 Good morning everyone. My name is Bokat. Bokat Tolks from the company Siemens and I'm working there in the in-house Consulting group as a coach and consultant Last year Henry from the program team of this conference asked me if I would like to give a call on a presentation in this business agility track and my first reaction was Why me? Why Siemens? There are so many cool companies in the world agile companies like spotify, Salando, WL gore Swordworks many others. They have all the cool success stories. They can share and We can learn from them, but after some time of reflection I agreed to talk today about our ongoing transformation at Siemens just Because I think it's a typical example of a traditional company that is struggling and is striving for business agility So it's a kind of case study. I can share with you my experience and if this meets your expectation You are right here in this room. So let me start with a question Who a few works in a company that is large and has been in business for many years So large in the sense of 5,000 people many years like 30 years. Okay, that's good I think our companies have several things in common when it comes to a child or digital transformation, however you want to call it large traditional companies have specific challenges in their transformation and and Let's learn from each other. So I'm happy to share some of my observation some of my experience with you and As I've been involved in both I can share learnings from the corporate level as well as Learnings from the team and the project level with you Siemens began as a very small workshop in 1847 today, we might call it a startup over the next 170 years it grow into a large industrial company with 380,000 employees and Today we successfully build and market the wide range of Electrical and electronics related products and services to business customers so the small ceiling board has been transformed into a large container ship that is highly efficient and Perfectly adapted to the existing business environment However, we all know changes ahead of us. So we can feel it. We can see it. The business is getting tougher and So we have around us we have already seen some ships sinking and They could not cope with Changed business environment the wuka world and these kind of things So we don't want to be one of those companies that are sinking next and a few years ago the captains on our ship called for a change in direction and Now we are in the middle of the transformation a transformation from a classical industrial company of the 20th century to a Digital company of the 21st century We are sure that the ship will look very differently in 10 20 years from now and Actually, it will not be a big container ship anymore it will rather be a fleet of smaller more flexible smaller ships and As a digital company the future company will also work on new paradigms and based on lean H.I. Principles and Practices, so that's for sure if Some of or in case some of the steps on our journey appear weird to some of you it may help to Understand and to know the major constraints. We have to consider when we change direction of our journey so this are that we have Or that our processes Structures and culture have evolved over decades They have the head worked relatively well so far Another constraint is we still produce a lot of physical products products like trains automation equipment or Electrical power plants. That's something we need to consider. We have very conservative Customers or very conservative markets that we serve where our customers don't feel comfortable with the idea of Getting weekly or monthly releases or even continuous deployment strict regulations Are very common in the business areas we serve today and That needs to be considered. We have a lot of legacy systems out there with a monolithic architecture instead of having these small nice independent modules or even micro services and Our development activities are globally distributed across the world so this constraints definitely add complexity and Challenge of to distance transformation, which we are going through at the moment and companies like Spotify Have grown in a different environment. It's very different constraints So how does the transformation journey has gone so far? Early attempts to foster business agility date back to the year 2008 First software teams started to look into things like scram or lean at this time Lean was already very widespread in our production units. So people were familiar with lean. That's what this at what's good Next was going beyond team level to departments and to projects to larger projects That started to explore these new approaches Then in 2015 The journey gained speed was a company-wide initiative to upgrade our company's operating system Including the ways of working in product development And today I think we see change in many parts of the ship of the organization. So something is going on Here's another question Who works in a company that has implemented one of the popular scaling frameworks or is in the process of doing so? That's interesting. Which one? Say what to say Okay Interesting. Yeah, there has been more and more or recently there was more and more talk about scaling frameworks Not only at conferences or in conversation with consultants. You can really see it that people want simple or they want to get guidance they want to know what to do and Frameworks provide this kind of guidance to people. I also noticed the desire for guidance In when I'm talking to managers or other people Just last week or no the week before last week I got a call from a new HL enthusiast yet come back from a training and He told me that he appreciates the ideas behind scrum and you would like to use them Unfortunately in their project. They have very specific circumstances that do not allow them to apply scrum and So but he also heard about safe during this training and he was wondering If it wouldn't be better to use and to start with safe instead of scrum Just to give you some context about the project. It's a small project 20 people Several of them are only involved part-time so with 25 50 percent of the time it's a distributed team many roles and But you may guess my answer to this person my recommendation At Siemens, we have very few parts of the organization That bet on a single framework if so it is safe or less in most of the cases So but just a very few all the other business units use combinations or hybrid approaches for their scaling activities and This gives us a good opportunity to observe both experiments with and without of the shared scaling frameworks which which is interesting Unfortunately, it's still too