Siemens Business Activity and Knowledge Management

Introduction

Siemens is a multinational corporation based in Germany. It specializes in electronics and electrical engineering divided into seven groups: transportation, power, information and communications, medical, automation and control, financing and real estate, and lighting (Heier et al. 92). Siemens has a market value of more than $65 million and employs more than 400,000 people all over the globe.

With a shift in the information and communication system and the growing priority of knowledge in leading business, the company was forced to launch a series of knowledge management initiatives so that it could compete with other multinational corporations in the field of electronics and keep up with the times with knowledge-sharing internal system, ShareNet, and knowledge-sharing business application, References+, among them. Moreover, Siemens introduced new corporate divisions carrying out the functions of managing knowledge within the company. They are Knowledge Management Office, Knowledge Management Counsel, and Knowledge Management Board. They comprise of top managers whose primary function is developing, carrying out, and controlling the implementation of the knowledge management initiatives in the activities of the company.

Because Siemens is a multinational corporation and it was successful at implementing knowledge management to improve the performance, its experience has become a subject to many case studies. For example, Heier et al. (2005) describe the evolution of the ShareNet from concept to development and international implementation and operation. Furthermore, Ciabuschi (2005) describes the evolution and expansion of ShareNet that is a “specific Intranet-based knowledge-sharing platform” (p. 87). Gibbert et al. (2011) focus their attention on the lessons that Siemens learned while implementing the knowledge management system and launching Internet-based knowledge repositories (p. 63). The authors concentrate on two traps that they named a customer trap and a personalization/standardization trap.

As Siemens went further in developing knowledge repositories and launched a knowledge-sharing business application named References+, Stocker, and Müller (2013) decided to explore it in their case study. They focus on the interrelation between the Web activities as the element of knowledge management implementation and the success in the business activities of the company on a multinational. So, all the authors of the case studies mentioned above concur in the belief that knowledge management is of significant importance if the company is interested in further successful development.

Problem Identification and Analysis

Every company is a priori interested in the operational, organizational, and financial success no matter what are the scales of its business activities. As the information and communications environment of business activities change and grows the priority of knowledge and effective communication in conducting business, every company faces the need to change the system of management to maintain the needed level of competitiveness, keep up with the times and conform to operating conditions.

As the global information and communications environment changes grow the necessity to implement knowledge management initiatives and change the whole management system. As companies especially those engaged in the field of electronics and electronic engineering become knowledge-based emerges the need for effective communication and sharing knowledge and skills among the employees. This need is extremely acute in the case of companies operating on a multinational scale and employing people from different corners of the world with a diverse background, education, and skills. Siemens being a multinational corporation is not an exception to an overall tendency.

In the case of the chosen corporation, the problem of the lack of efficient communication and sharing knowledge among the employees may result in giving up its positions in the global electronics market thus entailing financial and economic losses measured in millions of dollars. That is why a powerful system of knowledge management is of significant importance. The conceptual and practical cause for the problem is that knowledge as a resource for successful economic performance is relatively new, so the companies need time to change their management systems that would correspond to the new conditions in the business environment. That said, those that managed to implement knowledge management first, are more likely to be more successful and powerful on the market.

So, the primary problem that Siemens faced is the need to reorganize the whole management system and implement an effective system of communication and knowledge-sharing within the company.

Major Problems

With the development of informational technologies started a new era in conducting business. That said, every company was affected by the creation and further evolution of computers ant it as well caused the growth of the priority of knowledge as an important resource for carrying out economic activities. As mentioned by Ciabuschi (2005), knowledge in the case of multinational corporations is created by their subsidiaries (p. 82). Bearing in mind that the companies engaged in the electronics market evolved to become knowledge-based, knowledge has become an extremely valuable resource that adds to the company’s competitive advantage. That means that such shifts in the conditions of conducting business have led to the need for effective communication between the subsidiaries and a universal system for sharing knowledge and skills.

Bearing in mind everything that was mentioned above, the key organizational and operational issue that Siemens met with is the pressure of the competitors that already managed to transform their management systems in response to the shifts in the information and communications environment. Moreover, moving towards a knowledge-based company Siemens faced the challenge of effective knowledge-sharing and communication. Together with that, the company was forced to implement knowledge repositories to deal with the problems described above.

So, in the research, the challenge of the changing information and communications environment, the issue of communication and sharing knowledge and experience among the employers from different places all over the globe and the need to foster the performance capabilities needed to compete with other companies in the field of electronics are addressed.

