Innovation and Sustainable Development Report: Siemens Case Study

This report presents a comprehensive analysis of Siemens Building Technologies' approach to innovation and sustainable development. The study delves into the company's business model, focusing on its performance contracting services aimed at energy savings in buildings and ships. It identifies key problems, such as the need for cost-effective and environmentally friendly solutions, and highlights the benefits of Siemens' approach, including significant reductions in carbon emissions and substantial financial savings. The report outlines the strategic responses and plans employed by Siemens, including a four-step process for implementing energy-saving solutions, and analyzes various project options. Furthermore, it examines the delivery of these solutions, emphasizing the drivers of sustainable development and the company's commitment to leveraging innovative technologies to meet growing energy demands and promote environmental responsibility. The report underscores the importance of human capital and the company's customer-centric approach in achieving its sustainability goals. The report also provides a detailed overview of Siemens' innovative business model, emphasizing its focus on energy efficiency and its positive impact on both environmental and economic sustainability.

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Table of Contents
Introduction:....................................................................................................................................3
1) Problem Identification:................................................................................................................3
2) Benefits of the innovation:..........................................................................................................5
3) Strategic response or plan:..........................................................................................................7
4) Project options analysis:..............................................................................................................8
5) Delivery of the recommended solution:......................................................................................9
Conclusion:....................................................................................................................................10
References:....................................................................................................................................11

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Introduction:
Siemens Building technologies is the company selected for developing the business case using
the different sections including problem identification, different benefits from the innovation,
strategic response or plan, analysis of project options, as well as solution deliverability. This is
one of the main operational units of Siemens. The company was established way back in 1998
from the acquisition of different companies which together integrated and combined in order to
achieve the different business objectives including building automation, fire safety as well as
engineering services (Nordic Innovation, 2017). The headquarter of the company is situated in
Zug of Switzerland having more than 35, 000 employees and works together to make this
organization more safe, comfortable, secure as well as cost efficient. The company is performing
its business operations across the globe and mainly include Asia Pacific, America, Germany, and
South west, eastern as well as central Europe.
The services of performance contracting of the company facilitated to provide effective saving
solutions of the energy within the organization. The company is aimed to solve its business
problems by providing automated building systems, as well as ventilation, heating and solutions
for the air conditioning systems in order to reduce overall operational costs for the company
(Halme & Korpela, 2014). The services of performance contracting are one of the major business
operations for the Siemens for about twenty years and have enabled the company to perform its
business operations in both innovative as well as sustainable manner.

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1) Problem Identification:
It has been analysed from the different research and latest developments that innovation is one of
the key factor for the sustainable development of the companies. Most of the companies across
the globe have realised that their environmental friendly business approach will help them to
remain competitive and enable them to formulate strategies which are innovation driven with
sustainable development of the business operations for the companies at the same time
(Shrivastava et al, 2016). The appropriate innovation model will help the companies to achieve
their target or objective of the sustainable development. There are different issues which are
observed in business operations across the globe that is mainly categorised into four categories
including social, financial, and environmental as well as governance.
Consumer rights, employee turnover, customer relations, employee training, diversity issues,
supplier relationships, or labour relations are some possible social issues observed in business.
Shareholder returns, procurement, revenue or operating costs or financial support from
government are some possible financial issues analysed in business. Environmental policy, value
chain or management, emissions of green house gases, management of natural resources,
environmental compliance or regulatory risk are some possible environmental issues observed in
business across the globe (Liedtke et al, 2015). In the similar manner, business ethics,
compliance, diversity, succession planning, ethical standards, transparency, stakeholder interest,
executive remunerations, ownership structure, accounting or audit process are some possible
governance issues which are observed in the business operations of the companies across the
globe.
The different stakeholders have their important role in the business models used in innovation
and sustainable development of the business operations of the companies. Investors, funders,

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regulators, customers, employees, exporters as well as communities are key stakeholders play
vital role in the efficient implementation of innovation sustainable business model within the
organizations (Boons & Lüdeke-Freund, 2013). Siemens technologies is the company mainly
selected for the innovative sustainable development business model that mainly focuses to
minimise the overall operating costs for the company by providing different range of automation
systems including ventilation, heating as well as solutions of air conditioning.
The company is also focussed to provide saving solutions for energy which is the main problem
identified during the development of new innovative and sustainable business model for the
organizations. The company has mainly adopted the model of value proposition for its services
of performance contracting that is focused to provide self financed as well as low risk saving
solutions for the energy to their customers for the ships and large buildings (Broman & Robèrt,
2017). This has helped the company in significant manner to save their energy sources by
reducing overall level of carbon dioxide emissions as well as reducing overall capital over the
energy consumptions.
2) Benefits of the innovation:
The business model developed by the Siemens Building technologies provide several innovative
benefits to the company which has enabled it to operate its business operations in more
sustainable manner in coming years. This innovation provides both environmental as well as
economical benefits to the business of the company. From the environmental perspective, it has
been analysed that this innovative business model has enabled the company to save energy
sources for the customers (Voegtlin & Scherer, 2017). The energy savings have been varied from
one project to another but usually reduced by the limit from 20 to 50 percent that has also helped

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the company to reduce level of carbon emissions from their business operations. It is also
analysed that innovative business model adopted by the company has facilitated the services of
performance contracts by reducing huge amount of carbon dioxide emissions that is about 9.5
million tonnes.
The innovative business model has also provided several economical or financial benefits to the
company. This model has enabled the company to save their overall expenses on amount of
reduction of carbon dioxide by saving one Euro on 9.5 kg of the carbon dioxide. On estimation
from the above data for the reductions of level of carbon dioxide, services of performance
contracting for energy savings has enabled the company to save 1 billion Euros from the duration
of 2000 to 2016 (Welford, 2013). In addition, the company has an immense experience in the
field of energy savings by using the innovative business models focused on latest and advanced
technologies for reduction of amount of energy consumptions. This innovative step has also
helped the company to save additional 1.5 billion Euros with guaranteed assurance for the energy
savings to their customers all across the globe.
The solutions for energy savings as provided by the Siemens has also provided several
significant gains in terms of economical and financial benefits by enhancing values of the
building among the potential customers (Boons et al, 2013). For example, if a building has low
operational costs as compared to buildings with similar traits then certainly enhance value of
building among the potential renters or customers. Due to this factor, the owners of the building
are able to set high costs for the rents that are certainly helping the owners in enhancing their net
revenues as well as financial efficiencies for their invested capital.