early to draw a final conclusion on what's the better approach Maybe we can say something in one or two years. I personally think that Scaling frameworks are an excellent body of knowledge. They make a good compilation of what we learned in the previous 20 years in the H.I. Community however, I think Just using one single framework as the map of the ocean might bring you into troubled waters So that's my personal belief As long as no one else proves me to be wrong, which would be okay One more question who works in a company where the transformation was initiated and driven directly from top so from the CEO or is direct reports Wow quite a lot lucky one It's evens everything began in the engine room not on the command bridge. So The first H.I. teams used to be software development teams was who were struggling to adapt to this work WUCA environment and they couldn't cope with the new requirements challenges in a traditional way Though they looked into a scrum can one other things and unfortunately All these attempts had only very limited impact on organizational level It kind of it felt like an H.I. bubble in a larger organization an organization that is that still has traditional expectations and traditional ways of measuring success That changed when the top ranks on the ship Got involved. We had the first significant boost when the new CEO of one business unit got engaged and actively supported the transformation in his business unit by investing time and money in In addition to this active involvement, we could also identify other success factors for transformation Yes, some examples the management team came together and developed a compelling vision for this new organization and They also developed guiding principles for day-to-day decision-making they also revised their product portfolio and Put a clear focus on eight key projects. So those eight key projects Always got priority in the organization and at the same time They also served as a kind of H.I. pilot for organizational learning Then management set a time box of one year for those key projects One year time box of one year The typical project duration at this point of time was more in the range of two to three years so it was really a challenge for the teams and it forced them to Seriously think about minimal marketable product scope and to look into incremental iterative approaches Additionally they formed Unfunctional teams that received a high degree of empowerment and freedom for their decision-making and The organization also invested into coaching and communication so this was good that made a difference and In this organization, we could also reconfirm the assumption that a leader is very important for a successful transformation because when CEO took a new role and left this organization the entire transformation slowed down immediately So if you need any ideas or advice how to stop a transformation or to even put it in reverse here You can also talk to me, but please don't apply this in practice a little later Siemens started a company-wide Initiative to support a transformation from top so it brought together influential people to drive the upgrade of the company's operating system The aim was not to come up with an age-old process for the entire company The aim was rather to simply create an environment for change for the transformation Was the ultimate goal to become faster and more flexible So today we call this the Siemens development system or SDS for short and it is to foster good practice exchange leadership support and Join communication activities across the entire organization So SDS is based or integrates lean age-old principles and practices as well as Modern leadership Mindset and behavior so provide it provides recommendations, sorry Rather than guidance to the organization which was quite unusual at this point of time because People were used to the idea when there's a corporate initiative will provide more guidance more process So we frequently had to explain to people This is not a process. This is not a framework. It's not a book of recipes. It's just require recommendations so that was important and Yeah, people shell Shows their own approaches within SDS to really make it their own sustainable change. I think that's important Here are some examples of the pillars that make up the SDS this initiative So we have common principles that are inspired by lean sinking and by sort leader Mary Poppendick if we take for example focus on customer value That seems to be so obvious, but it isn't unfortunately In big companies like ours Bureaucracy leads us to spend a lot of effort on internal requests rather than real end customer requests and What's even worse? It's the fact that people are trained and teach to regard their next downstream partner as the customer and thereby they completely lose sight of The real end customer Requirements and needs and value. They only look at their next partner, which they are delivering some work to Also deliver fast and small increments. It's a paradigm change for the organization. Most of our processes encourage upfront planning and Big Bang integration with all the related challenges and problems So when we apply these principles today, we notice that Several of the decisions today are different from those of the past. So we can already notice this Then we have a couple of practices which we encourage for the organization those practices include things like fixed scope variable Sorry fixed time and variable scope it also includes the idea of An involving ranked backlog rather than the fixed comprehensive requirement specifications Which you usually have in a traditional organization. It also encourages the setup of Empowered small self-organizing teams That proves to be particularly difficult in hardware development by the way Because we have a lot of Specialists in hardware development. So we are struggling here Responsibilities every business unit has appointed and empowered one so-called SDS manager This is to show that the topic is important for the organization and to drive it forward and the last pillar in this initiative is Competence competence development not so much for experts The focus is much more on leadership Development and I'll get back to it in a moment. Let's have a look on the structure first The structure of this initiative at first glance it pretty much looks like a copy of our company hierarchy So on top we have top managers 10 CEOs of the divisions and of some business units They form the or they make up the functional board Then on a second level we have second level managers people like head of R&D or head of program manage product management so functional heads of