, countries, and cultures within the company are also becoming increasingly blurred. “When researchers from different countries come together, you end up with a fascinating melting pot of knowledge,” says Dr. Tabea Arndt, a CT manager for Superconductor Development — an area of research for numerous scientists around the world (see article "Supercool Anniversary").

“Each culture brings its own unique perspective to the table,” Arndt explains. “For example, whereas we Europeans know a lot about materials research, scientists from countries such as Japan that have few raw materials and extremely dense populations often specialize in efficiently utilizing materials in compact solutions. This broadening of our horizons through our innovation partners benefits the research activities we conduct throughout the Group every day.”

The same is also true when IT experts from Bangalore work with colleagues from Munich or Shanghai on intelligent image processing programs for surveillance cameras, for example (see article "Products Set to Sizzle"), or when engineers from Siemens Healthcare in the U.S. and Germany get together to develop and prepare the world’s first full-body MR-PET scanner for its market launch (see article "Hybrid Insights").

Moving into New Markets. This “research without borders” offers other benefits as well. “Joint research programs with our international partners also enable us to learn about requirements in their markets and to adapt our processes and solutions to local conditions,” says Sebastian. According to Deutsche Bank Research, more than 90 percent of leading technology companies pursue this type of research outside their home markets. The most popular R&D locations are the emerging markets, whose specialized requirements (i.e. the need to meet complex technical demands at low cost) had previously prevented market entry on a large scale.

The idea here is not to simply transfer R&D activities, but instead to establish new activities — which is part of the basic philosophy of companies such as Siemens that wish to remain at the cutting edge of innovation and technology developments in the future. That’s because when someone in India discovers how to develop a high-tech product that can be sold at one tenth the price it would cost in the U.S., he or she creates an innovation that higherpriced product segments can benefit from as well. Whether it’s medical equipment or energy solutions, Siemens has been successfully developing such innovations for years in its S.M.A.R.T. program. Here as well, the company utilizes the expertise of its global research network (see article "Products Set to Sizzle").

Intercultural Stumbling Blocks. Despite its scientific and economic benefits and successes, global cooperation does have its pitfalls, and these often have to do with human nature and interaction.

“People in each culture go about their daily business and take care of things in completely different ways, and they also utilize different learning habits as they do so,” says Dr. Alois Moosmüller, a professor for Intercultural Communication at Ludwig-Maximilians-University in Munich. “A company needs to be able to deal with that.” (see article "Intercultural Communications: Seeing the Signposts, Avoiding the Pitfalls") “We frequently get caught up in situations in which we don’t understand one another. This makes joint project work in teams more and more difficult, as people become increasingly unwilling to work together constructively.”

Such disputes are anything but minor differences of opinion for Siemens — a company that not only operates a global research network but also does business in 190 countries. That’s why Siemens set up its own internal “Learning Campus” training and consulting center in 2003 (see article "International School of Thought").

The Learning Campus thoroughly prepares Siemens employees for the dominant culture at their future work locations once they have received an assignment to move abroad — whether the company is sending them to China, India, or North America. The policy pursued at the center has a clearly defined objective: to make global teamwork more successful by fostering intercultural understanding. After all, in our dynamic age no one can afford to go back to the days of the cultural ivory tower any more.