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Moreover, this innovative approach also helps the company to enhance their CSR (Corporate
Social Responsibility) profile as well as environmental image (Tawney et al, 2015). The
innovation has certainly helped the company to enhance their brand image among the potential
customers and investors that has played significant role in sustainable development of the
business operations of the Siemens with enhanced market share across the globe.
3) Strategic response or plan:
The different strategies can be adopted by the company in order to achieve its objective of
sustainable development with help of innovative business models. Defensive, accommodative
and proactive are different type of strategies adopted by the companies on the basis of their
organizational goals or objectives (Richter, 2013). But the proactive strategy is the most feasible
for the Siemens in the present scenario as effectively integrates social or environmental
objectives with the overall business objectives in order to achieve the target of sustainable
development. The innovation solutions can be provided with the help of following plan which
mainly include four steps.
In the first step of process, preliminary analysis for the total amount of potential savings for the
energy has been conducted by inspecting the past as well as present consumption of energy for
establishment of the customers. This analysis enables the company to prepare efficient business
case by estimating amount of energy that can be saved, overall costs for the project and propose
the guarantee scheme for energy savings (Weaver et al, 2017). The cost required for the
preliminary analysis is also shared among the potential customers of Siemens in order to enhance
the commitment level of the customers. This step enables the customers to decide on the fact that
if they wanted to continue their involvement for the new innovative model.

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In second step, comprehensive and detailed analysis for the estimation of energy savings has
been confirmed or invalidated on the basis of first step. In this step, customer has an alternative
to pull them out from the project on their previous agreed prices for the solution. In third step,
detailed analysis enables the customers to sign the construction contract and effectively
implement the project based on innovative and sustainable model (Stafford-Smith et al, 2016). In
the final step for the strategy plan, guarantee phase for the energy savings has been comprised
which enable investment profits for both customers as well as company. This stage also ensures
effective mentoring for energy savings which is the one of the objective for sustainable
development of the company.
4) Project options analysis:
This is the stage which enables the companies to effectively implement the business model
within the organizations. The innovative segment which is included in Siemens’s business model
divided into two options or alternatives to effectively implement the model in sustainable
manner. The company can provide the guarantee for the energy savings to their customers with
the latest technologies and if that not possible then needs to pay the amount which is suffered by
the customers due to incompletion of the desired targets for energy savings (Atkinson et
al ,2014). This will enable low investment risks for the potential customers of the company. In
addition, if energy saving is more than the estimation, then additional profits can be equally
shared between the customers and the company. This enables the company to enhance their
performance level and helps to motivate their customers to reduce amount of energy
consumption that ensures more benefits for the customers.

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In order to ensure feasible investments, the saving solutions for the energy need to be of specific
size. Due to this reason, private and public organizations are the key customer segment for the
company. The customers from public sector are found through procurement tenders publically
whereas; customers from private sectors are contracted with help of existing contracts involving
intelligence systems for the building (Kinnear & Ogden, 2014). The customers related to
shipping industry are also targeted by the company. The company also organises seminars to
enhance customer engagement and interest towards savings solution for the energy.
5) Delivery of the recommended solution:
The delivery of efficient solutions for the project mainly depends on several drivers in order to
ensure sustainable development including sales or profit margin, cost or cost reduction,
reputation or brand value, risk or risk reduction, innovative capabilities as well as attractiveness
as the owner. The saving solutions for the energy depend on the various factors like increasing
urbanisation, rising energy demand and population growth. It has been analysed that population
living in cities contribute 80% carbon dioxide emissions across the globe which is only 50% of
globe’s population (Blewitt, 2014). This indicates that market for services of performance
contracting will be certainly increased for the company due to rise in population as well as
energy demand. The innovative models will provide sustainable delivery solutions for energy
savings for approximately of about ten years within the specific building across the globe.
Further, estimation of potential energy savings and implementation of systems using the latest
technologies are the major activities involved in the business model as adopted by the Siemens.
Human capital is the key resource for the company in order to effectively perform detailed as
well as preliminary analysis (Belletti et al, 2017). The company can use human capital within the

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organization in order to effectively provide the innovative solutions to the customers that will
ensure sustainable development of the company. The company can also provide financial
assistance to customers who are not capable to finance solutions for the energy savings.
Conclusion:
From the report, it is concluded that business case plays very significant role in order to develop
efficient business model for the companies. The amount of energy consumption across the globe
is the major problem which has been identified in this report. Adequate solutions for energy
savings and reduction of overall costs are some key benefits observed from innovative business
model (Sachs, 2015). Proactive strategy enables the company to effectively implement business
model which helps the company to achieve its target of sustainable development with
organizational objectives. Additional benefits and guarantee for the estimated energy savings can
be the options adopted by the company to analyse the project. Increasing population and demand
for energy needs to be considered by the company while providing energy saving solutions to the
potential customers across the globe.

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