changing paradigms in r&d - front | · pdf filecc software replacing hardware ... (ewsd) -...

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© Siemens AG, CT, 2005

Changing Paradigms in R&D –A View from Siemens

EIRMASaint-Paul de Vence - January 27, 2005

Dietmar TheisSiemens AG, Corporate Technology

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Outline

Siemens Innovation strategy:Trendsetter in our businesses

Evolvement of central R&D Towards Open Innovation

Corporate Technology Securing the technological future – new paradigms for innovation

Business environment Major trends in electricalengineering and electronics

Conclusion Lessons learned

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Outline






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The World Electrical/Electronics Market Development 2002 – 2007 by Region

NAFTA(USA)

Europe Asia

7.6% p.a.

6.0% p.a.

2002 2007(Forecast)

Source: ECR 2

2007(Forecast)

2002

661727

6.9% p.a.

2002 2007(Forecast)

946

1,318

1,045

888

Figures in billions of euros

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ENIAC: Electronic Numerical IntegraterAnd Calculater (1946)

C Components: 18 000 tubesC Multiplication time: 3 msC Power: 150 kW C Price: 2 Mio. US $

Performance in Key Technologies Has Increased by Orders of Magnitude Processors

Software

Data-Transmission

Integration:more than the sum

Storage Devices

Intel Pentium 4 (2004)C Components: 125 Mio. transistorsC Multiplication time: ~ 0.4 nsC Power: 103 W (3.4 GHz)C Price: 400 US $C Chip Area: 112 mm2

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Regional Continental CosmicGlobal

Increase of Performance by Factor 10: A New Dimension!

Historic view: Revolutions in transportation

x 10 x 10 x 10

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Advances in technologydriven mainly by• digitalization• miniaturization• rapid innovation• technological strides• networks

Advances in technologydriven mainly by• digitalization• miniaturization• rapid innovation• technological strides• networks

Increased competitivenessis mainly stimulated by• globalization• faster response time• price reductions• specialization• liberalization / deregulation• cooperation / alliances

Increased competitivenessis mainly stimulated by• globalization• faster response time• price reductions• specialization• liberalization / deregulation• cooperation / alliances

New Marketsare mainly created by• growth in services• system integration• software solutions• ecological concerns• changes in life styles• e-business

New Marketsare mainly created by• growth in services• system integration• software solutions• ecological concerns• changes in life styles• e-business

Entrepreneurship- skills- management

Stable conditions- political- economic- social

Factors Influencing Growth in the Electrical and Electronics Industry

Acceptance ofnew technologies

- society- media

V innovationV timeV networking

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Market requirements:C Increasing

- variety - performance

of all products

Market requirements:C Increasing

- variety - performance

of all products

C Information technologies penetrate into all segmentsC Increasing share of servicesC Information technologies penetrate into all segmentsC Increasing share of services

C Integration and miniaturizationC Integration and miniaturizationC Increasing customer

needs for consultation and after sales services

C Increasing customer needs for consultation and after sales services

C Software replacing hardwareC Software replacing hardware

B Services and knowledge based businesses gain in importance

Marketing Productdefinition Development Manufacturing Sales After Sales

Structural Change of the Industrial Production

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Changing Paradigms in Management

LinearLongtermplanning

Analysis of competitiondynamics

(Porter)

Analysis of Value chain

Benchmarking(Porter)

Networkedspaces of

value added

Learning curvePortfolio matrix

(BCG)

Shareholdervalue

Stakeholdervalue

2,0 1,0 0,5

7%

14%

Nr. 3

Nr. 1

Nr. 2

93%

profit margin[%]

competitive position

Competitive position

Mark

et g

rowt

h

Stars Question mark

Cash Cows Dogs

- 5

0

10 1,0 0,10,20,52,05,0

10

25

Market

Com

pete

ncies

Exploitationof

competencies

White space

Mega-chancesBuilding newcompetencies

existing new

exist

ingne

w

Market

Prod

ucts

/ Tec

hnol

ogies

Market penetration

Market enlargement

DiversificationProduct program

enlargement

existing new

exist

ingne

w

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Revolutionary Changes Call for More Strategic Orientation of R&D

V Short term: Fast product sequences with evolutionary /marginal product improvement

Price degression in devices & systems requires continuosimprovement

Market penetration risky with revolutiony improvements

V Funding: Financial reservation towards long and expensive R&DShort-term business orientation of companiesR&D expenditures directly affecting profit marginStrong effect of compound interest

Strategic company goal: Minimize Risc !

