Siemens Nixdorf Moves to Knowledge Culture

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Corporate Strategy

Siemens Nixdorf Moves to Knowledge Culture

German computer maker Siemens Nixdorf Informationssysteme AG (SNI) has embarked on one of Europe's most sweeping overhauls of a corporate culture. The goal: To transform a bureaucratic, 9-to-5 company into an entrepreneurial, knowledge-based organization that can match the performance of rivals IBM Corp., Compaq Computer Corp. and Hewlett-Packard Co.

The catalyst of change is chief executive Gerhard Schulmeyer, who was recruited from the U.S. operations of Swedish-Swiss engineering concern ABB Asea Brown Boveri. When Schulmeyer took over in 1994, SNI was deeply in the red and rapidly losing market share. Gross profit margins-a standard measure of efficiency-were running 30 percent below the industry average. Today, although the overhaul is still in progress, the company is turning a profit and showing a feisty spirit.

Schulmeyer has turned SNI into a laboratory for testing innovative management tools. Among his many experiments: flattening rigid management hierarchies, installing younger top managers and launching several programs aimed at installing more entrepreneurship among the company's 35,000 workforce.

Schulmeyer, who likes electronic mail because "it doesn't have any hierarchy" and lets employees gripe to him or make suggestions directly, says SNI's culture must change because the industry has changed. Today's hierarchy-driven, routine-based industrial age, he claims, is transforming into a complex information society. Labor, capital and real estate are no longer the key factors that determine success for a technology-driven companyknowledge is. Thus, creating a knowledge-based structure with questioning workers is crucial to staying ahead of competition in the fast-paced computer industry. And that requires internal networking and a new breed of employee-from the manager to the systems developer right down to the office clerk.

Schulmeyer has demanded that all staff have e-mail and that the various in-house reporting systems be unified. He believes that a company can only make extreme changes if these "are supported by changes in communication."

250 Entrepreneurial Centers

To help cultivate the new breed of employee, Schulmeyer has implemented a decentralized structure with 250 entrepreneurial profit centers and introduced a company-wide cultural change program. The aim is to create a new class of entrepreneurs within the business units and establish a networked "learning" organization equipped to succeed in a knowledge-based industry.

In Schulmeyer's opinion, a company within a company is more responsive and flexible, and employees who know their roles in the core process and how to make concrete contributions to the value-added chain are more motivated. In short, the new structure is designed to bring the entire organization together as a team and create a spirit of consensus among equal partners.

But staff in SNI's product development center are particularly affected by the new structure. "Here there is a huge focus on achieving the total quality organization, developing faster response times and establishing core competencies," says cultural change director Timothy Bookas.

SNI, which doesn't have its own research department but relies instead on R&D support from Siemens AG, is indirectly benefitting from an initiative launched a few years ago by its parent company, notes Bookas. …