In the late 1990s, the arrival of Internet communications worried Siemens and urged them to find a new alternative that could be as efficient and as cheap as this new technology. They knew they had very few years before being surpassed by Internet in terms of communication. They finally came up with a solution from their Information and Communication Network (ICN) branch. This branch is one of the most important for Siemens since it controls almost 300 millions telephone lines and routs one in five phone calls worldwide. They spent hundreds of millions of euros to get to almost perfect reliability (99,999%) and it paid off. In 2000, its annual revenue was estimated at 11 billions euros. They therefore developed a new hybrid platform named “Surpass” which combined traditional EWSD and new broadband technology for data transmission that came in part from acquisitions in the US. This platform was mainly produced in Bangalore and required very skilled workers.
The biggest challenges in coordinating international efforts occurred because of interdependency of subprojects, delays in assembling crucial employees from differing countries, and international coordination overhead – which could cost as much as 15% of project budgets. Generally individuals worked in so-called “Centers of competence” (CoC) groups which were divided along technical lines such as “system architecture,” “system testing,” “peripheral systems” or “core processing.”
Problem identification:
1. Cultural differences
Siemens encountered many problems since its foundation. The majorities of them rely on cultural differences. Siemens workers experienced many problems while working with foreign worker. Germans have big hierarchy tradition, in Munich, there are 7 layers of management in comparison with the Boca Raton branch has only 3. This of course can cause delays in taking crucial decisions, the more middle managers, the longer it takes to approve decisions. Germans workers are not used to informal work places and have a shock when experiencing it. German workers on the other hand are more loyal than Indian workers, they do not mind working for a long period on non entrepreneurial jobs. The Indian branch is experiencing a very high rate of workers loss. Other companies offer better salaries and more challenging work to Indian workers who enjoy entrepreneurial tasks. Germans expect delivery on time and quality which can be very difficult to do for the Indian branch since they are working on a new technology and experiencing unpredicted problems. Indians do not like the fact that vacations for Germans are sacrosanct; they leave without leaving a trace even if the project they are on is a crucial stage that requires their presence. A fun fact is that Indians can’t keep up with the German beer drinking habit which bothers them to some extent. An other problem due to cultural differences is lack of communication comprehension which even led a branch to present a faulty product to one of its big customer. Germans and Indians do not mean the same things while speaking the same language. When an Indian says that something is fine, he is specifically talking about a given part of the product while the German understand that the whole product is fine. As it is impolite for Indians to speak their minds in front of everyone, meetings can sometimes be pointless. Siemens has difficulties giving more power and autonomy to its Indian branches while it is asking for more liberty and the right to talk to the customers in order to also understand their product. We can easily understand that having so many problems with the Indian branch that giving more liberty is a dangerous thing to do. The Indian branch is lacking experience and the products made by the Indian branches do not meet exactly the expectations of companies. For example, the product the Indians worked on was considered as inappropriate as the interfaces where too flashy for the markets it targeted. On a same basis, RDC in United States also had problems. Communication was a big problem; Indian workers never say no at first sight but can call you back four days later to tell you that they cannot manage to do what you asked them. These delays might cost a lot of money to Siemens.
2. Research and development
The Indian and American situation show a lack in management in the development of research and development. It is one of Siemens main priorities to invest in research and development. Siemens spent over 10 billion $ in 2000 in research and development and employed 57 000 employees worldwide just for that purpose. As telecommunication markets are very volatile and products get outdated very fast, it is important to stay on top. Competition is increasing with Internet communications becoming more and more accessible; Siemens has to improve products very fast. This is why slow product delivery and delays can’t be acceptable. The fact that highly-specialized people are involved makes it even harder to manage; managers have to trust specialists sometimes as they can’t take their place, lacking the knowledge. As American economist and Nobel laureate Kenneth J. Arrow stated, "The central economic fact about the processes of invention and research is that they are devoted to the production of information." R & D outcome can never be predicted 100% accurately; there are always unplanned problems that are encountered. That is what makes R & D such a big problem for the company, R & D is risky and cannot go according to plans all the time.
3. Globally dispersed teams
This case also talks about the difficulty to manage complex development project due to the fact that such project are not done in one place, but in many locations. In example, delays from a Chinese factory could affect the productivity of the French branch and therefore postpone the delivery date in Germany. Siemens is trying to keep the communications between branches as high as possible with faxes, phone calls, emails between managers. Experience has shown that face to face encounters can not be replaced, therefore, Siemens is spending a fortune to reunite workers. Another problem encountered because of globally dispersed teams is that there is often a duplication of tasks. Because of a lack of communication, workers work on the same problem or same part of a project for a while before realising someone has already solved this problem. To insure product quality, Munich specifies all parameters of a project, which decreases regional flexibility but insures quality of products. Problem here is that Munich can not dictate everything in a project because parameters of a project are developed during the progress. This is why divisions ask for more flexibility and ask to speak face to face with clients to insure that the customers needs is what they will deliver. While globally dispersed teams are supposed to help ‘’development around the clock’’, it has caused many problems in Siemens organisation and Siemens never took advantage of this what global teams are supposed to offer. Regulations can also be a big problem, Visas for Indian workers are hard to get for their business travels.
