Siemens: Successful Implementation of a Knowledge Management System

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The Contribution of ShareNet to the Competitiveness of Siemens

It is hard to disagree that every organization wants to stand out among analog companies in order to attract more customers. For a business to be distinguished from its competitors, it is vital to establish a competitive advantage so that it would contribute to a growing number of clients, brand loyalty, higher prices, and increased sales (Rivas, 2019). Being competitive enough is one of the most crucial objectives of any company, and various businesses choose different ways to achieve the desired level of competitiveness and become the company that most customers choose over other firms.

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For example, some organizations decide to analyze the competitors and their advantages and disadvantages and then start to improve their own weaknesses and develop strengths. Others focus on improving their processes in order to reduce the delivery lead time (Rivas, 2019). What is more, many leaders choose to produce their products at a lower cost so that they can be sold at a reduced selling price, and many more clients can afford them (Rivas, 2019). Indeed, all these strategies are usually effective and successful, and if implemented correctly, they can contribute to the competitiveness of a business and enhance its status and reputation. At the same time, these are not the only strategies that help outperform competitors. According to Rivas (2019), some leaders of major companies believe that overall success mainly depends on employees, and investing in their skills and knowledge is one of the best strategic decisions that will bring long- and short-term effects. That is also what the upper management of Siemens AG thought back in 1996.

The case of Siemens’ success has been studied for many years, and many companies take its approach, hoping to achieve more results. Together with sales, consumer commitment, and a number of loyal employees, Siemens’ competitiveness has grown significantly after the top management decided to invest in workers’ training and knowledge sharing (Voelpel and Han, 2005). As Rivas (2019, para. 6) noticed, achieving competitiveness “requires the company to create a strategy that involves the constant optimization of different factors,” such as human capital, organization, and technology. Therefore, the leaders of Siemens needed to consider all these components, which was achieved by adopting ShareNet.

First of all, it is essential to provide some information regarding this system in general. ArsDigita’s ShareNet is an innovative knowledge management system that is used to capture important experience and knowledge of the company’s global marketing units, sales, customers, and suppliers so that all managers and employees can have immediate access to it. To be more precise, ShareNet is a scalable and robust structure with informal and formal communication channels and allows workers to record valuable facts, data, or other information presented in context so that other staff members can use them in similar or different situations. Furthermore, employees can also provide feedback regarding various pieces of information and help others determine the value of certain data. Chat rooms, discussion forums, and commenting functions make it more convenient for workers to search for necessary information. After ShareNet proved to be a powerful and robust structure, Siemens’ KPIs increased, and its competitiveness rose to a new level.

When taking a deeper look at the role of ShareNet in increasing the competitiveness of Siemens, it is necessary to analyze in more detail the system’s contribution to strengthening the company’s human capital. The first and probably the most evident effect of providing the staff with the possibility of obtaining and sharing knowledge quickly and easily is the increased competency of all workers who use the system (MacCormack, Volpel, and Herman, 2002). ShareNet provides incredible benefits not only for those who search for and find necessary information but also for those workers who share it in the first place.

The former can avoid workplace errors, manage specific situations more professionally, learn about new methods and approaches, and find additional information when looking for an answer to another question. Further, they can also become more experienced by analyzing the mistakes made and described in detail by their colleagues (MacCormack, Volpel, and Herman, 2002). It is hard to disagree that most people become experienced by learning from their mistakes (which are sometimes rather severe and painful) because they do not have the opportunity to learn from others. However, such a system like ShareNet is perfect for an organization to make their employees more skillful without much risk.

As for those employees who spend their time and energy to share their knowledge and experience with their coworkers also benefit from it, first of all, it is vital to re-live some valuable situations, once again analyze them, and extract useful insights. In other words, this is exactly what the employees who enter information into the system do, and this process increases their own skills and knowledge as well. Therefore, Siemens gets employees who help each other develop their skills and perform duties with the minimum number of mistakes, which in turn increases the status and reputation of the company and positively affects its competitiveness. Additionally, the top management of Siemens decided to provide monetary rewards for those workers who voluntarily and often add useful information to the system. The fact that employees feel that the company appreciates their efforts increases their loyalty and attracts other professionals, which again raises the competitiveness and makes Siemens a rather strong firm. Consequently, ShareNet made a significant contribution to the company’s ability to compete with other manufacturers.

