A Case Study of Innovation Ecosystem Design: Siemens

Introduction

西门子 is a global technology leader and a pioneer of sustainable solutions for the future. The company has a strong focus on innovation and collaboration, which are key to success in a complex and dynamic world. In 2018, Siemens achieved a remarkable jump in its innovation ranking, from 16th to 7th place, according to the 波士顿谘询公司 . This was due to the successful execution of its strategy, capturing market share and achieving high value growth. One of the main drivers of this success was the establishment of a strategic research and innovation scheme called the Siemens Research and Innovation Ecosystem program. In this article, we will briefly explore how Siemens did it.

Problem Statement

Siemens operates in a highly competitive and rapidly changing market environment, where innovation is essential for maintaining its technological leadership and competitive advantage. However, innovation is also becoming more complex and challenging, as it requires multidisciplinary and cross-sectoral collaboration, access to diverse and cutting-edge technologies, and alignment with customer needs and expectations. Moreover, innovation is also influenced by various external factors, such as geopolitical tensions, economic fluctuations, social trends, environmental issues, and regulatory frameworks.

To address these challenges, Siemens needed to design and implement an effective and efficient innovation ecosystem that would enable it to leverage its internal and external resources, capabilities, and networks, and to co-create innovative solutions that would meet the current and future needs of its customers and stakeholders. The innovation ecosystem also needed to be scalable, adaptable, and resilient, to cope with the dynamic and uncertain market conditions.

Solution Approach

Siemens adopted a holistic and systemic approach to design and implement its innovation ecosystem, based on the following principles:

• Customer-centricity: Siemens focused on understanding the needs, preferences, and expectations of its customers, both internal and external, and co-created solutions that would deliver value and satisfaction to them. Siemens also engaged its customers in the innovation process, by soliciting their feedback and validation of the solutions.
• Collaboration: Siemens fostered collaboration among its internal and external innovation partners, such as universities, research institutes, startups, and incubators, by providing them with various benefits and opportunities, such as access to technology, funding, support, networking, mentorship, visibility, and recognition. Siemens also facilitated collaboration among its partners by using the Siemens Innovation Ecosystem platform, which connected them online and enabled them to participate in various innovation challenges, events, and programs.
• Co-creation: Siemens co-created digital solutions with its partners, using the Siemens Xcelerator, an open digital business platform that enabled them to use Siemens' technology portfolio and expertise. Siemens also co-created solutions with its partners by conducting joint research and development projects, participating in publicly funded research consortia and initiatives, and exploring other individual collaboration formats.
• Culture: Siemens cultivated a culture of innovation and entrepreneurship among its employees and partners. Siemens encouraged its employees to experiment and learn from failures, supported startups with mentorship and coaching, and engaged customers with co-creation and feedback. Siemens also inspired and motivated its employees and partners by hosting various innovation challenges, events, and programs that solved real-world problems and created positive impact.

The RIE Program

The Siemens Research and Innovation Ecosystem (RIE) program is a global initiative that aims to foster collaboration and co-creation between Siemens and its external innovation partners, such as universities, research institutes, startups, and incubators. The program covers 16 Research and Innovation Ecosystems in different regions and domains, such as energy, mobility, healthcare, industry, and digitalization. The program offers various benefits and opportunities for its partners, such as:

• ?Access to Siemens' technology portfolio and expertise
• ?Joint research and development projects
• ?Funding and support for innovation challenges and programs
• ?Networking and matchmaking events
• ?Mentorship and coaching
• ?Visibility and recognition

The program also leverages the Siemens Innovation Ecosystem platform (https://ecosystem.siemens.com/), which is an online platform that connects Siemens' internal and external innovation partners and enables them to participate in various innovation challenges, events, and programs. The platform also provides access to the Siemens Xcelerator, an open digital business platform that enables customers and partners to co-create digital solutions using Siemens' technology portfolio and expertise.

The program invests in research and development, especially in digital technologies such as artificial intelligence, cloud computing, internet of things, and additive manufacturing. The program collaborates with leading universities, research institutes, startups, and incubators around the world to conduct excellent research and develop innovative solutions. The program also participates in publicly funded research consortia and initiatives that provide additional funding and support for its research and innovation activities.

The program fosters a culture of innovation and entrepreneurship among its employees and partners. The program encourages employees to experiment and learn from failures, supports startups with mentorship and coaching, and engages customers with co-creation and feedback.