Solutions:
1- Cross cultural relations
Working in multicultural groups can have many advantages to a worldwide company such as Siemens like: around the clock work rotations, knowledge of different markets and culturally sensitive customer service. But in the case Siemens cross cultural relations seem to cause various problems in the Indo-German relationship. Various experts identified four problem categories that can create problems in a multicultural team:
1-direct versus indirect communication
2- Trouble with accents and fluency
3- Differing attitudes toward hierarchy and authority
4- Conflicting norms for decision making
We then realize Siemens is having all these problems, which are normal problems for this kind of organization. The first thing to do is pin point the cause of the problem before finding an appropriate strategy to solve the problem. Experts suggest 3 ways of solving such a problem:
- adaptation (acknowledging cultural gaps openly and working around them)
Here, Siemens is on the right track, workers respect each other and seem to be adapting to one another. There just need to be more communication between the two offices, whenever something is wrong it should be said immediately, which doesn’t seem to be the case right now. Cultural sensitivity training could also be a big asset for the company, as workers would be prepared for cultural shocks, and would understand differences better. Learning to work with other cultures can be difficult, but it has been proven successful in other major companies. Both sides have to realize that some things will never change such as Germans taking vacations even on crucial dates and Indians being more entrepreneurial and less loyal.
- structural intervention (changing the shape or makeup of the team)
For example, giving more independence to Indian workers because they demand it. This could be risky for the enterprise as Munich ensures its quality by dictating the work to other offices around the world. By giving them more autonomy Siemens would increase the Indian workers responsibility in the project therefore increasing their productivity and accomplishment. Indians as we discussed earlier are not motivated because they are not given enough responsibility and entrepreneurial type of work. Employees working on a given project should be able to speak directly to the customers instead of hearing specifications of a project from Munich. It is very difficult to meet a certain client’s expectations when specifications are unclear and given by a third party.
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managerial intervention (setting norms early or bringing in a higher-level manager)
Managers should meet more often, to reduce the delays in international projects. By trying to coordinate their teams, work will be done in a more efficient ways. Branch managers should be trusted for more responsibilities since they are the ones who see what problems are encountered from day to day while general managers are being informed in reunions once in a while. This could diminish the time needed for crucial decisions therefore reducing the delays in projects.
Whatever the strategy managers choose, the earlier, the better. Never let things go to the point where it’s too late. In the Siemens case it is not too late to react. Trying to engage everyone in the team by making them feel important is rater also a big factor of success. Solving culturally based problems with good humor is very important.
2. Research and development management
It is clear that managing R&D centers in such a big organization is largely the art of integrating the efforts of diverse, creative, intelligent, and independent branches. R & D is what insures the future of a company such as Siemens which specializes in markets that evolve very fast such as telecommunications. Munich perhaps expects too much from Bangalore with short delays and high quality norms. Developping a product can take time and problems can occur during the process. Encouraging Bangalore instead of blaming them could be a good start to motivate employees and productivity.
3. Managing globally dispersed teams
Here we found that the big problem for the Bangalore projects was requirements gathering. The requirements where given only partially to Bangalore’s workers and kept on coming gradually during the project. Making sure that the clients requirements are met during the project is a crucial part of such a project. Munich and Bangalore’s managers should have talked to the client in order to make it clear for both parties what are the goals to be achieved in the project. For globally dispersed teams, it is even harder to make requirements clear because of language differences, as people do not use the same technical jargon in every country. We believe that if a greater effort had been put to communicating the specifications, less problems would have been encountered during the project. Communication should also be the key to good projects. The more communication between parties, the less misunderstanding, the more effective the work will be. We do not think that relocating the project would be a good idea. It would cause very big delays and high costs. Working on somebody else’s project can very difficult, the specialist who have created the software know it inside out and can more easily detect its faults.
Conclusion
Siemens encountered many problems in its Indo-German relationship due to cultural difference, R & D management and global projects. To solve these problems, we suggested many solutions: cultural sensitivity training, giving more independence to Bangalore, adaptation, structural intervention, managerial interventions and précising the project specifications earlier in the project and directly with the client. We think these solutions will solve the problem.
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