CORPORATE TECHNOLOGY | Interview
And since the mid-1990s we’ve been focusing more closely on cus- tomers. For every new project, we ask ourselves what benefits it will bring — not only for today’s custo- mers but also for those of tomor- row and beyond.
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 in- novation strategy is clearly that of a trendsetter.
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 ex- tent 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 re- maining 80 million euros a year. We invest these funds in areas that we regard as crucial to the future
In which areas is Siemens setting trends? Weyrich: If possible, we want to be a trendsetter in all of our busi- nesses. Of course, that’s an ambi- tious 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.
Over 2,400 employees work for Corporate Technology (CT) worldwide. CT’s principal locations are Munich, Erlangen and Berlin in Germany; Princeton and Berkeley in the U.S.; Roke Manor in the UK; Beijing and Shanghai in China; Bangalore in India; Tokyo in Japan; and Moscow and St. Petersburg in Russia.
Siemens’ R&D: Tuned in to Today’s Megatrends
Prof. Claus Weyrich (61) is a member of the Manag- ing Board of Siemens AG and is head of Siemens Corporate Technology (CT). Siemens has conducted re- search on a corporate level for one hundred years.
Bell Labs have Horst Störmer, a Nobel Prize winner for Physics, IBM has Gerd Binnig … Weyrich: These companies pur- sue 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 guaran- tee that they’ll be able to advance and commercially exploit top scientific research. Although Bell Laboratories invented the transis- tor, others eventually led the way forward in microelectronics.
Didn’t research at Siemens use to have more of a “pure” orien- tation than is the case today? Weyrich: Yes, it did! But you also have to take history into account. There have been four major periods
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 develop- ment in our fields of work is in- creasingly 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.
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 cons- traints. By the mid-1970s, it be- came 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 glo- balization, it became crucial to convert research results into pro- ducts faster and more effectively.
of Siemens. This budgetary model forces us to concentrate on strate- gically 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 num- ber one in all the fields of electrical engineering. However, we cer- tainly intend to continue setting business and technological trends.
How do you find out what cus- tomers 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 na- ture what the experts call “fuzzy.” However, we have a range of me- thods to help us here. These in- clude extrapolating forward on the basis of today’s product lines and technologies, but also extra- polating 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 “Horizons 2020” sce- narios into account. These sketch
CO R P O R AT E
out future developments of so- ciety 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 main- taining technological leadership. Above all, it means exploiting tech-
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 sus- tainability in terms of the environ- ment, business and society — cor- porate responsibility — on the one hand, and growth based on profi- table innovation on the other.
INNOVATION: LEVER FOR PRODUCTIVITY AND GROWTH
i it Product v y
“New” products < five years
Realigning the product portfolio
Reducing product complexity
Design to cost
“New” products < five years
A need to innovate
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. Re- search 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 fast- growing markets and dynamic innovation processes. Besides, Siemens needs more than 10,000 highly qualified young people a year. We therefore need to deve- lop networks with foreign univer- sities. Finally, it’s a matter of corporate citizenship. When a company sells products in a coun- try, 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.
nological synergies, developing platform strategies, having full control over your R&D processes, being globally present and protect- ing your know-how with patents. Because of the fierce competition between the world’s top compa- nies, 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 an- other 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
Target (e.g. after five years)
Twenty years ago, R&D expen- diture was eight percent of sales; today, it’s only 6.7 per- cent. Is that enough to deal with future challenges? Weyrich: The comparison is mis- leading because the semiconduc- tor business — today it’s called Infineon — is no longer part of Siemens. And that’s a very R&D- intensive area. Take that into ac- count, and you’ll see that the pro- portion of sales spent on R&D has remained fairly stable. It’s also worth noting that Siemens has increased sales by more than 60 percent over the last decade. Na- turally, that applies to R&D expen- diture as well. We’ve also become more effective and more efficient.
General Electric recently opened a research center near Munich. Does that worry you? Weyrich: We’ve had a major rese- arch 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 busi- ness is competition.
Venture a prediction. What will Siemens researchers be working on in 20 years? Weyrich: We are all aware of the global challenges and the mega- trends of the future. The world’s population is growing and getting
older on average, especially in the industrial nations. Resources such as water will become more limi- ted, traffic will increase, and the number of mega-cities will grow. We need innovative and interdisci- plinary solutions if we are to meet these challenges. Electrical engi- neering will definitely have a key role to play here. And, naturally, Siemens is involved in many of the areas involved. Innovative materials and material systems are set to play a particularly important role over the next 20 years. Here I’m referring to fields such as nanotechnology and biochips, lightweight engineering, and in- telligent sensors and actuators. Modern information and commu- nications technologies will also have a major impact on all sectors of industry and all areas of life. I’m thinking here of intuitive human- computer cooperation, and auto- matic information processing as ways of dealing with data over- load. But none of us can predict with any certainty what will really revolutionize the next 20 years. The unexpected can always hap- pen. And that’s what makes re- search and development such a fascinating and exciting field, as far as I’m concerned.
Interview by Jeanne Rubner
Pictures of the Future | Fall 2005