Larger business units, but what looks like a hierarchy is actually an attempt to complement the existing Hierarchical structure with a ad hoc formed network in order to implement change So many of you may know the concept of a dual operating system made popular by John Cotter and In this dual organization we have a stable Hierarchical organization for day-to-day operation that makes it reliable resilient and efficient and we have a second organization which is more dynamic and At hoc formed around a specific topic in our case the specific topic is Improvement of the ways of working along the product life cycle and we also try to leverage this approach in other areas However, it still remains very difficult to really balance adaptability and stability in an organization like ours back to leadership development What is how is the organ company? Supporting leadership development on all levels as We all know a leader is more watched than heard so we need leaders managers to act as role models and They need to show the behavior themselves, which they would like to see from their people Some examples are that the people of the functional boards the CEOs they really take time for go and see events That means as no learning takes place in a conference room They go and visit certain parts of the business units in order to observe to listen which is pretty hard for a CEO just to listen and To see what's going on on the front line. So that's an example the members of the working groups They apply those new linear child principles in their own work They have regular work sessions where they try to identify the organizational impediments for the transformation where they try to come up with ideas how to address those impediments and the most promising ideas they take into their business units and Test there and try it out. So we initiated kind of PDCA cycle for the improvements They also don't leave the communication only to the corporate communication experts they get in front of their people and their peers and Frequently communicate the vision and the cornerstones of the journey Communication is very important in a big company from my experience. So We always focus on this one for all executives in the business units the Company of us leadership trainings and in recent years Most of the people in this target group have participated in such workshops Also, HR is offering something called culture labs culture lab is a safe environment for leadership teams to reflect on those new principles and to connect this to their leadership behavior and Of course, we also have learning journeys where people can go get inspired by other companies can learn and Well, not all learned learning journeys have to go as far as Silicon Valley There are also other companies around us where you can learn a lot. I personally think that Already for the increased awareness and engagement of management. This initiative has paid off to some extent at least Despite the fact that Siemens with 25,000 software engineers is already among the top 10 software companies in the world, which was surprising to me We still have a long way to sail to really call us fast flexible digital company here are some Examples of the improvement areas we see for the near future We some parts of the organization have already started to restructure around value streams and around cross-functional teams with end-to-end responsibility rather than functional silos as it looks today Interestingly enough 15 years ago Several of those organizations were already structured in such a way that was before Efficiency became the most important parameter for optimization and that changed every single cost Was that the key driver? Siemens also set up a couple of fast innovation projects that are supposed to experiment in a startup like environment and Well despite very good management intent I can tell you from first-hand experience that The standard organization seems to strike back almost every day so there are a lot of pain points which those projects recognize They this are pains like The the strong demand for mid and long-term plans The dependency on bureaucratic and slow Processes when it comes to procurement or IT support and decision-making based on strong stakeholder opinions rather than real customer feedback another ongoing activity is to extend HIL development from software into hardware and system development and Also, I think a very powerful lever Will be to introduce more and more HIL product portfolio management So this is using boards Hanman boards to make the strategic Product and improvement initiatives visible and once you make something visible You have a far better chance to manage something and to improve it So that's I think that's very powerful devops. I Suppose that's a hot topic for many here in the room for many companies. So it is for Siemens and last but not least We also have to win over our people in the finance and accounting department We need them to adapt the processes around budgeting and The the metrics that are used to measure progress success and value So if you want to know more about this HIL finance stuff, there will be a talk in your after moon by Henrik Esser You will tell more details about this one here So, yeah, the journey continues There are still a lot of things ahead of us or there will be an lot of Exciting challenges that we are going to address in the future. So always take this as an opportunity And there are questions like what are the new career passes for people in an organization that is more network that is more based on cross-functional teams or what are the suitable indicators to measure progress on organization level and What are structures and processes that really adapt to stable and dynamic context. So that's hard and difficult So if anyone here has any recommendations ideas or experience, I would be happy to listen just approach me later today and Would be nice to hear from you Okay, I think we still have plenty of time left for questions Yeah, that's right. Yeah, because the system is still the same and How you are doing it is optimized to the system around you the agility the age and mindset of the people That's very difficult On an individual basis What I appreciate is the idea that Is implemented in some parts of the organization now to not measure Individual contribution, but rather to use Contribution of the entire group and then in this group you always have some Team dynamics that will help all the people in the group to to adopt this new way of thinking So that's how I would approach it and how we see it in some parts of the organization, but not everywhere So different experiments in different parts of the