Identification and Evaluation of Alternative Solutions

Siemens as a multinational corporation specializing in electronics and electronic management was among the companies that were forced to implement knowledge management initiatives so that it could keep afloat and preserve competitive positions. To solve the issue of insufficient communication between the subsidiaries and employees from all over the globe, Siemens decided to launch a system for sharing knowledge. Now known as ShareNet, it is a worldwide knowledge repository. The company believes that “The idea behind ShareNet is that knowledge created somewhere in the world should be made available for global reuse, in order to increase efficiency and to create new business opportunities” (Ciabuschi 2005, p. 83). Initially, it was a system for sharing knowledge among the employees, i.e. that is was strictly internally accessible. But later on, the company decided that it would be more beneficial if the communities and libraries were allowed to add to the knowledge repository and use the information located therein.

Launching ShareNet as a knowledge management initiative played a significant role in the business activities and operational success of Siemens. As it was said above, knowledge is an important competitive advantage, so launching an internal knowledge-sharing system was a cost-effective solution. First of all, it saved time and money because the needed information was always available to the employees that needed it. Second, it helped reduce the costs of the products and at the same time increase their quality. It was also caused by the access to knowledge that was granted to everyone working for the company. Together with that, launching ShareNet transformed Siemens into a global network of skilled workers and added to the expansion of research and development and highly-innovative activities throughout the local subsidiaries (Ciabuschi 2005, p. 90-91).

The effectiveness of the company’s strategy of knowledge management can be explained by the fact that because of using ShareNet, Siemens managed to find out the preferences of their customers based on their cultural backgrounds. It helped the corporation to decide what products should be sold in different markets. ShareNet made it possible for the companies to know the preferences of their customers from different parts of the world and thus develop management and marketing strategies that would help improve the performance and at the same time avoid negative consequences of implementing knowledge management known as standardization/customization and customer traps (Gibbert et al. 2011, p. 68).

Siemens went further in carrying out a knowledge management strategy and launched a business knowledge-sharing application named References+. This Web-based app is that it is a social network for Siemens employees where they can discuss the company’s organizational issues and find the needed information. Its primary advantage as compared to ShareNet is that it is free and employees are not obliged to use it (Stocker & Müller 2013, p. 3). That means that it is used only by those who want to gain and share knowledge.

So, Siemens is an example of the successful implementation of knowledge management initiatives. The company created special corporate divisions and launched two knowledge repository sites, ShareNet and References+. It all helped in solving the primary problems the corporation faced as a result of shifts in the conditions of conducting business such as the communication among the employees from all over the world, sharing knowledge and skills and the need for the overall change in the management system to preserve competitive positions in the electronics market.

So, together with the steps that have been already taken by the company and mentioned above Siemens can also take further actions in developing its repositories. For example, the company may lift the limits that it imposes on the users of ShareNet by making it free for the employees. To my mind, it is of great use to keep it obligatory for everyone to use it as it adds to the skills but keeping it paid is not a very wise decision. I also think that it is good for the company to leave ShareNet strictly for internal use by the employees so that the proprietary information is safe. As of References+, in my opinion, it would be a good solution to motivate its use by more employees but not making it obligatory. For example, those who actively and productively use References+ might be granted a discount for using ShareNet. It also sounds advantageous to make these two repositories available to the employees engaged at every level of business activities so that they may add up to the knowledge and make their company more successful.

References

Ciabuschi, F 2005, ‘On IT systems and knowledge sharing in MNCs: a lesson from Siemens AG’, Knowledge Management Research & Practice, vol. 3, no. 2, pp. 87-96.

Gibbert, M, Probst, G J B & Davenport, T H 2011, ‘Sidestepping implementation traps when implementing knowledge management: lessons learned from Siemens’, Behavour & Information Technology, vol. 30, no. 1, pp. 63-75.

Heier, H, Borgman, H P & Manuth, A 2005, ‘Siemens: expanding the knowledge management system ShareNet to research & development’, Journal of Cases on Information Technology, vol. 7, no. 1, pp. 92-110.

Stocker, A & Müller, J 2013, ‘Exploring Factual and Perceived Use and Benefits of a Web 2.0-based Knowledge Management Application: The Siemens Case References+’, Proceedings of the thirteenth international conference on knowledge management and knowledge technologies, pp. 1-8. Available from: ACM Portal: ACM Digital Library.