A feast of opportunities for Siemens?

I decided to invest a decent amount of time into the Siemens 3^rd Quarter Announcements and it has been worth it.

I really don’t understand the reporters and analysts attending this event as they seem to continue to stay stuck in their recurring opinions and stances, constant looking in the rear-view mirror. It has its reference points perhaps but it is understanding “the road ahead and its conditions” that provide shareholder value.

We need to become more forward-looking based on strategic outlook, innovation potential and market opportunities.

The analysts seek to always look constantly to the immediate, often not looking beyond their own noses. They seem not to want to go under the bonnet through investigation, just rely on ‘given’ handouts or myopic views, rooted in the short-term. The sound of future innovation potential was in most of the event as very evident but lost in the focus on immediate numbers and results. Why?

Widening the scope of inquiry

Do these questions, many highly narrow in their own scope serve us well? Surely we should be looking far more for that “real, sustaining value” under the hood of a company that shows a growing clarity to the future? One or two questions certainly were attempting to get under the hood but you get that feeling they (reporters) were simply  wanting to “pain the CEO in a corner” in forcing out positions wthn the management’s reply that then”paints them in a corner” so the reporter can go back and refer to them (constantly) at a later date. I find that highly negative.

Although there was a new word that emerged to counter this and couch future options under “optionality” simply as much in the future stays “highly fluid”. It is advisable to have constant evaluations, up to the necessary point of a required decision, to then make the best decision in (their) judgement.

Of course, some of the replies from Management remain vague, sometimes annoyingly so, couched in future options such as “optionality” that can leave you, as a listener, in negative territory wanting more understanding.

By the way, the meaning of “optionality value” (optionality used in a financial sense) is “enormous and choice or discretion is allowed”.  Now that sounds intriguing as it was used many times in this Siemens Event.

As the CEO of Siemens rightly put it “it is always a difficult balance to strike between the doable and the desirable. Sometimes the speed to go to the desirable has got to be slower because the doable will otherwise not be accompanying you”.

Who actually creates the volatility- the messenger sometimes needs to reflect.

Share price volatility depends to a large degree on finding the balance between short-term gain and long-term planning and structuring.  One headline prior to the actual the event was “Siemens sees lower profit, announces restructuring followed with this short “breaking news” article : “Siemens sees lower profit, announces restructuring” then you hear one of the analysts noting “that they see today that the share price is trading down” asking what Management is doing about it. Well, duh, of course, results are down for many well-explained reasons, market reasons. Yet the immediate reactions are far more due to these immediate news feeds that shareholders were given (by you analysists) that provides a very restricted story.  The headline-grabbing reaction that this type of “dramatic” heading makes the positive story very hard to get out there as the valuable one to absorb.

Would I scoop up Siemens with many others within closely related business areas? Specifically, those desperately struggling in their crisis, mired in rapid reorganization and sell off, of past strategic parts? Yet that is what you immediately think, with headlines like these above but is that really true? Clearly not in my opinion, totally different but treated in the same sensational way.  I think it is a headline bordering on a level of reporting that continues to push reporting into an ever-tighter corner, boxed in by this type of translation and a constant search for “hype”.

Listening for the deeper messages from this Siemens event

So I wanted to sit down and listen carefully to the very extensive explanations laid out by the CEO, Joe Kaeser, and the CFO Ralf Thomas. I said earlier “we need to get under the bonnet” and the level of “analysis offered” at the event just failed to do that for many. I saw this differently. Many, not all, were applying their own narrow lenses to the questions they asked not connecting all the story given at the event. As Mr. Kaeser remarked, “I do appreciate that maybe the quality of detail has been insufficient for some, but obviously have been more than able to digest for others, so we need to bring things together….”

So what has this to do with innovation?

Well, it is only when you get under the hood you begin to see the sparks of creativity, innovation, and imagination working away. In Siemens case when you are in leadership positions where the “feast of opportunities” for Siemens electrification, automation and digitalization systems of products, solutions, and services are coming together in some imaginative and thoughtful ways to evolve and solve many of the challengings within the world, you need to dig a whole lot deeper.

Perhaps Siemens is failing to tell this “future story” in a better way. They have seen the paradigm shifts and are repositioning themselves to address these in new business-orientated ways to further shareholder value. Here lies the real story, by being adaptive and responsive you are tapping into creating attractive growth opportunities. So why become fixated on the past (last quarter results) when you need to understand one company and its approach to the future, to overcome transformational challenges? It is managing these that gives us innovation, growth, and creativity.

Making the calls to a new platform for business need

I was reading, just before listening to this Siemens Event, a piece by BCG Henderson Institute, entitled “Leaping before the platform burns; the increasing necessity of pre-emptive innovation”

The article rightly points out that we know systems are failing faster than ever, businesses are operating in increasingly complex adaptive systems that are increasingly reliant on mutualistic relationships, where one benefits from another (business ecosystems in my thinking and work) to grow markets, to solve more difficult challenges and drive its development. Siemens is setting itself up to do just that.