organization, okay? Hardware is One of my pet peeves so we can talk about it later. Maybe it's not that interesting for all people here in the room Yeah, we have a lot of hardware and There are different attempts to Look into this and to see how this can also Become more agile It's you have to use different approaches So there's nothing like a scrum guide for hardware There were several attempts in the community to create this all field But yeah, we slowly try to also change this to implement ideas like Cross-functional teams the idea of time box all this not only works in software development, but also hardware development is very helpful but we are in the beginning and I'm also involved in this so let's have a discussion later and the second question was The conservative part you can't change your customer But also the environment for our customers changing so I remember When I was in one part of our organization when I was talking to the R&D manager and I Made a statement that I'm sure that also our his customers Will be interested in this a child approach sooner or later He completely refused this idea that is not going to happen but One year later. There were two customers that were interested because It was in a railway business and when you have very complex projects For instance Yeah, very complex. I don't want to tell you any details, but if you have very complex details It's very hard for our customers to plan everything in detail upfront and to give you detailed requirements specifications So they were explicitly asking for HIV ways of working We had bad luck because our sales people the interface to the customer had even had never heard about Agile, so they just ignored it and We learned about this some months later About this request from a customer They have just started to implement safe so they went through all the trainings that are typical when you implement safe Like actually I was not so deeply involved in this I cannot tell you details But I think also there it's too early to really say if it held or if it will be combined in the future with other approaches and other Methods frameworks, I don't know So it's too early. That's a very interesting challenging question when it comes to cultures and geography My experience is there's not so much difference between The car the cultures the difference and the spread is more within the personalities in this culture So you can see a widespread of personalities in all cultures This is more something you have to consider and you have to take into account so work with people that are willing and enthusiastic first and then you try to also pull the other people and in terms of management, of course it is most difficult for Middle management to to appreciate this new new ways of working. That's for sure and we need to help them I'm convinced that we still need the activity of management and coordination But maybe it will not be an explicit role in the future. I think Brian yesterday also talked about this In the same sense More value or yeah, you started earlier the objective that the key goal is where to become faster and More flexible more adaptable more responsive to change in the world around us that where the key Goals the key objectives Does it answer your question or just party? So right now we have a specific goal to Only to half the development time on average for our projects in the next couple of years So that's a very specific goal you have Okay, and flexibility Responsiveness that's far more difficult to measure. So we don't have yeah, that's here one of my questions We don't have an indicator measure yet to to measure this one Okay, there was another question. We haven't changed that yet. Unfortunately. There's not a general I cannot give a general answer. I absolutely agree rewards systems incentives. That's the most important Driver for a transformation. So you should always start there, but I don't know any company that really did it So we companies always struggle for two or three five years before they really dare to to change this system What we already did in some parts of the organization, but not on corporate level was to give teams Not individual goals, but team goals. I think that is already a first step in the right direction So measure people on what they are shift as a team Yeah Well at the end it's to the people but they are measured on what the team is sheathed each one in a team is measured On what the team is sheathed, but this is just the first step and it's not perfect yet Some more questions. Do we still have time for? Cado five minutes good try to the procedures the documentation and all these things we even had a Department in the railway business which have also very strict regulations where they tried With every sprint to really do all the regulation related stuff as well So Experiments we have ongoing and we are fully convinced and we have seen it in many parts that you can Make it easier for you to to deal with the regulation and also the regulation bodies are starting to change Something now in their procedures in order to open up for HR development slowly But I think the the main idea that helps is to automate the stuff and It's the day there was a talk where they also try to collect all the data and information automatically and only even If you get an assessment or an auditor is coming to your company Then you can print out the stuff he's requiring As I said, it's a safe environment. That's for the leadership teams. So as a leadership team you Can get a facilitator and then you have a safe environment where you look on the principles you see You what are the most challenging principles and then you try to figure out? What does it mean for me? How can I roll model this principle? What does it mean for us as a leadership team? What is it that we are going to change? So it's very on a very individual basis Depending on the context where this leadership team is involved Not in a culture labs, but you can do this as a leader anyway With with your team, but the team is not involved But maybe that's one of the outcome of the culture lab that they will Strengths an idea of feedback in their organization Okay, I think I will be around for the rest of the day So you can approach me ask me additional questions I'm happy to answer them and you can also Reach out to me after the conference my email address is included in the presentation and It's the cute Vendatory cute animals light at the end because research shows that this will increase the rating of a presentation by 50% So I just want to try it It also tells you that you deserve a break now before the next session starts So thank you very much for your interest and have a good day