Top of the list are subtle changes to Siemens’ unwieldy management structure in a move that could have a profound effect on the company's culture. Siemens at present has three layers of management: coaches - who oversee several divisions without assuming total responsibility - on the main executive board; the divisions themselves; and very powerful national subsidiaries based in many countries.

Mr. Loscher's plan, according to senior directors, is to strip power away from the countries and to eliminate the people acting as coaches on the executive board. Instead, that board will be made up of executives with central powers - the chief executive, CFO and managers for technology, compliance and personnel - as well as the heads of three new "super-divisions", made up of Siemens' self-defined core areas: energy, infrastructure and healthcare. This is likely to be presented next month and represents a more focused structure from the present 11 divisions.

The disempowerment of the national subsidiaries is a radical step. Up until now, they - rather than the divisions themselves - took the lead on negotiating contracts in their particular country even if it was a deal purely in the power generation unit, for example. No more. Mr. Loscher is clear that the business unit itself will make the decisions in a move that could put him in conflict with certain national grandees at Siemens. Alongside this, countries are more likely to be grouped in a region with services pooled: Mr. Loscher likes to point to the example of his home-country of Austria being the base for most of eastern Europe. "This is about changing Siemens’ culture in a very deep way. Because of that we will have to proceed in small steps," says one director.

Mr. Loscher's status as an outsider - he was brought in from Merck of the US after the former chief executive and chairman resigned amid a bribery scandal - means he needs to tread carefully in a company with a deeply held culture.

The changes are also likely to lead to an influx of new blood into the executive board. Already, Peter Solmssen is joining in the newly created position of legal and compliance executive from US rival General Electric. Other appointments from outside Siemens or from the lower ranks of its own management are expected in the coming months.

The creation of the energy, infrastructure and healthcare super-divisions will also lead to the possibility of further disposals from the sprawling conglomerate, which makes everything from light bulbs to power stations. Directors say only 80 per cent of Siemens’ activities fit into the three pillars with the remaining 20 per cent open for possible disposal.

Many have speculated Osram, the light-bulb manufacturer, could be floated but one senior director calls this "total nonsense". Similarly, suggestions Siemens could sell its part of a joint venture with Bosch in household appliances seems unlikely. But its stakes in Nokia Siemens Networks and Fujitsu Siemens Computers are under threat of sale as they fall in what Mr. Loscher calls "the penalty box" - they need to justify why they are there. Other disposals are likely to be on a smaller scale than some investors have expected or hoped for with Mr. Loscher telling colleagues: "I have not come here to sell lots of things."

Mr. Loscher, a former GE executive, often likes to invoke his former employer; in particular on where Siemens has potential to grow. GE is far stronger in both services accompanying its own industrial activities and financial services, and Mr. Loscher is keen to boost both high-margin areas.

Other plans Mr. Loscher has include a new cost-cutting program, in part from the closure of many of the divisional and country headquarters.

Source: Financial Times