The EFMD business magazine

The EFMD business magazine

Busting boundaries to accelerate business transformation

Andrew Rutsch explains how a recent EFMD CLIP workshop shed light on Siemens’ transformation from a troubled company to a role model and how corporate learning played a key role in this strategic renewal.

In 2007, in a booming global economy, Siemens was in troubled waters. The industrial giant was facing a global corruption scandal which would cost the company 32.5 billion in fines and lawyers’ and accountants’ fees (The Guardian 2008). Peter Loescher was hired as the new CEO to clean up the company. He was the first top executive in the 162-year history to join from the outside. Today, Siemens is a role model in Dow Jones’ sustainability world index, and one of the top five in the 2010 Hay Group Best Companies for Leadership survey.

So what is the Siemens transformation story? The EFMD CLIP Sharing Best Practice

The workshop at the Siemens Global Leadership Center in Feldafing near Munich on 7 October 2011 provided rich insights. Four key success factors for transforming a global organisation were highlighted and discussed:

Factor 1: Getting the right people on the bus

New blood was injected to heal the patient. Within a short time frame, Loescher changed 90% of the Group’s management board, 70% of the second tier and 50% of the third management level. Overall, 1,000 leadership positions were filled with external and internal talent. Loescher took the crisis as an opportunity to change the leadership team and leadership culture in order to spearhead the transformation of the company.

Factor 2: Strengthening collaboration

The One Siemens strategy, assuming the whole is more than the sum of its parts, is another key factor. The firm moved to a sector-based structure bringing products, know-how and people together across borders to create solutions that meet the needs of hospitals, cities, and so forth. All 90 direct reports of the management board are assessed and incentivised for how well they and the entities they oversee collaborate with each other horizontally. Traditional incentive systems over-reward results, while Siemens recognises collaboration as a key means to the end.

Factor 3: Strategic decisions based on an outside-in view

The renewed leadership team had to make tough decisions. For example, the rail business was turned around within one year, taking an outside-in view looking at how automotive producers work and mobilising the employees in the change process. Similarly, Somatom, a new computer tomography generation developed by an engineer in China, played a key role in boosting innovation in the healthcare business. Today, it is a blockbuster and is exported across the world. Also, patients were brought in to meet with employees to change the view that their mission was not to develop technology but to help cure patients.

For the full article, you can view the PDF.

Busting boundaries to accelerate business transformation

See more articles from Vol.06 Issue 01 – ’12.

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