The program also hosts various innovation challenges, events, and programs that inspire and motivate innovators to solve real-world problems and create positive impact. Also, it works with various customers from different industries and sectors to co-create digital solutions that enhance their performance, efficiency, and sustainability. Some of the examples of the external customers that the program works with are:

• ? Deutsche Bahn : The program co-created a digital solution for predictive maintenance of rail infrastructure, such as tracks, switches, and signals, using artificial intelligence and cloud computing. The solution enables Deutsche Bahn to monitor the condition of its assets in real time and optimize its maintenance schedules and costs.
• Volkswagen : The program co-created a digital solution for optimizing the production of electric vehicles, using the internet of things and edge computing. The solution enables Volkswagen to connect its machines and sensors in its factories and collect and analyze data at the edge, improving its productivity, quality, and flexibility.
• Airbus : The program co-created a digital solution for additive manufacturing of aerospace components, using cloud computing and digital twin. The solution enables Airbus to design, simulate, and produce complex metal parts using 3D printing, reducing its material waste, weight, and emissions.
• E.ON : The program co-created a digital solution for smart grid management, using artificial intelligence and blockchain. The solution enables E.ON to balance the supply and demand of electricity from renewable sources, such as wind and solar, and facilitate peer-to-peer energy trading among prosumers.

The Siemens Research and Innovation Ecosystem program is funded by the Siemens Technology unit, which is part of the Siemens AG. The Siemens Technology unit has an annual budget of about 5.4 billion euros for research and development, which is about 8.17% of Siemens’ total revenue in fiscal 2022. The unit also receives additional funding from external sources, such as public grants or contracts.

The program is part of the Siemens Technology unit, which is headed by Dr. Roland Busch , who is also the President and CEO of Siemens AG and the head of innovation at Siemens. He oversees the company's innovation strategy and portfolio, as well as the Siemens Innovation Ecosystem platform. The Siemens Research and Innovation Ecosystem program is not a separate business entity, but rather a strategic initiative of the Siemens Technology unit, which is part of Siemens AG. The program does not directly earn money, but rather aims to create value and drive growth for Siemens and its partners by fostering collaboration and co-creation of digital solutions.

Absorbing Technology

To support its innovation efforts, Siemens made substantial investments in research and development, with a particular emphasis on digital technologies and invested heavily in key technology areas such as artificial intelligence, cloud computing, internet of things, and additive manufacturing. 2018, Siemens spent €5.6 billion on R&D, an increase of 6% compared to 2017. This amounted to 6.1% of its revenue, well above the industry average of 4.5%2. Siemens also increased its R&D headcount by 9% to 40,500 employees.

In addition to technological advancements, Siemens introduced several notable products and services during this period. For instance, Siemens MindSphere , an open cloud-based operating system for the industrial internet of things, offered customers a powerful platform for data analytics and optimization. 西门子医疗 , a spin-off of its healthcare business, focuses on delivering innovative medical solutions. Furthermore, Siemens Mobility emerged as a provider of comprehensive mobility solutions for rail and road transport.

Siemens also acquired several digital companies such as Mendix , a leader in low-code application development platforms; Electrocon International Inc , a provider of software solutions for power system protection and control; and COMSA Computer und Software GmbH , a specialist in electrical systems design and wire harness engineering.

Other examples of these acquisitions include 明导国际 , a leader in software solutions for electronic design automation; Dresser-Rand Group Inc. (Now Dresser-Rand - A Siemens Business ), a supplier of rotating equipment solutions for the oil and gas industry; CD-adapco Group, Inc. , a provider of computational fluid dynamics software solutions for engineering simulation; and Varian Medical Systems , a leader in radiation oncology treatments and software.

Siemens also made significant moves to solidify its position in the renewable energy sector. The acquisition of Gamesa (Now Siemens Gamesa ), a renowned wind turbine manufacturer, further bolstered Siemens' capabilities in the renewable energy market. Additionally, the formation of a joint venture with 阿尔斯通运输 , a prominent French rail transport company, expanded Siemens' footprint in the rail industry.

These strategic investments enabled Siemens to expand its capabilities, develop cutting-edge solutions, and stay ahead of market trends. By embracing emerging technologies, Siemens positioned itself as a leader in digital transformation and further strengthened its position in the industry.

Reorganizing

One of the pivotal steps taken by Siemens was a comprehensive reorganization of its operations. The company transformed its structure by dividing it into three Operating Companies and three Strategic Companies. This restructuring ensured a clear focus and accountability for each entity, enabling Siemens to better address specific markets and cater to the needs of its diverse customer base. The reorganization enhanced operational efficiency and responsiveness, fostering a more agile and customer-centric approach.

Also, the global setup for the Power and Gas Division, the Power Generation Services Division, and the Process Industries and Drives Division was consolidated, which involved the reduction of about 6,900 jobs worldwide, half of them in Germany. The aim of the consolidation was to increase capacity utilization at production facilities, drive efficiency, and enhance expertise by bundling resources.

Siemens actively fostered a culture of innovation and entrepreneurship within the organization. The company established innovation hubs, providing a dedicated space for collaboration, experimentation, and the exchange of ideas. Siemens also supported start-ups, promoting an ecosystem that nurtured and accelerated innovation. Encouraging employees to experiment and learn from failures further cultivated a mindset of continuous improvement and innovation.