The BCG article also points out “we are facing countervailing forces- negative feedback loops – that limit growth”. Part of those is “traditional business metrics and strategies that tend to reinforce these negative feedback effects”. One of the roles of management as nicely put in this BCG article is to “anticipate exhaustion”, “make big and small steps” and “embrace evolution”. Siemens is doing just that in what I heard.

At this Siemens event, I heard many analysts looking to provide negative feedback loops, in their questions. Management needs to give as much depth or color to ideas, concepts or future assumptions as they can. We come back to the balance between “doable and desirable” spoken about by Mr. Kaeser

Why should we look deeper and listen just a little harder?

As this event showed (well to me) that the depth of thinking, the processing and “best” judgment being outlined as a “way forward” offers a better pathway to a “feast of opportunities”. As Joe Kaiser rightly underlined the major intent of his outline was around the whole intent of Vision 2020+, to integrate the interest in an evermore “dividend world” in this balanced meaningful way. It may not be perfect, or fleshed out in the “granular detail” but it is signaling the way forward in very deliberate and broad brush strokes, the details of how this is “colored-in” will emerge in the months ahead.

Siemens is reshaping its organization for a greater long-term value creation by giving individual businesses sharper goals and targets to chase, to provide them more entrepreneurial freedom away from a consolidating center so as to sharpen their focus on their respective markets.

Siemens looks to build new growth opportunities in partly a new emphasis on IoT integration services, distributed energy management and greater infrastructure solutions for electric mobility. The decision to consolidate the business down into tighter groups, such as dealing with a broader remit in industrial digitalization gives new growth opportunities. How these are managed going forward is another matter as Siemens needs to believe it has greater strength than many others in this field of opportunity. It has but it does need to tell the different stories of that future in new ways.

I have some lingering doubts over the execution in this industrial digitalization, but I do not have doubts over a vision or where the focus needs to be. It is how responsive and adaptable they are and for me, that seems like a work-in-progress that is getting better but not yet good enough. The level of integration is going to be critical and well-managed with the senior group coming together in greater ways around the emerging vision and strategy. This needs well-managing.

I want to pick up on some of these real, tangible innovation stories in the next week or so.

The announcement of buying Mendix, a leader in a low-code application is certainly one is a very exciting purchase. My mind has been racing over this announcement.

We could be seeing a new platform dawn, one of a “Smart Platform, full of smart apps designed to seek out experience, not just data” This is going to be potential “context-aware”, “intelligent connected” and “pro-active” in intelligence outcomes.

One key to unlock this is visualization in programming, combining artificial intelligence and knowledge graphs to build better, informed work-flows. This is a must for me to focus upon as it overs the route to the 2^nd generation of platforms, smart and dynamic for abstraction and automation. The point of shifting to “experience relating” is crucial. I see a very clear three horizon plan emerging with this Mendix and Mindsphere integration that I’ll share soon that takes platforms into a new era.

This building of a business unit for IoT Integrated Services is another. The lack of platform adoption by many companies has been significantly held back by not addressing comprehensive strategies for digital transformation and a feeling of concern, to date, over the poorer comprehensive support needed in any transformation. If this can be pulled together in the way Siemens believes it can do this, then terrific but the providers of specialized services need to be pulled into the Mindsphere platform in different ways and repositioned in the Ecosystem to deliver on this ‘aspiration’ in greater service to the clients and customers’ needs and wishes.

I also want to investigate the new “Smart Infrastructure” business being ‘bundled together” in this announcement of a reorganization. Where what, how and why this will unleash a whole new era of innovation solutions. That is exciting to explore in multiple ways for innovation perspective.

So let me offer a simple summary

I heard a different story by listening carefully to the Siemens Event. It struck me as very progressive in how they are wishing to respond to the changing world. Yet more importantly where innovation can be positioned in the future vision that was outlined. There are so many stories of innovation potential to tell at Siemens- now that is a “feast of opportunities.”

My focus continues to get as deep as I can under the bonnet of Siemens, more and more as it reveals itself. It needs to think about building more “compelling” stories to link to the future, so the prevailing negative forces diminish or maybe regroup as they equally focus on the future and stop looking constantly in the rear-view mirror, attempting to predict the future,

When you stay stuck, perhaps based simply on the past and not look  deeper and rigorously towards the options Siemens have to explore in the future is a shame, it misses the possibilities and options and these seem highly promising if executed upon.

The management is attempting to do it job in sketching out the potential in a rapidly changing and challenging world and the future is not based on the past, believe me, but on how you set up for the future.

Telling the future innovation stories builds a better future for all involved. Somehow Siemens need to draw these out, it would help many ‘stuck’ in the present, based on (past) experiences.

Let’s give credit, where credit is due.  When a Management of a Company comes out with a strong vision, a set of well-thought-through validations and justifications. It equally resets the metrics and accountability closer to where success is found, closer to the market and reliant on people and technology to continue to combine and progress in new (imaginative) ways.

We should be applauding not pushing the underlying messages down into negative territory when the future does seem very bright.