The Declining Role of Information and Communications Technology in Germany — Siemens Exits the ICT Industry: Reasons and Lessons

B. Eidenmüller, M. Hoefle, A. Sorg


SUMMARY

The significance of information and communications technology (ICT) as an economic factor and driver of innovation continues to grow. In many markets well over fifty-percent of all new products will soon be essentially ICT products. It is criticized, and rightly so, that Germany has become an overall importer of ICT. Compared to the top fifteen ICT countries worldwide, Germany is now only a middle-ranking player.This decline is partly due to Siemens, the global pioneer of communications technology, withdrawing from the ICT sector. Yet, in the homeland of Konrad Zuse (inventor of the first program-controlled computer) this exit goes largely unnoticed.

The decline of the ICT divisions at Siemens is generally due to managers being largely unaware and incapable of responding to the technical switchover from analogous to digital systems and the consequences of IP (internet protocol). Siemens failed to respond rapidly and comprehensively enough as ICT users evolved from centralized to decentralized organizations and from regulated to deregulated markets.

A high degree of agility and desire to embrace innovation was called for. New ideas and new enterprises were needed. Instead slow committee-based decision-making, complicated structures, uncoordinated approaches, and focusing on older established companies was standard. Across the ICT divisions of Siemens this was the rule rather than the exception. These Siemens divisions alone made up the greater part of German ICT industry. None of them was fit enough to survive global competition.

It is important and urgent that Germany and Europe understand the reasons for this failure and learn the right lessons.