Pictures of the Future       Fall 2005

Siemens' R&D: Tuned in to Today's Megatrends

Interview with Claus Weyrich

Research and development at Siemens is associated with a number of great names such as Bolton, Schottky and Hertz. Who are today’s greats?

Weyrich: We could extend the list to include Ernst Ruska, Heinrich Welker and Walter Heywang, for example. But today, there aren’t so many really great names around. That’s not because we don’t have outstanding researchers, but because research and development in our fields of work is increasingly shaped by the need to integrate complex technologies. For this reason it is inevitable that individual achievements have tended to become less prominent than in the past.

Bell Labs have Horst Störmer, a Nobel Prize winner for Physics, IBM has Gerd Binnig …

Weyrich: These companies pursue fundamental research of an absolute kind—something we’ve never done at Siemens. And with all due respect for the names you’ve mentioned, there’s no guarantee that they’ll be able to advance and commercially exploit top scientific research. Although Bell Laboratories invented the transistor, others eventually led the way forward in microelectronics.

Didn’t research at Siemens use to have more of a pure orientation than is the case today?

Weyrich: Yes, it did! But you also have to take history into account. There have been four major periods since World War II. A Technology Push dominated the environment from the 1950s to the mid-1960s. Here researchers had widespread freedom and few budgetary constraints. By the mid-1970s, it became clear that the market was also capable of setting its own agenda. That’s when we took a key step toward establishing a continuous innovation chain by closely coordinating activities at Corporate Research and the Groups' development departments. In the third phase, which lasted from the 1980s to the mid-1990s, the focus was on processes. With globalization, it became crucial to convert research results into products faster and more effectively. And since the mid-1990s we’ve been focusing more closely on customers. For every new project, we ask ourselves what benefits it will bring—not only for today’s customers but also for those of tomorrow and beyond.

How does this affect the way research is organized?

Weyrich: In the course of the last two phases, we’ve decentralized our R&D activities to a certain extent and also decided that around two-thirds of our R&D budget at Corporate Technology (CT) should come from projects commissioned by the Groups. We largely decide ourselves what to do with the remaining 80 million euros a year. We invest these funds in areas that we regard as crucial to the future of Siemens. This budgetary model forces us to concentrate on strategically important technologies and to work closely with the Groups. Without a doubt, it has made our work more effective.

Does this concentration on the market and the customer mean that CT has abandoned its claim to being the research leader in all the fields of applied physics and electrical engineering?

Weyrich: We never pretended to lead in all areas of applied physics. It’s tough enough being the number one in all the fields of electrical engineering. However, we certainly intend to continue setting business and technological trends. We want to help shape the rules of the marketplace. And to do so, we need to be a leader when it comes to patents and standards. Our innovation strategy is clearly that of a trendsetter.

In which areas is Siemens setting trends?

Weyrich: If possible, we want to be a trendsetter in all of our businesses. Of course, that’s an ambitious goal, given the broad scope of what we’re doing at Siemens. At present, we’re outstanding in the fields of industrial automation, medical technology, innovative lighting technology with LEDs, mobile radio networks, in many areas of power engineering and rail automation, and in automotive electronics.

How do you find out what customers will want in the future?

Weyrich: You have to think your way inside your customers’ heads and try to anticipate what they might need in ten years. Of course, such a prediction is by nature what the experts call fuzzy. However, we have a range of methods to help us here. These include extrapolating forward on the basis of today’s product lines and technologies, but also extrapolating backward on the basis of holistic future scenarios. We then combine these results to form the Pictures of the Future for our areas of business. In addition, we also take our Horizons2020 scenarios into account. These sketch out future developments of society as a whole. Supported by our Pictures of the Future, we can conduct a meaningful, structured dialogue with customers and partners about the future.

Innovations are appearing at an ever-increasing rate yet have an ever-shorter life span. How do you ensure that Siemens remains a top market performer?

Weyrich: Setting trends is all about having long-term visions and maintaining technological leadership. Above all, it means exploiting techtnological synergies, developing platform strategies, having full control over your R&D processes, being globally present and protecting your know-how with patents. Because of the fierce competition between the world’s top companies, patents are more important today than ever before. According to the statistics on patents, we’re number one in Germany, number two in Europe, and—calculated across all sectors—one of the top ten in the U.S. Let me give you another statistic that shows how we have remained competitive over the years. In 1970 we posted the 10th-highest sales figures in the world’s electrical and electronics market. Today, we’re number three. What’s more, we’re the only European company in the top ten. Many of our former competitors are no longer listed or no longer exist.

Werner von Siemens once said that he would never risk the future for the sake of quick success. Does that still apply?

Weyrich: More than ever. Every successful company has achieved a successful balance between sustainability in terms of the environment, business and society—corporate responsibility—on the one hand, and growth based on profitable innovation on the other.

Weyrich: The comparison is misleading because the semiconductor business—today it’s called Infineon—is no longer part of Siemens. And that’s a very R&Dintensive area. Take that into account, and you’ll see that the proportion of sales spent on R&D has remained fairly stable. It’s also worth noting that Siemens has increased sales by more than 60 % over the last decade. Naturally, that applies to R&D expenditure as well. We’ve also become more effective and more efficient. We invest 5.1 billion euros a year in R&D, which puts us well ahead of anyone else in this sector.

Siemens is performing more and more of its research abroad. Will there still be a Corporate Technology in Germany in 20 years?

Weyrich: Without a doubt. Research and technology in Germany have always enjoyed a reputation for scientific excellence, and many countries envy the quality of our training in engineering. But we also need to be represented in regions characterized by fastgrowing markets and dynamic innovation processes. Besides, Siemens needs more than 10,000 highly qualified young people a year. We therefore need to develop networks with foreign universities. Finally, it’s a matter of corporate citizenship. When a company sells products in a country, it’s regarded as a guest. When it produces there, it’s seen as a friend. But it only becomes a citizen when it also trains young people and carries out research there.

General Electric recently opened a research center near Munich. Does that worry you?

Weyrich: We’ve had a major research center in Princeton for over 25 years, and we also operate labs in England, China, India and Russia. GE’s decision to set up an operation in Munich is not only a tribute to the quality of German research, but to the strength of the German market. Regardless of strategy, however, it all boils down to one thing: the essence of business is competition.

Venture a prediction. What will Siemens researchers be working on in 20 years?

                                                                                               Interview: Jeanne Rubner