Lifeblood of Innovation

The Siemens PLM Software Analyst Conference is an invitation-only annual event that brings together Siemens' senior management, senior industry thought leaders, and select industry trade media from around the world. The purpose of the event is to give a deeper understanding of the operations and philosophy of Siemens PLM, its strategy for market leadership and current status.

Tony Affuso, chairman of the board of Siemens PLM, gave a business update and at the same time also provided an insight into his thinking of what made Siemens great. “Innovation is our lifeblood,” said Affuso. He emphasized that in order to cultivate a culture of delivering superior customer value, innovation must be a pillar. He spoke with conviction that Siemens AG, with over 160 years of innovation in engineering and manufacturing, has a strong track record of delivering innovations to help customers. Coupled with innovation, another pillar Affuso mentioned was that “We never let a customer fail”.

Siemens always deliver on its commitments to customers. In order to do this, Siemens PLM follows a set of protocols: develop an in-depth understanding of customer's requirements; clearly state understanding of the customer's requirements and how its solutions can fulfill these requirements, ensure that customer understands its proposal; meet periodically with customer to discuss progress; be responsive to customer's problems whatever the cause; and protect customer's data by maintaining upward compatibility of releases, having open architectures and business practices and providing JT as a standard for data retention.

On the business front, Affuso said that NX, Technomatix, Teamcenter and Solid Edge had strong business performance. They had six quarters of steady growth, strong double-digit license revenue growth, and they exceeded profitability and cash flow targets. A major factor for this good showing was that Siemens PLM successfully added value to customers by offering the best collaboration solutions, helping customers in the globalization of their businesses, providing product and manufacturing engineering productivity and systems engineering automation.

Here are some statistics. For fiscal year 2010, Siemens AG had revenue of US$103 billion with the following breakdown: energy sector with sales of US$35 billion, industry sector with sales of US$47 billion and healthcare sector with sales of US$16 billion. R&D was US$5.1 billion, which was 5.1 percent of revenue. Siemens has 405,000 employees worldwide in 190 countries with 30,000 R&D employees and 18,000 software engineers. In 2010, it has 57,000 active patents and 8,800 inventions. Examples of innovations were: camera in capsule supplying stomach images, automated laboratory analysis for immunosuppressants, and synchronous technology for design productivity (synchronous assembly design with full range of applications; integrated modeling environment).

Delivering a consistent,compelling message
Dave Taylor, vice president of global marketing, gave an insightful presentation on how marketing can help Siemens PLM to achieve its vision of smarter decision,better products.

Taylor said: “In marketing, our primary role is to help the marketplace understand how what we provide can help them. We do that through a variety of marketing related activities, but also through our sales force. Bringing marketing and sales together is going to help us be much more consistent in our delivery of our message to the marketplace.”

According to Taylor, there is another key to delivering a consistent, compelling message to the marketplace. It is to have a simple, easy to understand message structure. “For us, this starts with our relationship to Siemens Industry Software – whose primary value is to help customers optimize their product innovation and production processes. Our HD-PLM vision supports this by optimizing the decision making process, wherever it exists throughout the product lifecycle – one of our automotive customers said there are over 20,000 decisions that go into the development of a car. If we can help people make each one of these a little faster, and get to the right one the first time, we can help our customers reduce overall cycle times, improve efficiency, reduce rework, reduce cost – all of these objectives that are part of every technology justification have their root in improved decision making. This is our focus.”

Like what Affuso mentioned about not letting a customer fails, one of the necessary steps to take is to develop an in-depth understanding of a customer's requirements. So in this case, in order to help the customer improves his decision making and reaps the accompanying benefits, Siemens PLM is tapping on the wide and comprehensive experiences it has accumulated throughout the years to understand the customer's business needs.

Understanding customers better
“To deliver against this, we are leveraging the rich experience and knowledge we have in industries. As you know, some things we do are very common across industries, but some are very unique. So to really get at the heart of decision making, we have to get specific within an industry. And of course to do that, we have the luxury of leveraging the robust capabilities of our products, and the rich industry knowledge that we've developed in our services organization and through our partners,” said Taylor.

To emphasize that each industry segment is unique and that Siemens PLM is going the extra mile to customize its solutions, Taylor said that talented and experienced manpower is being utilized to document the best practices in each sector. He said that they are breaking down the marketplace into different subsets of industry sectors so as to differentiate them better. And only after that will Siemens PLM start customizing the solutions and messaging and give collateral support at the more detailed segment level.

“As we look at the industries, this is not an attempt to simply put some industry language on top of a large grouping of companies that kind of look the same.”

“So for each segment, we're pulling together the best and brightest people in each industry segment from across the company to document the best practice processes. This serves as the foundation for everything we do. From this, we can define exactly how our products come together in the context of industry best practices to provide a true decision support environment that can be leveraged from planning and governance all the way through service and support.”

