Siemens Nixdorf Change from Middle

Presented By:-

Rizu Gupta

A1802009390

Section D

MBA-IB

Siemens Nixdorf

• Siemens Nixdorf Informationsysteme (SNI) was the largest European-owned computer manufacturer and information technology vendor in 1994.

• The company was created by a 1990 merger between Nixdorf Computer, an entrepreneurial minicomputer firm founded by a German software engineer, and the mainframe computer division of Siemens AG, the German electronics giant.

• The company offered a broad range of computer products, from personal computers and mainframes to software and support services.

• In 1994, the company posted a revenue of $8 billion ad employed 39,000 people.

• In addition to the Munich headquarters, SNI had divisions in multiple locations across Europe and around the world.

• Despite its size and a strong market presence in Europe, SNI did not post a profitable quarter since the merger.

• The company then lost over $350 million.• Over 65% of its products were sold in Germany, and the company lacked

base in the growing markets of Asia and North America.• Technology focus was high but SNI was slow to shift to market realities

that required more customer responsiveness and less emphasis on large mainframe systems.

• As per the industry analysts , the company was hampered by a rigid corporate culture established during the 1991 merger.

• The organizational structure was too bureaucratic in its approach to decision making for the rapidly evolving market.

Gerhard Schulmeyer

• In mid 1994, a decision was made by the Chairman of Siemens AG to bring in a new CEO for Siemens Nixdorf.

• Gerhard Schulmeyer, President and CEO of the American division of Asea Brown Boveri (ABB), a Swedish-Swiss engineering firm, was chosen.

• Schulmeyer was charged with leading the company in an unpredictable push to return SNI to profitability.

• In addition to his position at SNI, he was also a lecturer at MIT for a semester, where he came into contact with numerous theorists and consultants on managerial change.

• Schulmeyer’s goal for SNI was that the company becomes more customer driven and responsive in the market.

• His criterion for employees and managers was that they create specific and definable values for the customer.

• Strategically he hoped to expand SNI’s customer base and gain foreign market share in U.S. and China.

• He further hoped to increase the success for certain units, like PCs and UNIX computer systems.

• Communication within the company was important as well, so he immediately focused on ways to break down the barriers between the management and the employees, by means of emails, periodic meetings etc.

• Moreover he was convinced that the radical change 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 and replace the top-down procedures with innovative leadership in the computer, software and service fields.

• He also planned to create an environment that rewarded decision-making and risk-taking.

To accomplish these goals, Schulmeyer initiated a company-wide Culture Change Program in SNI, which had three major objectives:-

1. Changing the behavior of managers and employees with a view to achieving dramatic improvement in performance and results.

2. Changing work systems to foster a culture of operational excellence.

3. Changing processes to emphasize the customer and to ensure the primacy of customer service.

Andy ChewFrom Regional Manager to

Headquarters Change Catalyst

• Andy Chew came to SNI from a Nixdorf Computer office in Bracknell, his home country of Great Britain.

• He was hired in 1986 to be a Senior Account Manager and his responsibilities included being a sales manager and then later a General Manager of the commercial systems division.

• When Siemens merged its computer unit with Nixdorf, he was charged with heading SNI’s commercial systems division in Southern Great Britain.

• Chew became the GM for the solutions business in UK, where he managed 10 sales people and 30 consultants.

Siemens-Nixdorf Merger

• Major problem that the Culture Change Program resulted into was the lack of Siemens-Nixdorf culture.

• Chew felt that the most important point of the Cultural Change Program was to address this cultural difference and replace it with a clear and functional vision of the company and its workers.

• The Culture-Change Program was aimed at developing an organizational Culture and were intended to translate such culture change s into tangible advances for the company in the areas of strategy, product development and the implementation of new and innovative ideas.

• As a reminder, he listed “The Seven Skills of a Change Agent” on the wall next to his desk.

The R3 Acceleration Plan

• Chew’s goal was to create a new solution function at SNI by focusing on one of the three solution houses, the R3 division.

• The R3 software was a fully integrated commercial package that included solutions for financial accounting, materials, sales and inventory management.

• Chew wanted to improve SNI’s ability to market solutions to the international marketplace.