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R&D is Increasingly Networked Nationally and Internationally on Professional and Political Levels

V Science and educationUniversities (Techn. Co-Operations, Trustees, Ambassadors …)Public Research Institutes: FhG, Helmholtz-Gemeinschaft, MPG, acatech, …

V Associations, boards, initiativesPartner for Innovations (Fed. Govmt.)BDI, EICTAVDI, VDE, ZVEI, DIHK, DPG …WTB, abayfor

Strategic Company Goal: Improve balance of knowledge!

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Outline






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Innovations Have Kept Siemens Strong for 157 YearsOutstanding innovations and sales development by Siemens AG, 1847 – 2003

Digital electronic switching system

(EWSD) -first telephone

exchange

1847 1879 '80

Sales (in logarithmic scale)

First pointer telegraph

19241926 1958 1959 '74

ICE3

'031866 1973

Implantation of firstcardiac pacemaker

by Siemens

Start of Production of large-scale integrated

(LSI) circuits

W.v. Siemens discovers dynamo-electric principle

'81

64-kbit-memory chip

Magnetom

'84 …

"Eurosprinter"

Siretomcomputer

tomograph

'92

First 256megabit chip

First Simatic

Fingertip sensors

First electricrailway

First Siemensradio

receiver

First trafficlights

ISDN "HICOM" Market launch

of TransrapidFirst GSM cellular phone

with color display

Surface wave technology

Piezo injection valves

High purity silicon

Year of introduction

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Sony

55.9

43.6

GE IBM Siemens

77.8

73.975.2

67.7

Hitachi

67.4

Matsu-shita

61.6

Toshiba

43.4

Dell

38.8

SamsungElectronics

54.5

49.2

30.9

58.5

39.1 38.8

49.0

Hewlett-Packard

65.6

63.7

The Top Ten Companies in Electrical Engineering and Electronics in Fiscal 2004

Total sales (in billions of euros)

Sales in electrical engineering and electronics(in billions of euros)

119.0

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Siemens – Global Network of Innovation (1)

External sales in billions of €w/o SFS, SRE) - FY 2003/04

Broad scope of business(6 business segments, 13 Groups + SFS, SRE)

Information andCommunications

Medical Transportation

Automation and Control

Power

Lighting4.1

10.8

17.1

20.8

7.013.3

NorthAmerica

Europe

MiddleEast

Asia /Pacific

Source: CD S 8 - 11/04

Production sites

NAFTA GER EURexcl. D

APAC SAM AFRME

96 72 61 4414 4

430,000 employees wordwide164,000 (38%) in Germany110,000 (26%) in Europe (w/o Ger)

95,000 (22%) in North America52,000 (12%) in Asia-Pacific

9,000 (2%) in other countries

Global presence(in more than 190 countries)

SouthAmerica

Africa

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Siemens – Global Network of Innovation (2)

GE1)

Sourcee: Siemens AG, CD S 8 – 11/04

1) e/o GECS (GE Capital Services)

IBM

Hitachi

HP

Samsung

Toshiba

Siemens

Sony

Matsushita

1 US$ = 0.82125 EUR1 Yen = 0.00755 EUR1 Won = 0.00070 EUR

1.8

4.6

3.9

2.9

2.6

5.1

2.8

4.0

4.6

0.5Dell

R&D expenditure in 2004:5.1 billions of euros …

Information and Communications

Automation& Control

PowerTransportation

MedicalLightingOthers

… more than 50% for Software(worldwide total R&D personnel 45,000 ; 2/3 in software dev. )

Business Units

Corporate Technology

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Corporate Structure (October 1, 2004)

Managing BoardOperating Groups Corporate Departments

Corporate CentersCorporate Communications(CC)Corporate Information and Operations(CIO)Global Procurement and Logistics(GPL)Chief Economist / Corporate Relations(ECR)Management Consulting Personnel(MCP)

Company Unit in Siemens Schweiz AG*)