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Managing Change After the Implementation of a Knowledge Management System

It is evident that an extended number of different additional processes and changes follow the major implementation of any knowledge management system. If top management ignores this necessity and believes that the staff members can go through the adaptation phase by themselves, the newly introduced system will likely fail in the near future (Black et al., 2019). Most people are not ready for global changes and find any possible way to remain working processes as they were. What is more, not all employees are comfortable and skillful enough to use new technologies (Aslam et al., 2018). Consequently, older workers may experience great discomfort, noticing that they are the only ones having problems with the new system and hesitate to ask for help. It is also possible that a vast number of staff members do not realize the necessity of adopting a new knowledge management system, and their resistance may affect the effectiveness of the KMS itself (Black et al., 2019). Consequently, without proper preparation and further change management plan, it is likely that employees will not agree with the modifications, and all changes will eventually become canceled.

The reasons mentioned above prove that it is essential to manage change after the implementation of a knowledge management system. Since there are various factors that can negatively influence this process, there are also numerous areas that require increased attention from management (Black et al., 2019). If these areas are addressed, then the success of the adoption of the new system, as well as its subsequent positive impact on the productivity and competitiveness of the company, increases. For example, as stated by Aslam et al. (2018, p. 575), “launching information technology, fostering knowledge-sharing behaviors and a knowledge-intensive culture require changes in the structure, culture, processes and policies of an organization.” Thus, a manager at Siemens tasked with controlling the change process should build their strategy based on the mentioned areas.

The manager should make some changes to the Siemens structure so that the knowledge sharing is more efficiently organized. First of all, they need to either add employee positions and make them responsible for ShareNet and its processes or revise assignments and job roles and find those who want to have fewer general duties and manage the system instead (Black et al., 2019). Therefore, such a structural change allows employees to empower and allow them to control the process and feel important and influential (Aslam et al., 2018). Additionally, it is also possible to divide workers so that each group manages certain areas and has specific tasks.

Another necessary step that should be taken by the manager is to make sure that the system runs smoothly and that the risk of errors is minimized. The major weakness of such a knowledge management system is that it contains vast amounts of data that can be leaked to the public or used by intruders or competitors (Aslam et al., 2018). This factor can be one of those that prevent employees from trusting such a system. Additionally, it is also vital to prevent ShareNet from any failures, especially during the first few months (Muqadas et al., 2017). The reason it is essential is that some employees may be against the implementation of the new system but then decide to give it a chance and use it. If ShareNet does not work at that moment, it is likely that those workers will never choose to use it again, which is not the purpose of the management.

Further, specific modifications should happen in the culture of Siemens. Managers should ensure that employees’ beliefs and assumptions about each other do not stop them from voluntarily and selflessly sharing their experiences and knowledge (Aslam et al., 2018). Unfortunately, if there is a major conflict or misunderstanding among the staff members, many of them may not want to provide the colleagues they do not like with their essential skills and information (Muqadas et al., 2017). That is why the manager needs to unite the collective, eliminate all possible arguments, and convey to employees the idea of the importance of sharing knowledge (Aslam et al., 2018). If the manager could add this concept to the Siemens mission statement, it would be a good contribution to the development of ShareNet.

Finally, the manager needs to add two necessary steps to their strategy. First, workers need to be provided with brief seminars and training where they would learn how ShareNet works, try to enter and search for data, and solve a problematic operational issue by finding the answer in the program (Muqadas et al., 2017). Then, the manager should concentrate on encouraging and promoting workers to share and search for the information and experience and making them want to do that voluntarily (Black et al., 2019). Certainly, there is already a group of employees who started the initiative and realized the effectiveness of ShareNet. As for other staff members, they should understand that this is done for them in the first place. Further, the manager should offer monetary and other rewards for adding a certain amount of useful information to the system (Black et al., 2019). Finally, receiving feedback and addressing any issues is the last but rather crucial step that allows to improve ShareNet and increase competitiveness.

Applying the Control Objectives of Information and Related Technologies (COBIT) Framework

For the change management strategy to be successfully and effectively realized after the implementation of the knowledge management system, it is vital to provide the manager with a helpful tool. This tool is COBIT – the Control Objectives of Information and Related Technologies framework (White, 2019). Created by the Information Systems Audit and Control Association in 1996, this framework makes sure that information systems in the company are quality, reliable, effective, and useful (Haes et al., 2020). There are four domains that the framework consists of, and it is possible to analyze the effectiveness of ShareNet implementation by evaluating how the company followed the COBIT domains.

