Has Siemens Lost Its Way?

Outline the main features of the development of Siemens between 1945 and 1979. Assess the relative importance of the main factors leading to its success during this period. The main feature of the development of Siemens between 1945 and 1979 is its superb growth, both in turnover and its ability to absorb high potential human capital. This was achieved through its ability to re-assess the learning curve achieved from its conception as a laboratory-turned-into manufacturing company.

Organisational Culture

Theory may explain the post-war Siemens extraordinary growth phenomenon.

Jones (2001) describes Organisational Culture as “a set of shared values and norms that controls organisation members’ interaction with each other and with suppliers, customers and others outside the organisation”. The ability of Siemens to deal with its employees by the formation of a co-operative “Werkverein” (Work Association) contributes to Siemens ability to minimize impact of strikes. This also gives a hint on how Siemens successfully managed its potential internal conflict and relationship between the employer and the employees.

This initiative can only be built based on a good understanding of how Siemens organisation members interact with their fellow workers, and their organisational setting and duty. The reduced tension and better understanding contributed to the effectiveness of Siemens in organizing its workers. Between 1923 and 1928 Siemens’s productivity level per man was doubled.

1 This is an excellent achievement that could only happen in a company with a conducive culture. Siemens had a head start by applying the same strategy in a new post-war environment.

Another aspect contributing to Siemens quick emergence from post war devastation – was its support of innovation. This aspect of company culture can be traced to Siemens founder Werner von Siemens. Siemens innovation culture post World War II can be seen by its aggressive approach on the market for high quality chips and semi-conductors in 1950s. This is very important, because this took place only few years after the invention of the transistor.

2 Siemens early involvement in the data-processing business during the mid 1950s can also be traced to Siemens tradition of innovation culture.

The learning curve gained from pre-war business is the main “invisible” asset of Siemens. It is not a coincidence that in both cases of post-war German and Japan, the early emerging companies are those from industries closely related to technology and innovation. This further indicates that innovative companies adapt more easily to changes compared to other companies. Other factors that can be contributed to Siemens post-World War II extra ordinary growth may be related to German national culture.

The German Wirtshaftswunder (economic wonder) was driven not only by a peace time reallocation of industrial capacity (which previously served the military), but also the synergy of German national culture with its industries. Siemens had the full support of the government because of its strategic position. Siemens’ focuse on energy, telecommunications, and electric business – gave them government-granted priority on the reconstruction process of post-war Germany.

Siemens and other companies like Daimler-Benz, Volkswagen, and Bosch, (which were also well known international companies before the war) are companies that not only crucial and strategic, but also a part of German cultural identity of its superior industrial knowledge and quality. Murray Sayle in his example of Japanese organisational and national culture identifies a close relationship between national culture and organisational culture. This may also be true with Siemens and German national culture in the Post-War era. Read  Siemens SWOT Analysis