Siemens AG is a global leader in electrification, automation, and digitalization. With headquarters in Munich, Germany, this multinational conglomerate has etched its mark on industries ranging from energy to healthcare. For Siemens, the problems of today are the opportunities of tomorrow. The company recognizes that the world is in a constant state of flux, with new challenges emerging every day. From the rapid urbanization of cities to the increasing demand for clean energy, Siemens sees these challenges as a call to action.

In a recent interview, CEO Joe Kaeser said the firm is not content with being a market leader, instead it aims to redefine markets. “In a world where change is the only constant, Siemens aims to be the beacon of stability and innovation.”

The inception of this Knowledge Leader is linked to the telegraph, a device that transformed communication in the 19th century. In Berlin in 1847, Werner von Siemens, an engineer, and Johann Georg Halske, a skilled craftsman, joined forces to create Siemens & Halske. Werner von Siemens, inspired by the potential of the telegraph, sought to improve its design and functionality. His vision was to create a telegraph that was not only efficient but also accessible to the masses. Together with Halske, Siemens developed the pointer telegraph, a device that was far superior to its predecessors. This invention marked the beginning of Siemens & Halske and set the stage for its future successes. The name “Siemens” was not just a reflection of its founder but a symbol of innovation and excellence. Werner von Siemens was known for his relentless pursuit of knowledge and his commitment to pushing the boundaries of what was possible. The name “Siemens” became synonymous with quality, precision, and innovation. The company’s first major contract involved building a telegraph line between Berlin and Frankfurt and put Siemens on the map as a leading telecommunication company.

The First Breakthrough: The Dynamo

In the annals of technological history, few inventions have had as profound an impact as Siemens’ dynamo. Developed in the 1860s, this groundbreaking machine was the brainchild of Werner von Siemens, who, with his indomitable spirit of innovation, sought to harness the power of electricity in ways previously unimagined. The dynamo, in its essence, was a device designed to convert mechanical energy into electrical energy. While the concept of generating electricity was not new, Siemens’ dynamo was revolutionary in its efficiency and practicality. Unlike its predecessors, the Siemens dynamo was capable of producing a steady and reliable stream of electricity, paving the way for its widespread use in industries and households.

On a global scale, the dynamo played a pivotal role in the Second Industrial Revolution, a period marked by rapid industrialization and technological advancements. With the ability to produce electricity on a large scale, factories could operate longer hours, leading to increased production and economic growth. Cities, once reliant on gas lamps, saw their streets illuminated by electric lights, transforming urban landscapes and improving public safety.

Beyond the immediate benefits of electrification, the dynamo spurred a wave of innovations in various fields. The transportation industry saw the advent of electric trams and trains, reducing reliance on horse-drawn carriages and steam engines. In the realm of communication, the dynamo facilitated the development of telegraph and telephone networks, connecting people across continents. Moreover, the entertainment industry was revolutionized with the introduction of the phonograph and the cinema, both powered by electricity. The dynamo’s impact was not just technological but also societal. With electricity becoming more accessible, there was a marked improvement in the quality of life. Medical facilities could offer better care with electrically powered equipment, educational institutions benefited from electric lighting, and households saw the introduction of electric appliances, making daily chores easier. In essence, Siemens’ dynamo was not just an invention; it was a catalyst for change. It transformed industries, reshaped societies, and set the stage for a future where electricity would become an indispensable part of human existence.

Diverse Product Portfolio

Siemens AG has developed a vast array of products that cater to a multitude of industries. Some of the standout products in their portfolio include the following.

Wind Turbines: Siemens is a leader in renewable energy, with their wind turbines dotting landscapes across the globe. These turbines play a pivotal role in reducing carbon footprints and promoting sustainable energy solutions.

Credit: Siemens

Medical Imaging Devices: In the healthcare sector, Siemens’ advanced medical imaging devices, such as MRI and CT scanners, have revolutionized diagnostics, enabling early detection and treatment of diseases.

Industrial Automation Systems: Siemens’ automation technologies, including their SIMATIC range, have transformed manufacturing processes, ensuring efficiency, precision, and scalability.

Train Technologies: In the transportation sector, Siemens’ high-speed trains and signaling systems have redefined rail travel, offering speed, safety, and sustainability.

Smart Grid Solutions: Siemens’ energy management systems ensure efficient distribution and consumption of electricity, paving the way for smart cities.

Siemens holds a dominant position in several product categories. While Siemens is a formidable player in its domains, it operates in a competitive landscape. Some of its chief competitors include General Electric, ABB, and Philips. Each of these companies brings its strengths to the table, challenging Siemens to continually innovate and improve.

Spanning Continents, Connecting Worlds

What began as a local enterprise focusing on telegraph systems has blossomed into a global conglomerate with operations spanning every continent. In the late 19th century, Siemens took its first steps beyond German borders, establishing its presence in the UK. This move marked the beginning of Siemens’ global ambitions. Recognizing the potential of emerging markets, Siemens soon expanded to Russia, setting up operations in St. Petersburg. By the turn of the century, Siemens had a footprint in Asia, with offices in Japan and China. Today, Siemens operates in over 200 countries, catering to diverse market segments. In North America, Siemens has a significant presence in the energy sector, providing smart grid solutions to cities like New York and Los Angeles. In the Asia-Pacific region, countries like India and China see Siemens as a leader in transportation, with high-speed train technologies transforming their vast rail networks. Europe remains a stronghold for Siemens, with operations in sectors ranging from healthcare to industrial automation. The African continent, with its burgeoning economies, sees Siemens playing a pivotal role in infrastructure development, especially in energy and transportation. Siemens’ global operations are supported by a workforce of approximately 293,000 employees and has offices and innovation centers in over 90 countries.

