Siemens AG, a $73 billion electroni

Siemens AG, a $73 billion electronics and electrical-engineering conglomerate,produces everything from lightbulbs to X-Ray machines, from power generationequipment to high-speed trains. During its 156-year history, Siemens (siemens.com)developed into one of the world’s largest and most successful corporations.Siemens is well known for the technical brilliance of its engineers; however,much of their knowledge was locked and unavailable to other employees. Facingcompetitive pressure (see opening case, Chapter 1), Siemens is trying to maxi-mize the contributions of each business unit. One way to do it was to learn toleverage the knowledge and expertise of its 460,000 employees worldwide


SOLUTION
The roots of knowledge management (KM) at Siemens go back to 1996 whenanumber of people within the corporation with an interest in KM formed a“community of interest.”They researched the subject, learned what was beingdone by other companies, and looked for ways that knowledge managementcould benefit Siemens. Without any suggestion or encouragement from seniorexecutives, mid-level employees in Siemens business units began creating knowl-edge repositories, communities of practice, and informal techniques of sharingknowledge. By 1999, the senior management of Siemens AG confirmed the im-portance of knowledge management to the entire company by creating an orga-nizational unit that would be responsible for the worldwide deployment of KM.At the heart of Siemens’ technical solution to knowledge management isaWeb site called ShareNet, which combines elements of a database repository, achat room, and a search engine. Online entry forms allow employees to store in-formation they think might be useful to colleagues. Other Siemens employeesare able to search the repository or browse by topic, and then contact the au-thors for more information using one of the available communication channels.In addition, the system lets employees post an alert when they have an urgentquestion.Although KM implementation at Siemens involved establishing a networkto collect, categorize, and share information using databases and intranets,Siemens realized that IT was only the tool that enabled knowledge management.Randall Sellers, Director of Knowledge Management for the Americas Region ofSiemens stated, “In my opinion, the technology or IT role is a small one. I thinkit’s 20 percent IT and 80 percent change management—dealing with culturalchange and human interfaces.”The movement toward knowledge management by Siemens has presentedseveral challenges to the company, some of which are cultural. Siemens used athree-pronged effort to convince employees that it is important to participate inthe exchange of ideas and experiences and to share what they know. It has as-signed 100 internal KM “evangelists”throughout the globe who are responsiblefor training, answering questions, and monitoring the system. Siemens’ top man-agement has shown its full support for the knowledge management projects. Andthe company is providing incentives to overcome employees’ resistance to change
In exchange for employees posting documents to the system and for using theknowledge, Siemens rewards its employees with “Shares,”much like frequent-flyer miles. Once collected and accumulated, these shares can be exchanged forthings like consumer electronics or discounted trips to other countries.However, the real incentive of the system is much more basic. Commission-driven salespeople have already learned that knowledge and expertise of theircolleagues available through ShareNet can be indispensable in winning lucrativecontracts. Employees in marketing, service, R&D, and other departments are alsowilling to participate and contribute as long as they realize that the systemprovides them with useful information in a convenient way.The ShareNet has undergone tremendous growth, which resulted in severalchallenges for Siemens. The company strives to maintain balance between globaland local knowledge initiatives as well as between knowledge management ef-forts that support the entire company or individual business units. Furthermore,Siemens works to prevent ShareNet from becoming so overloaded with infor-mation that it becomes useless. It employs a group of people who monitor thesystem and remove trivial and irrelevant content

THE RESULTS
he ShareNet has evolved into a state-of-the-art Web-based knowledge management system that stores and catalogues volumes of valuable knowledge, makes itavailable to every employee, and enhances global collaboration. Numerous com-panies, including Intel and Volkswagen, studied ShareNet before setting up theirown knowledge management systems. Furthermore, Teleos, an independentknowledge management research company, acknowledged Siemens as being oneof the Most Admired Knowledge Enterprises worldwide for five years in a row.Siemens also has realized a variety of quantifiable benefits afforded by knowl-edge management. For example, in April 1999, the company developed a por-tion of ShareNet to support its Information & Communications Networks Groupat the cost of $7.8 million. Within 2 years, the tool had helped to generate $122million in additional sales.Ultimately, knowledge management may be one of the major tools that willhelp Siemens prove that large diversified conglomerates can work and that be-ing big might even be an advantage in the Information Age.