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To begin with, before implementing any major project, it is necessary to prepare for it. Thus, the first domain is called planning and organization (Haes et al., 2020). Managers have to create or choose a specific strategy, consider all possible disadvantages and issues, plan their actions properly, and take into consideration all stages of a new KMS introduction (White, 2019). As for the actual case of Siemens, it is fair to state that this domain was considered successful. When the top management noticed the employees’ interest in knowledge sharing, they did not rush to stop or support the employees’ initiative in any way (MacCormack, Volpel, and Herman, 2002). Instead, Siemens leaders analyzed and assessed the situation, weighed the advantages and disadvantages, and decided that it was much more profitable for the company to allow employees to share experiences by providing a very convenient system. Next, the managers chose ShareNet, thought of the best and safer way to implement it in the company, and began a well-planned promotion among the rest of the employees.

The next domain of the COBIT framework is acquiring and implementing. The leaders managed to make sure that the staff understood the necessity of introducing ShareNet and receiving the numerous benefits. The situation was thought through, and the managers decided that the system was rather promising, it was possible to introduce it to the company on time, ShareNet would not interfere with other business operations, and it would meet the needs of Siemens. In other words, the purpose of this domain is to assess whether the implementation is actually beneficial and effective and does not negatively affect other parts and processes of the business. If the evaluation is successful, the next stage can be started.

Further, the delivery and support stage was also performed successfully. The managers made sure the costs were optimized, and the further profit would be greater than the money spent on the preparations and implementation. The staff members were trained to use ShareNet correctly and productively, which resulted in numerous benefits and the absence of issues or complications. Employees were provided with monetary rewards, which stimulated them to become better acquainted with the system and start working with it. Overall, it was concluded that the continuation of using ShareNet was justified, this system promised various short- and long-term benefits, and workers were pleased with the ability to share and find necessary information.

Finally, the last domain of the COBIT framework is monitoring and evaluating. The managers tracked the results and all strengths and weaknesses of ShareNet and found that all internal controls were efficient and effective. All issues were reported on time, and there were no reasons for canceling the new knowledge management system. The leaders compared their previous and current KPIs and confirmed the significant value of ShareNet and its contribution to the increased profit, competitiveness, and performance of Siemens. Lastly, it is possible to say that implementing ShareNet was the greatest and most successful step made by Siemens, and this is why this company is still famous, and its products are in demand all over the words.

Three Components of Intellectual Capital

Recently, it became evident that non-material resources, just as material ones, play an essential role in developing an organization and can strengthen its competitive advantage. As a matter of fact, intellectual capital (IC) is the company’s intangible assets that, if increased and maintained on a higher level, can contribute to the improvement of the business (Abdulaali, 2018). Intellectual capital is the value and sum of an organization’s staff training, experience, knowledge, and skills, and the three components of this concept should interact with each other effectively to help the company in its knowledge management journey. According to the Danish Confederation of Trade Unions, these three components are human capital, relational capital, and structural capital (Arszułowicz, 2019, p. 100). Each of them is analyzed below, and their participation in creating value for Siemens in the firm’s knowledge management practice is also examined.

To begin with, it is crucial to discuss the essence of human capital. As noticed by researchers, this component is a strategic asset with a strong and positive effect on a business’s performance (Arszułowicz, 2019, p. 102). It is typically associated with competencies, creativity, abilities, skills, expertise, experiences, and knowledge of workers, and it is possible for employers to encourage their staff and promote intellectual capital by investing in training programs (Arszułowicz, 2019, p. 100). This element of IC is especially connected with relational capital – the second component of intellectual capital that is related to the company’s external entities: customers, contractors, and suppliers, as well as owners, stockholders, and shareholders (Arszułowicz, 2019, p. 100). Relational capital involves stable and robust relationships with clients that depend on price sensitivity, customer satisfaction, financial growth, and repeated transactions.

