Siemens Case Study

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EVALUATING THE CHANGE AGENT PROGRAM AT SIEMENS NIXDORF (A)

Siemens Nixdorf Informationssysteme (SNI) was the largest European-owned computer manufacturer and information technology vender in 1994. The company was created by 1990 merger between Nixdorf Computer, an entrepreneurial minicomputer firm and the mainframe computer division of Siemens AG, the German electronics giant. The company offered a broad range of computer product, from personal computer and mainframes to software and support services. In 1994, the company posted $8 billion in revenues and employed 39,000 employees worldwide. Despite its size and a strong market presence in Europe SNI has not posted a profitable quarter since merger. The company lost over $350 million in fiscal 1994. Over 65% of its products were sold in the Germany, and the company has a weak base in the growing Asian and North American Markets. While the organization has a strong technological focus, SNI was slow to respond to market changes requiring more customer responsiveness and market shifts away from large mainframe systems. In Addition, SNI’s efforts to trim high labor costs were hampered by strong union pressure and strict German layoff regulations. Industry analyst observed that the company was constrained by rigid corporate culture established during the merger. The organizational structure was considered too bureaucratic in its approach to decision making for rapidly evolving market.

In mid 1994, in the search for profitability a decision was made by the Chairman of Siemens AG (100% Shareholder of SNI) to bring in the new CEO for Siemens Nixdorf. Gerhard Schulmeyer, President and CEO of the American Division Asea Brown Boveri (ABB), a Swedish-Swiss engineering company, was chosen. Schulmeyer wanted to SNI to become more customers driven and responsive to the market, and he was convinced that the major adjustment necessary to recreate SNI could only occur alongside a radical change in the corporate culture. He wanted to create an SNI culture that enhanced entrepreneurial thinking and team building. He aimed to replace top-down procedures with innovative leadership that rewarded decision making and risk taking.

To accomplish the goals, Schulmeyer initiated a companywide culture change program that had three major objectives:

1. To change the behavior of the managers and employees with a view to achieve dramatic improvements in performance and results.

2. To change work systems to foster a culture of operational excellence.

3. To change processes to emphasize the customer and to ensure the primary of the customer service.

He believed that SNI’s radical change requirements could only be met holistically, addressing structure, systems, behaviors, and strategic philosophy together, underpinned by a continuous learning process for both individuals and the organization itself. A road map was created and published, and execution as set in motion in October 1994. Of particular importance in creating a foundation for change at SNI were the behavioral and learning components of the road map. On the behavioral side, a set of mutually reinforcing initiatives was introduced to encourage new ways of acting and support the development of new capabilities. These initiatives included the Culture Change and Friday Forum Programs, fine Tuning of the organization’s matrix structure, a reengineering and profit improvements program, the introduction of a new management information System (MIS), and corporate strategy initiatives. On the learning side, the organization committed to a Change Agent Program and Management Development Program and supported the learning objectives of the change agent program.

THE CULTURE CHANGE PROGRAM

The process started with scheduling of four major changes events in Hanover, Germany. The first, Hanover I, held in December 1994, was a gathering of selected SNI employees with theme of “Giving Employees a Voice Defining the...
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