Innovation as a Core Value

For Siemens, innovation is not just about creating new products; it’s about redefining possibilities. The company’s ethos revolves around the belief that there’s always a better way to do things, a more efficient solution waiting to be discovered. This attitude towards innovation is deeply ingrained in Siemens’ DNA, driving every department, from engineering to marketing, to think outside the box. A prime example of this innovative spirit is Siemens’ development of the world’s first electric railway engine in the late 19th century. At a time when steam engines dominated, Siemens dared to envision a cleaner, more efficient mode of transportation, revolutionizing the railway industry.

Today, Siemens’ R&D endeavors span a vast spectrum of industries and technologies. Siemens is pioneering the use of digital twins – virtual replicas of physical assets – to optimize manufacturing and infrastructure projects. With the global shift toward renewable energy, Siemens is investing heavily in wind and solar energy technologies, aiming to make them more efficient and accessible. In addition, Siemens envisions a future where cities are smarter, more sustainable, and efficient. Their R&D in this sector focuses on everything from smart grids to intelligent transportation systems.

Siemens S200 Light Rail, credit: Siemens

Embracing the AI Revolution

Siemens has integrated AI into a plethora of its products and solutions. One notable example is their AI-powered gas turbines. These turbines use AI algorithms to optimize combustion, resulting in increased efficiency and reduced emissions. Similarly, in the realm of healthcare, Siemens Healthineers, a subsidiary of Siemens AG, has introduced AI-driven diagnostic tools that enhance image quality, reduce scan times, and provide more accurate results. Other ongoing AI projects include MindSphere, an open cloud-based IoT operating system that leverages AI to analyze vast amounts of data from connected devices, offering insights that drive efficiency and innovation. In addition, Siemens is developing AI solutions that optimize manufacturing processes, predict maintenance needs, and enhance product quality. Using AI, Siemens also aims to create intelligent infrastructure systems, from smart grids to adaptive traffic management solutions.

Collaborative Genius at Work

By joining forces with other industry leaders, Siemens amplifies its capabilities, taps into new markets, and accelerates the pace of innovation. Siemens’ collaborations are not mere business transactions; they are synergistic relationships that drive mutual growth and innovation. These partnerships allow Siemens to combine its technological prowess with the expertise of its partners, leading to solutions that are greater than the sum of their parts. Notable collaborations include:

Siemens and Airbus: A partnership that aims to electrify the skies. Both giants have come together to develop hybrid-electric propulsion systems for aircraft. This collaboration promises to revolutionize air travel, making it more sustainable and efficient.

Siemens and Atos: A digital alliance for the future. Siemens and Atos have joined hands to co-create digital solutions in areas like smart infrastructure, data analytics, and cybersecurity. This partnership is a testament to the power of digital transformation in reshaping industries.

Siemens and SAP: Together, Siemens and SAP are redefining the world of industrial software. Their collaboration focuses on integrating Siemens’ digital industries software with SAP’s enterprise software, offering holistic solutions that optimize the entire product lifecycle.

Siemens and IBM: A collaboration that’s shaping the future of industrial IoT. Siemens’ MindSphere, combined with IBM’s Watson analytics, offers unparalleled insights into industrial data, driving efficiency and innovation.

Siemens and Salesforce: In the wake of the COVID-19 pandemic, Siemens and Salesforce partnered to develop workplace technology solutions that ensure safety and enhance productivity.

This Knowledge Leader spotlight was generated using our AI engine with a series of prompts custom-developed by Knowledge Leaders Capital and designed to uncover the innovation strategies of companies we consider to be Knowledge Leaders. We have edited it for content, style, and length.

The following sources are examples of sources that may have been consulted in the preparation of this spotlight.

• Siemens Official Website
• TechReview Journal
• Medical Innovations Magazine
• Aerospace Today
• TechInsights Journal
• Industrial Software Review
• IoT World Magazine
• Business Innovations Daily
• Electrical Engineering Journal
• Autobiography
• Technology Review
• Siemens Research Journal
• Global Business Review
• Industry Analysis
• Healthcare Insights
• GreenTech Magazine
• Aerospace Review
• Energy Today Journal

As of 6/30/23, ABB was held in the Knowledge Leaders Strategy and the rest of the companies mentioned were not.

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The Knowledge Leaders investment process uses a proprietary methodology based on academic research. To create an intangible-adjusted financial history, we capitalize intangible investments—including R&D, advertising, brand development and employee training expenses—treating them as a company would tangible investments. Using these intangible-adjusted financial histories, we run each company through a proprietary Knowledge Leader screen. Companies that pass through every level of the screen emerge as Knowledge Leaders.

Past performance or historical trends are not necessarily indicative of future results.

Companies are selected for “Spotlights” based on high levels of innovation activities in their respective industries and illustrate innovation being employed across all sectors and geographies. Spotlight selection is separate from stock selection by the investment team. Spotlights are not necessarily representative of investment opportunities and can be selected regardless of investment performance or inclusion as a KLC holding.