Finally, the third element of IC is structural capital (Cabrilo and Dahms, 2018). Researchers note that it refers to traditional databases, systems, activities, and procedures, including “patents, copyrights, trademarks, brand, brand names, the organizational culture, network systems, and management systems” (Arszułowicz, 2019, p. 100). Generally, this capital is not modified if there are changes among people in the firm (Cabrilo and Dahms, 2018). The interconnection of the three components can be traced in the following examples. For instance, in case of employees lack or have no knowledge and experience in marketing, it is almost impossible for the company to attract and maintain customers – human and relational capitals suffer (Arszułowicz, 2019, p. 102). At the same time, new patents cannot be created unless the staff learns to be creative and innovative. These elements also interact and create value for Siemens AG in its knowledge management journey.

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Taking its incredible success into account, it is beneficial to examine how the three capitals together contribute to the firm’s increased performance and competitiveness. To begin with, the history of the appearance of knowledge management in Siemens allows drawing specific conclusions regarding its management and staff. First, such growth began with the employees’ desire to develop their skills, competencies, and knowledge back in 1996 (MacCormack, Volpel, and Herman, 2002). Many of them were ready to participate in the exchange of information and user experience. As for the upper management, they did not choose to devalue employees’ efforts but helped them instead, and a distinct organizational KM unit was created (MacCormack, Volpel, and Herman, 2002). Furthermore, incentives and rewards were given to workers who provided knowledge of the system. Overall, these are proof that human capital was improved significantly, and great results were achieved without putting in too much effort. Additionally, strong human capital interacted with the other two components as involved and interested employees and managers is the key to increased sales, a good IT system, and beneficial relationships with customers.

As for the structural capital, it was also strengthened. In order to make sure that the new knowledge management system can and will work effectively even if workers change, upper management made sure that ShareNet provided a database repository, search engine, and chat room (MacCormack, Volpel, and Herman, 2002). Despite the fact that a number of employees volunteered to train other workers and answer their questions, as well as monitor the KMS, it was possible for new staff members to join their group. That is why the system was stable and did not depend on particular employees, meaning that the structural capital was strong and efficient.

Finally, there also were significant improvements in relational capital. First of all, the company’s overall image became more influential and powerful, and investors and competitors realized the potential of Siemens AG (MacCormack, Volpel, and Herman, 2002). The newly implemented knowledge management system helped the firm land large contracts readily, meaning that customers and suppliers were impressed by its success and readiness for large-scale changes. Siemens AG improved its global collaboration and international relationships and increased sales (MacCormack, Volpel, and Herman, 2002). In other words, on the part of top management, it was a rather smart and reasonable decision to support the group of initiative workers and train nearly half-million employees around the globe with little effort. To sum up, precisely the interaction of the three components and the correct approach taken by the management and employees allowed Siemens AG to become one of the most successful and largest conglomerates.

Reference List

Abdulaali, A. R. (2018) ‘The impact of intellectual capital on business organization’, Academy of Accounting and Financial Studies Journal, 22(6), pp. 1-16.

Arszułowicz, N. (2019) ‘The concept of intellectual capital and its measurement using the VAIC method on the example of PKN ORLEN’, Optimum Economic Studies, pp. 97-111.

Aslam, U. et al. (2018) ‘Exploring the sources and role of knowledge sharing to overcome the challenges of organizational change implementation’, International Journal of Organizational Analysis, 26(1), pp. 567-581.

Black, S. et al. (2019) ‘Organizational change’, In Organizational behavior. Houston: OpenStax.

Cabrilo, S. and Dahms, S. (2018) ‘How strategic knowledge management drives intellectual capital to superior innovation and market performance, Journal of Knowledge Management, 22(3), pp. 621-648.

Haes, S. et al. (2020) ‘COBIT as a framework for enterprise governance of IT’, In Enterprise Governance of information technology: achieving alignment and Value, Featuring COBIT 5. Berlin: Springer.

MacCormack, A. D., Volpel, S. and Herman, K. (2002) ‘Siemens ShareNet: building a knowledge network’, Harvard Business School, pp. 1-27.

Muqadas, F. et al. (2017) ‘Exploring the challenges, trends and issues for knowledge sharing: a study on employees in public sector universities’, VINE Journal of Information and Knowledge Management Systems, 47(1), pp. 2-15.

Rivas, G. (2019) Business competitiveness: how to make the company more competitive? Web.

Voelpel, S. and Han, Z. (2005). ‘Managing knowledge sharing in China: the case of Siemens ShareNet’, Journal of Knowledge Management, 9(3).

White, S. K. (2019) What is COBIT? A framework for alignment and governance. Web.

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