Category winner: Open Innovation at Siemens

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This case won the Production and Operations Management category at The Case Centre Awards and Competitions 2015.
 
The case

Who – the protagonists

Dr Norbert Luetke-Entrup, recently promoted to lead the Technology and Innovation Management group within Siemens’ Corporate Technology (CT) unit, and Dr Thomas Lackner, in charge of CT’s Open Innovation and Scouting initiative.

What

electric meterSiemens operates across the globe. Its activities include power generation, transmission and distribution, smart grid solutions and the efficient application of electrical energy. It also works in the fields of medical imaging and in-vitro diagnostics. The company has 343,000 employees worldwide, and orders worth €78.4 billion in 2014.

Why

The essential challenge facing the two protagonists related to the future of the open innovation programme at Siemens. The company had introduced open innovation to create new product ideas, resolve important technology gaps, and overcome day-to-day scientific and engineering problems faced by staff. The open innovation programme included crowdsourcing contests, knowledge sharing networks, and competitions. During its first five years, 35,000 employees from more than 80 countries took part, and 2,700 external problem solvers worked on 20 projects.

When

Siemens flagsSiemens was founded in Germany in 1847 by Werner von Siemens and Johann Georg Halske as a telegraph company. It continued to grow throughout the twentieth century via alliances, mergers, acquisitions and the expansion of its core business. Its headquarters are in Munich, Germany. The open innovation project was launched in 2008.

Where

The company operates in 289 major production and manufacturing plants worldwide. It also has offices, warehouses, research and development facilities and sales offices in almost every country in the world.

Key quote

‘I have had a front row view of these projects and I still wonder if open innovation is a distraction for our company if we do not commit to scaling it... If we shut everything down, would anyone really notice?’ – Dr Thomas Lackner

What next?

Dr Norbert Luetke-Entrup knew that research and development was a process fraught with failure and dead ends, and that the path from initial idea to commercial product was a long one. In addition, financial realities meant that the company had to make tradeoffs while ensuring staff remained focused. Should open innovation continue to be championed?

 
The protagonists

The insiders’ view: Dr Norbert Luetke-Entrup and Dr Thomas Lackner

Norbert, Head of Technology & Innovation Management, and Thomas, Head of Open Innovation & Scouting, at Siemens Corporate Technology, explain the benefits of taking part in the case.

Innovative employer

The study provided an external view on our open innovation programme. The distribution to many universities and the elaboration of the case by students will make Siemens more attractive as an innovative employer.

New ideas

We saw the case being taught at TU Munich’s Case Study Seminar ‘Technology and Innovation Management’; the students discussed the different approaches to open innovation at Siemens and decided which one they thought to be the most useful one (TechnoWeb). The excellent discussion with Karim Lakhani and Johann Füller triggered new ideas on future steps to be taken by Siemens and how to scale open innovation within the company.

External challenge

One should not underestimate the effort of providing information to the case writer. But, if you have a sound case, and if the content is not confidential, then it’s worthwhile to get an external challenge by an expert on this topic.

e norbert.luetke-entrup@siemens.com
e thomas.lackner@siemens.com

The authors

Karim R. Lakhani, Johann Füller, Katja Hutter and Stephanie Healy Pokrywa

The authors explain the origins of open innovation and why it should be the ‘new normal’ for many businesses.

Prominent topic

The topic of open innovation is very prominent for almost every company. Companies and innovation managers recognise that not only do they have to innovate, but they also have to rethink the way they innovate. They have to open up their former rather closed innovation processes. Many companies face similar challenges to Siemens in establishing open innovation as a sustainable approach and the ‘new normal’ of innovation. Companies, managers, professors and students can learn a lot from the shared examples and experiences of Siemens. In addition, open innovation is also a top priority for research and resonates within the research and teaching community.

Origins

Originally, the term ‘open innovation’ was coined by Henry Chesbrough, a professor at Berkley, in his book, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business Review Press, 2003. Within Siemens, Thomas Lackner, the protagonist in our case, became aware of the approach and convinced senior management that this might be a promising new way to innovate in the future. Siemens started the open innovation programme to systematically explore the potential of open innovation.

Applying the principles

In general, even small and medium sized companies can learn a lot from Siemens about the tools and methods as well as the required skills and capabilities. However, as SMEs are differently managed and structured the ways in which they implement open innovation may definitely differ.

Writing a successful case

It is good to have in-depth knowledge about the topic and some knowledge about the company you want to write the case about. This may help you to establish a good relationship with the company and its managers. This enables you to carry out intensive research and collaborate with the company to get deep and rich insights. Of course, it is important to remain neutral. Also, it’s good to have no easy solution to a real challenge that a company is facing.

Open and honest

It was a really good experience to write the case. We enjoyed the discussion with Siemens a lot and want to thank the Siemens team, especially Thomas Lackner, for their time as well as the open and honest discussions.

About the authors

Karim R. Lakhani is an Associate Professor of Business Administration at Harvard Business School.
e klakhani@hbs.edu
tw @klakhani

Johann Füller is Professor for Innovation and Entrepreneurship at the University of Innsbruck
e johann.fueller@uibk.ac.at
tw @joe_hanson

Katja Hutter is a Visiting Scholar at the Institute for Quantitative Social Sciences (IQSS) at Harvard University.
e khutter@iq.harvard.edu

Stephanie Healy Pokrywa is currently a Recruiting Director at the Boston Consulting Group
e pokrywa.stephanie@bcg.com

 
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Open Innovation at Siemens
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