“And by building everything off this common foundation, we can then deliver consistently to the market – whether someone experiences us through the web, at a trade show, through a sales presentation or a detailed demonstration, our value proposition is consistent, clear and founded in well defined best practice in each industries context. So to wrap up – we're really internalizing smarter decision, better products. It's becoming the thread now that drives us. We're aligning everything we do – from IS to our products and services – around this vision.”

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One on one with Tony

Lee Kok Leong spends time with Tony Affuso and uses this rare opportunity to pick his brains and tap his vast experiences.

I am impressed by Tony. He is the top man in Siemens PLM and yet he can make me feel like I'm his long-lost friend. He has a ready smile and can eloquently and clearly communicate what is on his mind. But at the same time, I can also sense the authoritative and forceful sides in him. And to me, these qualities are exactly what make him a great leader. During the course of our chat, I was struck by his openness and willingness to share his views. He was natural and spontaneous in his answers and this made me decide to discard all my prepared questions and just go with the flow of the conversation.

Q: What are the qualities you look for in your staff?
A: I look for people who have a vision and who respect other people. They must care and respect people whether they are above them or below them. The other things I look for are integrity and honesty. Then of course, there are technical capability and skills. They are important. But if you don't have the vision and respect and integrity, even if you have the smartest mind in the world, then from my perspective, you will not get promoted. This is what I think. Then I look for aggressiveness. I like aggressiveness, those who want to get things done, who feel that they can go the extra mile. Those that did so much but things didn't happen yet but they still make the extra call, do the extra work and keep on working. They never give up until they win. I look for this level of passion to win, or aggressiveness. Whichever way you want to phrase it, this is another key quality I look for.

Q: You have thousands of staff working for you. How do you manage?
A: I have 8,000 staff, including contractors. The key thing is you have to rely on other people. I remember when I was an individual contributor, an engineer, I always wanted to do everything myself. But as you move up to management, you must rely on other people. You must find those people with the right quality and trust them. If you trust them, they'll trust you back. And together you can have a great partnership, a relationship because you have what each other is looking for. And you have the goal. The goal is to win the competition and so together you're trusting each other to make it happen.

And then you have the management chain and a structure that most companies used. Now, we have a management chain in our company, however we have a process where we skip through the levels. For example, we have a country manager and a salesman. Sometimes, I work right with the salesman, we'll email, we'll talk, and we'll have a conversation or visit a customer. We have a culture where we collaborate. In some companies, you can't do that. You must only work through the respective management chain. But in our company, we have the culture of making it happen. However you respect the authority, you don't do anything to disrupt the chain of management but you work together to win something. And if you are working together to win something, you skip these levels.

Now when it comes time to sign the contract, I want to be sure that everyone and their leaders agree. So for that authority you always keep the management chain in there. But when you're trying to win businesses, when you're doing something to try to beat the competitors, and everyone is working hard as a team to make it happens, then you can skip the levels.

Q: Is people one of the strategies of moving your company forward?
A: The pillar is teamwork. I think the pillar that we have in our company is first of all, never let a customer fail. It is the culture. I hear people talking about we have to be careful, we can't propose that because if we propose that, we may fail. So what we have to do is before we propose, we tell the customer that our capacity won't be ready for one or two years. So when we sign the contract, the expectation is there.

There's a culture of respect for each other. When somebody makes a mistake, you always say that is ok as long as we learn. What you don't do is when people make mistakes, you go and fire them. Ok, now we learn from this and let's go forward. But don't make the same mistake again. I know in some companies, when you make a mistake you get the sack, if you will. But I think that is wrong because you don't have a learning environment, learning by experience and growing together. And through this, we will be stronger.

Q: You started your career as a design engineer and now you're the chairman of Siemens PLM. What factors contribute to your personal success?
A: Well, if I think about it, I always have some kind of a vision. I am never satisfied and I always look for ways to improve productivity. And I will go to the management team and talk about it. You know, we do it this way and we can be better. Also I think it is due to communication. I am not a great communicator but I will communicate with logic about the situation or a business case and present all sides of the story. And you start building trust with the leadership.

And as you build that trust, you do something and it is on time and becomes a success, then the management team gives you something else to do. I think this type of process, having a vision, having aggressiveness and following up, all helped.

And I am never afraid of hard work and long hours and things like that. I always want to reach a goal. If I don't have a goal, I'll find one. Because I need a goal to thrive, without a goal, you're aimless. You can modify it of course. But at least have a goal and a vision, then you can begin to progress and continuously improve. When I was growing up, my parents, and my father and his brothers, had a fruit farm. And I was always finding out new ways to do things. Why not we do it this way or that way, we could be more productive if we put this over there, or how about if we grew the trees there? I was always thinking of ideas. My father grew tired of me!

Q: What more do you hope to achieve?
A: One thing that gives me great pleasure is watching the team grow. And watching the team win against the competitors. When we have a big win, it gives me great pleasure. Also, to see the team come together to work hard.