Siemens launched several initiatives to encourage its employees to generate and implement innovative ideas, such as the Siemens Innovation AG, which provides seed funding and mentoring for internal startups; the Siemens Entrepreneurship Program, which offers training and coaching for potential entrepreneurs; and the Siemens Intrapreneurship Award, which recognizes outstanding intrapreneurial achievements.

Results and Impact

The Siemens Research and Innovation Ecosystem program has achieved significant results and impact for Siemens and its partners, such as:

• Innovation performance: Siemens improved its innovation performance, as evidenced by its jump in the BCG innovation ranking from 16th to 7th place in 2018. In 2018, Siemens filed more than 3,900 patents, an increase of 9% compared to 2017; and launched more than 40 new products and services in various fields such as mobility, energy, healthcare, and industrial automation.
• Increase its revenue and profit: In 2018, Siemens reported a revenue of €83 billion, an increase of 2% compared to 2017; and a net income of €6.1 billion, an increase of 8% compared to 2017.
• Improve its market position: In 2018, Siemens ranked first in the global market for power generation equipment, with a market share of 21%.
• Customer satisfaction: Siemens increased its customer satisfaction, as evidenced by the positive feedback and validation of the co-created solutions. Siemens achieved a high customer satisfaction score of 4.3 out of 5 in its annual customer survey. Siemens also built trust and loyalty among its customers by delivering value and satisfaction to them and strengthened its customer relationships by creating new business opportunities and customer segments.
• Partner engagement: Siemens enhanced its partner engagement, as evidenced by the growing number and diversity of its external innovation partners, as well as their participation in various innovation challenges, events, and programs. Siemens also attracted and retained talent among its partners by providing them with benefits and opportunities, such as access to technology, funding, support, networking, mentorship, visibility, and recognition.
• Social impact: Siemens created positive social impact, as evidenced by the alignment of its co-created solutions with the United Nations Sustainable Development Goals (SDGs), such as reducing greenhouse gas emissions, improving energy efficiency, enhancing mobility access, promoting health care quality, and advancing digital inclusion.

Lessons Learned

Some of the lessons learned from the Siemens Research and Innovation Ecosystem program are:

• ?Innovation ecosystems are complex and dynamic systems that require a holistic and systemic approach to design and implement them effectively and efficiently.
• ?Innovation ecosystems need to be customer-centric, collaborative, co-creative, and cultural, to create value and drive growth for the ecosystem members and stakeholders.
• ?Innovation ecosystems need to be scalable, adaptable, and resilient, to cope with the changing and uncertain market conditions and customer needs.
• ?Innovation ecosystems need to leverage digital technologies and platforms, such as cloud computing, internet of things, and artificial intelligence, to connect and empower ecosystem members and enable co-creation of digital solutions.
• Building strong partnerships with external innovation partners, such as universities, research institutes, startups, and incubators, is crucial for accessing diverse expertise, resources, and networks.
• Engaging customers throughout the innovation process, from ideation to validation, is essential for ensuring customer satisfaction and creating solutions that address real-world needs.
• Creating a supportive culture of innovation and entrepreneurship within the ecosystem encourages experimentation, learning from failures, and fosters a sense of ownership and commitment among ecosystem members.
• Continuous evaluation and improvement of the ecosystem's performance and impact is necessary to identify areas of strength and areas that require adjustment or enhancement.
• Absorbing cutting-edge technology through research and development, acquisition or partnership not only is a key driver for delivering new products and services, but also a key enabler for innovation ecosystem.
• Enhancing innovation performance without reorganizing the company structure and culture can be challenging as it requires a holistic approach that aligns various elements within the organization.

Final words

The Siemens Research and Innovation Ecosystem program is a strategic initiative that has enabled Siemens to build a thriving innovation ecosystem by leveraging its internal and external resources, capabilities, and networks. Through customer-centricity, collaboration, co-creation, and a strong culture of innovation, Siemens has achieved remarkable results in terms of innovation performance, customer satisfaction, partner engagement, and social impact.

The program's success is a testament to the effectiveness of a holistic and systemic approach to innovation ecosystem design. By embracing digital technologies and platforms, Siemens has created a dynamic and connected ecosystem that fosters collaboration and co-creation, resulting in the development of innovative solutions that address the evolving needs of customers and contribute to a more sustainable future.

As Siemens continues to evolve and adapt to the ever-changing market landscape, the lessons learned from the Research and Innovation Ecosystem program will guide the company in designing and implementing future innovation initiatives. By staying committed to its core principles of customer-centricity, collaboration, and co-creation, Siemens will remain at the forefront of technological innovation and continue to drive growth and value for its ecosystem members and stakeholders.

Laura Engelhardt Dr. Annika Hauptvogel Vanessa Westphal Sonja Zillner

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