• Jaeger , the head of SNI’s entire solutions business, strongly supported Chew’s idea for change and helped him to refine his goals for improving SNI’s solution capability.

• In R3 Acceleration Plan, Chew would first explore the R3 business to identify what was working and what needed improvement. Then he would test his plan on the R3 business to generate immediate results along with building a template for future solutions projects.

• The R3 Acceleration Plan covered four main areas:-Marketing strategy, Relationship with SAP, Operating Model and Capabilities.

Project Strategy

• Since Chew and Lindstrom believed that any real change in the company would have to radiate from the centre and not from the regions, they both were relocated to SNI’s headquarters in Munich, where Chew realized the multiple obstacles that lay before him.

• The problem being, that tension immediately arose between him and his colleagues because of his being an outsider from the regions implementing a high-priority project that had the support of upper level management.

• Chew was disregarded with snide remarks like “Schulmeyer Kinder”, “Schulmeyer Kids” and “ Specials by boss” etc.

• Chew found that the scope of his project at SNI was far broader than he and his supervisors had imagined.

Project Obstacles

• Mobilizing our resources so that the way in which business is done from this level down can be changed, particularly in terms of attitude.

• Chew felt that many of his ideas could be seen as implicit criticisms of some members of the current management.

• The conflicts that arose in the merger between two corporate cultures.

• The head of the division lacked in giving clear signals and clear authoritative directions for the things to be done.

The Twelve Point Plan• To help combat the obstacles, Chew realized that the R3 Acceleration Plan

would have to be quickly redesigned. • He consulted managers and employees from both the regions and the

central offices, with the goal of creating a blueprint of the capabilities necessary to implement his original ideas for reorganization.

• This effort evolved into a detailed Twelve Point Plan that outlined the specific actions necessary to reengineer the solutions capacity in the R3 division.

• Many employees supported Chew in his Twelve Point Plan as because they saw it as an opportunity to implement changes that would improve the viability of the solutions business, and not as a threat that could jeopardize their position in the company.

• The 12 point Plan was supervised by a core team of three, which was supplemented by three more permanent members as the scope of the project grew.

• The breadth of these projects and the cross-divisional goals that Chew had established for both the R3 Acceleration and professional services plans prompted Chew to include up to 50 additional people in the development of ideas and models.

• Each of the 12 Point in the R3 Plan was given to a team that had till the end of October 1994 to develop a strategy for implementation.

• These teams consisted of 2-8 members, reporting directly to Chew.• Chew tried to manage his project teams by prioritizing goals and outlining

clear deliverables.• In addition, he used team building exercises to improve the effectiveness of

a diverse group of staff.• They had a real mixed bunch of team working on parts of the project.• The team included Germans, Americans, Ken’s a Dane, two guys from

BCG, One Turk, and One Swiss.

• Chew and Lindstrom adopted new approaches to improve communication with colleagues, for example:- leaving the door of their office open.

• Chew used the Twelve Point Plan to gain the support of “key individuals” from across the company, both at his level and below.

• Towards the end, he spoke extensively with managers from the UK, Holland, France, US, Germany to make sure their concerns and ideas were being incorporated into the project.

• Chew also conducted informational workshops for management at the SNI headquarters in Munich, through which he assured the support of other managers by incorporating their ideas into the project design.

• Moreover building support for his plans was made easier by vocal support from Jaeger.

Gradual Acceptance• Chew found that his frustration with the cultural and stylistic differences in

the beginning and middle of the project were slowly replaced with support as his colleagues were, one by one incorporated into plan.

• Every time he encountered opposition from other managers, Chew would emphasize the necessity for change by citing the division’s poor performance.

• He took a couple of remedial steps to try and highlight the importance of it to people.

• In September 1995, the final implementation structure and deadlines for the 12 points were being determined and assigned.

• The creation of the model for improving the solutions business had taken up all of the project’s resources.

• Despite Jaeger’s support and the growing acceptance of Chew’s initiatives by his colleagues, the viability of the implementation phase was uncertain.

• Chew knew that upper management’s expectations from him and the R3 project were very high, and he needed to make every effort to ensure that the project succeeded.