The First Outsider

Most companies put insiders at the top post. It serves as an inspiration for the lower ranks who also aspire for the top position. An insider also knows the company already so there is no lag time required to get to know the company better.  In the case of German company giant Siemens AG it hired an outsider to lead the company for the first time in its 160 year history.

The reason why Austrian born Peter Löscher was chosen to become the Chief Executive Officer of Siemens in May 2007 was because the company was reeling from a global bribery investigation. In this case it would be best put a new face that was not connected with the company’s past.  The company eventually had to pay $1.6 billion in fines.

Yet the move to hire Peter was not merely symbolic he went to work to improve the company image and more importantly to improve how the company functioned. As he wrote in an article within months of his taking over the company replaced 80 percent of the top level executives, 70 percent of the next level down and 40 percent of the level below that.  He also implemented some streamlining to improve efficiency.

Prior to his job as the CEO of Siemens AG, Peter held high level positions including as CEO of other large companies.  This time the outsider proved the best choice.