Corporate Finance(CF)

Corporate Personnel(CP)

Corporate Technology(CT)

Power Generation (PG)

Power Transmissionand Distribution (PTD)

PowerCommunications(Com)

Information and Communications

Siemens Business Services GmbH & Co. OHG (SBS)

Industrial Solutions and Services (I&S)

Automation and Drives (A&D)

Automation and Control

Siemens BuildingTechnologies AG (SBT)

Logistics and AssemblySystems (L&A)

*

Transportation Systems (TS)

Transportation

Siemens VDOAutomotive AG (SV)

Lighting

Osram GmbH

MedicalMedical Solutions(Med)

Financing and Real Estate

Siemens Financial Services GmbH (SFS)

Siemens Real Estate(SRE)

Corporate Development(CD)

Regional Organisation Germany (RD), Regional Companies, Representative Offices, Agencies

Regional Units

CT / E 011 a -10.04

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Bracknell

Pretoria

Lisbon

Zaragoza

Toulouse

EynshamBerlin

Brussels

Budapest

Milan

Melbourne Sydney

Bratislava

Roke Manor

Paris

Helsinki

Zurich

Porto

Bombay

Istanbul Seoul

Penang

Tel Aviv

Buenos Aires

Sao PauloCuritiba

ShanghaiYokohama

Burlington

Orlando

Auburn Hills

ArlingtonKnoxville

Mülheim

Dresden Erlangen-NurembergRegensburg

Salzburg

Graz

Vienna

Karlsruhe

Taipei

Issaquah

HoffmannEstates

Bangalore

BeijingTokyo

Lake MaryAustin

Newport NewsPrinceton

Piscataway

Norcross

Danvers

Linz

Changchun

Xi‘an

ChengduNanjing

Tianjin Ichon

Date: 01.01.2005

TilburyLondon

PeterboroughDrummondville

Chatham

Johnson CityPittsburgh

Madrid

SophiaAntipolis

Netanya

PandrupOslo

Goeteborg

New DelhiKakegawa

Kawasaki

Munich

Hong KongGoa

Santa Clara

BerkeleySacramento

Concord

San DiegoSan José

Mountain View

Athens

St. Petersburg

Treviso

Global Presence of R&D −More than 45,000 R&D Employees Worldwide

Moscow

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Aspects for the Internationalization of R&D

Santa Clara

Close to the productionClose to the customer Networking to the scientific communityCostsRecruitingCorporate Citizenship Cultural diversity

R&D goes where the businesses and the markets are growing

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Innovation, Productivity and Growth are Closely Interlinked

Continuous renewal is a permanent challenge for all companies

CostsSales Costs

Sales

Starting point Target(e.g. after 5 years)

"new"products< 5Y

"old"products> 5Y

"new"products< 5Y

"old"products> 5Y

GrowthRestructuring

Demandfor

InnovationTidy upthe productportfolio

Expansion ofcurrent businesses

New products

Processoptimization

Design to cost

Reduction of the product

complexity

New services

New applications

World Class Productivity

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5 years and younger

6 to 10 years

More than10 years

Shares of sales with products

48% 55% 75%

1980 1985 2003

30% 29%

19%

6%16%22%

Speed as a Measure of Innovative StrengthC

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H N

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G Y


Any Innovation Process Starts and Ends with the Customer

„Genius is1% Inspiration

and 99% Perspiration"

Thomas A. Edison

V Idea generationB creativity

workshopsB customer

benefits

V Idea selectionB value creationB competitionB competence

V IP generation

V (Draft) Business PlanB product specificationB business strategyB business data

V Financing

V Project management

V Production/LogisticsIntegration/Testing

V Controlling

V MarketingB market

segmentationB timingB alliances/

cooperationsB key customers

V Sales

V After sales services

Innovation process

Invention Implementationin the company

Implementationon the market

Customer

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Innovation

Platform strategies

Trendsetting technologies

Customer focus

Cross-selling initiative

Winning new customers

Driving Strategy Implementation –Three Company Programs With 11 Initiatives

top+ company programs

Globalcompetitiveness

Project management@Siemens

Software initiative

Worldwide manufacturing concept

Shared services

Asset management

Service initiative

Quality and process initiative

Initiatives: Initiatives:Initiatives:

