For decades, scientists primarily exchanged ideas at specialized congresses and through scientific publications. Industrial researchers were also part of these networks, and whenever a topic developed by universities or research institutes appeared interesting to them, they entered into research agreements with them. These networks still exist, but globalization and the growth of digital networking have considerably accelerated the speed of such exchanges. Development processes have changed, and innovation cycles have become much shorter.Companies must therefore reinvent the way they invent if they want to continue being successful. This also applies to Siemens, where developers ceased to barricade themselves in the ivory tower years ago. The innovation processes of the company are much more open today. Instead of hatching ideas behind locked doors, Siemens is now collaborating with external partners, including small start-ups that have little money but good ideas. That affects the way to develop new things.
The research laboratories where the innovations of the past century were developed behind closed doors are not where the innovations of the 21st century will be invented. Those who wish to identify and serve the markets of the future must engage in a completely different kind of development and collaboration that is open, diverse, and flexible.
Innovation through Networking
So the magic words are “Open Innovation” (OI). Keeping knowledge to yourself has long been regarded as a competitive disadvantage. Through Open Innovation, companies seek to design an open innovation process – open in the sense that both internal expertise and outside knowledge are integrated into a comprehensive process with the goal of increasing one’s own innovation potential. Siemens set the course already years ago. Research cooperation arrangements and even strategic partnerships with universities (among other institutions) are only some of many options pursued for this purpose. Consequently, Siemens experts today are no longer limited by knowledge boundaries because the community of researchers and developers is globally linked through web-based information sharing platforms and idea contests. Colleagues discuss problems, identify the best ideas, and develop them to the point of being ready for market. Start-ups Are Redefining the Rules of the Market
Admittedly, examples like these are not typical of traditional innovation processes, but for that very reason they are valuable for large companies like Siemens. The same applies to start-ups, which are small, flexible companies focused on a single business idea. They redefine the rules of the market with their trailblazing innovations and thus pose an enormous challenge to large companies. In our interview , Jerome Engel, an innovation expert at the University of California at Berkeley, describes this phenomenon as follows: “Innovations of the kind developed by start-ups in Silicon Valley and elsewhere do not fit in well with the relatively rigid structures of large companies because they require constant experimentation and necessarily involve a great deal of uncertainty.”According to Engel, however, the strengths of large companies and start-ups can be complementary. That’s because start-ups often have a good idea and highly motivated employees, but lack the resources that would be needed to make successful products out of their ideas. In this case, start-ups are well advised to work together with a strong partner and create a win-win situation for both sides.
Siemens knows the importance of capitalizing on this opportunity. By founding next47, an independent unit designed to supercharge cooperation with start-ups the company aims to promote disruptive ideas more intensely and to further accelerate the development of new technologies. This way, Siemens can detect trends and innovative business models more quickly and gain early access to promising innovations, and to the sharp minds that are already working on them today.
Tapping Future Business Opportunities at an Early Stage
Start-ups illustrate another key point. Not only are innovation processes changing, but new technologies are laying the groundwork for superior business models that will unseat old ones. In earlier times, the invention of the steam engine or the automatic loom produced this effect. Today, we use the Internet and cloud solutions, glean insights from the intelligent use of smart data, and put these insights to use, for example, in the digital transformation of industry.This transformation represents a huge opportunity for Siemens. To take one example, Siemens’ customers can use its Product Lifecycle Management (PLM) software to simulate their own products before even proceeding to manufacture physical prototypes. Many of the Siemens employees who work on the further development of the company’s PLM software began their careers with a start-up company.
The future era of electricity represents another important market of the future. The abandonment of fossil fuel use by the year 2100 is practically certain. Siemens experts are conducting research and simulations to understand the demands that this revolutionary approach will place on our energy systems and what this means for the electricity markets of the future, with the goal of identifying future business segments for the company and implementing them in the Divisions.
In Touch with the Pulse of the Times
We therefore need to identify such trends in time in order to exploit them at an early stage. Moreover, trends can vary from one region to another. As a result, the researchers of a globally active company like Siemens must always have their finger on the pulse of the times, around the world. To this end, 33,000 Siemens employees conduct research and development work at more than 175 locations worldwide, with particular emphasis on Germany, the United States, India, and China. All of this makes it clear that the crowdsourcing of ideas is routine at Siemens, as is active, worldwide research and cooperation with universities, research institutions, and small, agile start-ups. And it is not just Siemens as a global enterprise but also the company’s partners who benefit from Siemens’ experience, resources, and global footprint. At one time even Siemens was a start-up that became a global enterprise on the strength of good ideas, hard work, and a little patience. Today it is a company that is constantly reinventing itself. And more than that, it is a company that is constantly reinventing the way it invents.