In this presentation, Ruediger Knauf outlines Siemens Water’s approach to in‑house innovation within a highly fragmented, €380 billion water market. He begins by quantifying market size ( €32 billion equipment and services) and noting that even the largest players hold less than 3 % market share, highlighting intense fragmentation and a multitude of technologies and applications (fresh water, wastewater, industrial, municipal reuse, etc.). To navigate this complexity, Siemens maps all water technologies onto an S‑curve life‑cycle model, prioritising growth‑phase, trend‑setting opportunities over mature, incremental ones. Knauf then describes a prioritisation framework that balances “before‑market” (new, disruptive products) and “after‑market” (sustaining existing product lines) innovation, organised across three horizons (short‑term, mid‑term, long‑term) and evaluated via an attractiveness‑versus‑risk matrix with quick, 10‑minute assessments. The resulting portfolio is reviewed through a rigid stage‑gate process, with disciplined go‑no‑go decisions that can halt projects even mid‑development to protect resources. Finally, he hints at leveraging services to generate recurring revenue, though time constraints limit further discussion.
Chapters
Yeah. Good afternoon ladies and gentlemen. Also from my end here, I'd like to share some thoughts on innovation from Siemens Water. I think Siemens is in the water business and certainly tried to develop portfolio and innovation roadmap that makes a difference. And the question is, how did that happen? So I like to give you some explanation for that. Really, what are the right innovation opportunities? And then also from all the plenty of opportunities, I think we heard the fun side versus the dark side. From all the opportunities, what is the right prioritization process? So how do you really select projects? We have limited resources somewhere, depending on the company, between 2 and 5% of revenue, depending on how much appetite you have. So really, what is the best mix of projects? And then at the end of the day, how do we really get to a stable and sustaining and hopefully recurring revenue? So that brings us to services. And if time allows, we will look at that. So the water market is very big, as you are very well aware of. So big numbers like 380 billion euros. If you really look on equipment and services, it's still big. It's a 32 billion euro market. And if you look on all the participants, please don't feel offended if you are not part of that. It just is a snapshot of big players. Really what it shows you that market share usually is below 3% even in best cases. And that actually tells us that this water market is incredibly fragmented. That is probably too much more than for water, more than for any other or most of other areas of business. And that is actually a challenge. That is also a challenge for big players, obviously also for small and mid sized players. The next challenge comes with technology. So there are literally hundreds of different technologies and applications you can think of. And this just gives you some examples of what we are talking about. Fresh water, wastewater, industrial, municipal reuse, all kinds of applications. So the question comes to mind, while with those kind of big varieties of applications and technologies and with this fragmented market with thousands and thousands of little competitors, what are really the right topics to focus on? What really matters if you are in innovation? So what is the blockbuster of water technologies? So you can easily find development opportunity worth of $20 million or euros a year. But what are the blockbusters that are worth 200 or 500 million euros a year? Well, it's gets very, very difficult in this situation for those questions. So what we did, we actually mapped all the technologies on this S curve, which is a life cycle curve from radical innovation, incremental innovation, upgrade versus basic development, growth and maturity. And you can See that all technologies find somehow their place on this S curve curve. And what we try to focus on is really trend setting opportunities really make a difference with new technologies. With really technologies that are in the growth phase and don't focus so much on mature technologies which have been optimized already for the last 30 years. Well, that certainly was one way of looking at it and selecting about projects and new technologies that we wanted to focus on. Which brings us to the question, so now that we have a better understanding of what technologies we could focus on, what is the right strategy for prioritization really how to get the fun side and the dark side, meaning innovative passion and business strategy and align those that the organization all supports that with the same motivation and energy. I just give those in terms of time, it doesn't bring anything to you that you don't know already. So what is really important to differentiate in this context is there is a before market entry site and an aftermarket entry site. And if we talk about innovation very often we talk about the before market entry side. So we like to think always of fresh products new to the market, never been there something brand new which is earth shattering and disruptive. Well, there's also quite some innovation happening on products and product lines which are already in the market and which need to be sustained and need to be further developed to keep them very valuable and strong for customers. And that is the entire aftermarket entry that we shouldn't neglect because actually the balance really is what matters. And at the end of the day earning money and being profitable. So with that you really need to think or not you. But we think in three horizons. It's really short term focus which many companies tend to do very, very well. Then really a midterm focus. And then we shouldn't forget about the long term focus. And that obviously is the hard pill to swallow because this is really the big investment and big risk topics that you need to somehow get agreement for in the company. But really what it is is today, tomorrow and future horizon that the company needs to develop in order to have a meaningful innovation roadmap for profitable growth and at the same time being really successful six months from now. So what that really means we need a good balance between application and product engineering as well as research development. And well, to make a long story short, how we decide on things like that is a matrix. So we put all innovation ideas into a big table and then we track attractiveness versus risk and we have a couple of key criteria that we evaluate and assess. And this is really not an exhausting exercise. This is something that can be done in 10 minutes for each idea. So we end up with a big portfolio here with a kind of portfolio chart. And really the place of each innovation opportunity tells us, well, this is a good one, or this is probably a prohibitive one. Or yeah, maybe we need to take a further look. So the way it works then time is up, doesn't work any longer here. Okay. The way it works is really that this is a concerted discussion with product management, with the business, with rd and we really come to a conclusion what the portfolio should look like and should be. And then we follow a very rigid stage gate process. Like Tuja already explained, this stage gate process really keeps us focused and always tracks how are we doing against the plan. And if there are serious deviations from the plan, then obviously it really takes the project at risk. Even after mid of the development phase, we are not shy of stopping a project, which is a very necessary discipline to have. Yeah, and with that I like to stop here. I just ran out of time. So maybe we can have a chat about services in the break. Thank you.