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Innovation Strategy is Part of the Business Strategy

Science

Business

Innovation Side“Knowledge to Money”

R&D Side“Money to Knowledge”

Technology“The systematic

application of knowledge (science) to practical

tasks in industry”

Business Strategy

Innovation Strategy

Technology Strategy

R&D Strategy

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The Most Important Innovation Strategies and TheirPositioning along the Technology Lifecycle

Pace-setting Technologies:Determine tomorrow‘s competitiveness

Key Technologies:Determine today‘s competitiveness

Basic Technologies:Basic competence for today‘s business

New Technologies:DiscontinuityNew rules of the game

First Mover

Trendsetter

Fast FollowerMaturity

Time

First Mover“The early bird gets the

worm“american saying

Fast Follower”The early bird gets the

worm but the second mousegets the cheese“

G. Keillor

Trendsetter”If you‘re in control of

wormholes and mousetraps,you get both - the worms

and the cheese“

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Siemens´ Innovation Strategy:”Be Trendsetter in Our Businesses“

B Comprehensive visions: “Pictures of the Future”

B Technological leadership

B Strong patent portfolio

B Use of synergy

B Optimized innovation processes

B R&D presence in the lead markets

B Network of excellent people

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Outline






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Corporate Technology: About 1,700 Researchers and Developers Worldwide …

Berkeley, CA

Roke Manor, Romsey Berlin

Erlangen

Beijing

Tokyo

Munich Perlach

Princeton, NJ

BangaloreNew sites planned in 2005:• Shanghai• St. Petersburg / Moscow

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Corporate Technology: International Network of Competencies –Worldwide Partner for Innovation

Roke Manor Research

Information Technology &Networks

Radio Communications

Sensors Products Siemens CorporateResearch

*) LLC of Siemens Corporate Research

CT China

SiemensTechnology Accelerator

Architecture

Development Techniques

Software&

EngineeringSystems Engineering

Project Management and Innovation

Materials &

MicrosystemsFunctionalPolymers

Innovative Electronics

Ceramics Analytics

Micromechanics & Coatings

Packaging &AssemblyDesign to Prototype

Information &

Communications

SecurityNeural Computation

Networks & Multimedia

Communications

Professional Speech Processing

User Inter-face Design

Intelligent Autonomous

Systems

Knowledge Management

ProductionProcesses

Simulation & Risk Management

Holistic Processes

Product Definition

Service Management

Manufacturing Engineering

VirtualEngineering

CT India

Electromagnetic Systems & Plasma Technology

Fuel Cells &Energy Conversion

Transducer Systems

Power & Sensor Systems

PowerManagement

Power Components & Superconductivity

Power Electronics

Microwave Systems

Sensor & ActuatorSystems

SensorSolutions

SiemensTechnology-to-Business

Center *)

CT Liaison OfficeTokyo

Imaging & Visualization

Software Engineering

Multimedia/Video Technology

Integrated Data Systems

User Interface Design Center

Intelligent Vision& Reasoning Real-Time Vision

& Modeling

Automation& Control Strategic

Marketing &

StrategicPlanning

System and Software Processes

Discrete Optimization

SoftwareInitiative

CERT

Business Development

CT Russia

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Business Model of Corporate Technology

Goal:Creation of EconomicValue Added for the Company

B Projects for theBusiness Group(Contract R&D)

B Projects to build up new competences

Cross BusinessGroup/SegmentTechnology Strategies forthe Company

New Businessopportunities byexternalcommercializationof technologiesand IPRs

Network of Competences-Partner for Innovation

• Pictures of theFuture- Markets- Trends- Technology- Business

Opportunities• Technology

Screening & Analysis

• Spin off´s(STA, TTB*)

• IP marketing• External

marketing of technologicalservices

* Partnership with A&D, arisinng also for Spin-in‘s

Core BusinessInnovationsStrategies

ExternalBusiness

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Outline






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ContractedR&D for

groups

Externalfunding

Corporatefunding

58 %

7 %

35 %

Technology“Provider“

Technology “Driver“

Know-How

CT´s Technology Divisions: “Driver“ and “Provider“ of Innovations and Technologies

Strategic principles► Focus & Multiple Impact► Key Account Management► Networking internally &

externally► Systematic Technol.&Innov.

Planning► “Strengthen the strength“► Acting as entrepreneurs► Decentralization of

responsibilitites► Performance differentiation

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Networking to the Groups: Key Account Managers Represent the Whole of CT‘s Technologies

Key Account Managers act like heads of “virtual Group laboratories“

Corporate Technology

Medical SolutionsMedical Solutions

Power GenerationPower Generation

Key Account Manager

Key Account Manager

Key Account Manager

Osram GmbHOsram GmbH

Power Transmissionand Distribution

Power Transmissionand Distribution

Siemens BuildingTechnologies AG Siemens BuildingTechnologies AG

Logistics &Assembly

Logistics &Assembly

Industrial Solutionsand Services

Industrial Solutionsand Services

Automation and Drives

Automation and Drives

CommunicationsCommunicationsSiemens

Business Services GmbH & Co. OHG

SiemensBusiness Services GmbH & Co. OHG

Siemens VDO Automotive AGSiemens VDO Automotive AG

TransportationSystems

TransportationSystems

Bosch und Siemens Hausgeräte GmbH

Bosch und Siemens Hausgeräte GmbH

USAUSAMaterials &Microsystems

Information &Communications

Power & SensorSystems

Software&

Engineering

Siemens Corporate Research

ProductionProcesses

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The Time Horizons of the R&D Activities of the Business Groupsand of Corporate Technology are Different

A seamless transition from R&D in Corporate Technologyto the Business Groups is crucial for our success

R&DExpenses

BusinessGroups

CorporateTechnology

Today Two product generationsin the future

One product generation in the future

Time to market(The absolute time scaledepends on business)

Total R&D expenses

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+

++

+++

+- 0

„Developindividual

strategies“

Position in comparisonto competition

Innovationpotential

„Stop“

„Ensure / enlarge the

lead“

„Fast marketing“

„Reducethe

distance“

Evaluation of Technologies with Regard to the Innovation Potential and the Own Competence

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“Customer"

R&DProgram

“Operations"

Market / BusinessTechnology

Key AccountManagement

(KAM)

StrategicMarketing

Technology Divisions

• Strategy Meetings• Inner Strategic

Circles

• Projects• Information Days

• Pictures of the Future• Technology strategies

Criteria• Group R&D spending• Group innovation strategy• Customer relationship

Criteria• Know-How• Unique selling point• Resources• Strategic fit

– Division– Department

Criteria• Market potential

–Size–Growth–Attractiveness for Siemens

• Technology trends• Discontinuities• New business opportunities

Optimization of the R&D Program of Corporate Technology

B Technology divisions and departments are responsible for optimizing the R&D program

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N Technology Divisions/Departments are fullyresponsible for the development of their uniquetechnology portfolio. Technology planning isdetermined by technology roadmaps and department strategies.

N CT´s Key Account Management orchestratesthe manifold communication processes towardsthe Groups.

CT-Inhalte

Key Account Management

(KAM)

StrategicMarketing


CT-Inhalte


(KAM)

StrategicMarketing


Optimization of the R&D Program of Corporate Technology

N Strategic marketing bundles informations on markets, trends, technologies, competition and analyses them in a comprehensive way. The results of this retropolative strategic visioning process are fed into the mid- and long range CT strategy

CT-Inhalte


(KAM)

StrategicMarketing


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Core Technologies: Sensors and Actuators

Strategic Planning of Innovations & Technologies

"Extrapolation“ viaRoadmaps

ProductsTechnologiesCustomer Requirements

Short-term Medium-term Long-term

Horizon of time(varies significantly in the different business segments)

Today

Today‘sBusinessToday‘sBusiness

"Retropolation" outof Scenarios

New MarketsNew CustomerRequirementsNew TechnologiesNew Businesses

Factors ofInfluence

Individual

Society

Politics

Economy

Environment

Technology

Customers

Competition

StrategicVisioning Scenarios for the

Business Segments

MedicalMedical

TransportationTransportation

PowerPower

Automation andControl

Automation andControl

Information andCommunicationsInformation andCommunications

LightingLighting

The combination of extropolation and retropolation leads to theB

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: Detailed Description of AllRelevant Trends of Our Business Segments

C Socio-economic trendssocietylife of work

C Market trendssize / growthstructuregeographical

C Customer / business trendsvalue chains / networkscompany structureprocesses

C Technological trendsstrategic importancemultiple impactdisruptive

Transportation

Power

Information & Communications

Medical

Automation & Control

Lighting

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Goal:Create values

for thecompany

Technology focus• high priority of

central R&D• wide range of topics• minor budgetary

constraints• little controlling

Market focus• the market as a

source of topics• selected

range of topics• close connection

of centralized anddecentralized R&D

• cost controlling

Process focus• feedback

between R&D and the market

• concentration oncore competencies

• internationalization• process-oriented

innovationsmanagement

• strategiccontrolling

Customer focus• customer is in the

center of interest• new businesses

as goal of R&D• flexible, interdisciplinary

task forces• cooperation and

strategic partnerships• knowledge management• technology marketing

as an independent business

Value

Time

Industry Research in Transition:Increased Value Through Broadening the Focus

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”We can no longer confine ourselves only to the progress achievable in the area of our own professional specialization. We have to build connections between the different branches of technical life and we have to exploit the technical and economic advantages which can be derived from interlacing and mutual stimulation of these branches.”

Carl Friedrich von Siemens , 1920

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Open Innovation*)V Valuable ideas are coming from inside or outside the companies.

They can go to market also from inside and outside the companies.

V Reasons for paradigm changes towards Open Innovation:N Knowledge is becoming obsolete at an ever-growing pace

N Innovation in the fastest growing markets is more directly rootedin science

N Increased mobility of work force

N New quality of university research (increased need for networking)

N Increasing importance of venture capital

N Great ideas arise from everywhere in the world

*) Henry Chesbrough, 2003

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Manifold Cooperation with the International Public Research

Training/Education Experience-sharing

Research and development policy

Research and development

Symposia /workshops

Symposia /workshops

RecruitingRecruiting

Equipment, training material, partnerships with

schools

Equipment, training material, partnerships with

schools

Structure of the research landscape, overall legal situation

Structure of the research landscape, overall legal situation

Future markets, labor situation,

knowledge society

Future markets, labor situation,

knowledge society

Bilateral research projects,

contract research

Bilateral research projects,

contract researchPublicly funded

projectsPublicly funded

projects

“Siemens sponsors”“Siemens sponsors”Requirements profiles forengineers and scientists,

internationalization, curricula, contributions to the work of associations

Requirements profiles forengineers and scientists,

internationalization, curricula, contributions to the work of associations

Awards,scholarshipAwards,

scholarshipTemporary student employees, interns,

students working on theses, doctoral candidates,

appointments to chairs and other teaching assignments

Temporary student employees, interns,

students working on theses, doctoral candidates,

appointments to chairs and other teaching assignments

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Outline






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Common Features of Successful Innovators

N Growth orientation – sustainable growth throughinnovations

N Strategy orientation – long-term future perspectivesthrough innovation strategies

N Customer orientation – focus on solution of customer-specific problems

N Competence orientation – integration of competencesof internal and external partners in networks

N Technology orientation – successful application of results from research

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Innovation Supporting Company Culture

Classical culture Modern culture

Founding grounds of the company Structure Culture

Basis of working together Coherence on contract basis Coherence through inte-gration of common sense

Alignment of attitudes Code of conduct Shared vision

Process organization “Enterprise as clockwork“ “Enterprise as network“

Company organization structure Hierarchical Heterarchical (with partial hierarchies)

Leadership concept Organisation of careers Management of competencies

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Seven Typical Errors in theInnovation Process …and How to Avoid Them

Censure by “best practise“

Fixation through traditional productsand customers

Short-sighted profit orientation

Small tolerance for failures

Little exploration of ideas

Innovation as a structurally assignedtask

Innovation as a matter of chance

Individual problem solvingcompetence as a primary asset

Exploration of potentials frompartners and competences

Long term strategic perspective

Innovation friendly corporate culture

Creative spaces a basis forsuccessful innovations

Cross-discipline collaboration

A continuum of structuredinnovation processes

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“Not the strongest species survive,nor the most intelligent ones,

but only those who

can react fast enough to changes!“

Charles Darwin

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