tv Leaders with Lacqua Bloomberg December 31, 2017 6:00pm-6:31pm EST
♪ francine: joe kaeser is a rare breed of chief executive, dedicating his entire professional life to one company. he was a young business graduate when he joined siemens in 1980, moving up the ranks and around the world for a company described by angela merkel as the flagship of the german economy. siemens truly powers modern life, making everything from turbines, health scanners to ovens and factory equipment. joining me on leaders with lacqua is joe kaeser, from
siemens. thank you so much for speaking to bloomberg. joe: sure. francine: can you tell me about the first day you started at siemens? joe: it has been a while. but i remember, when i was coming to the company i said, oh my god. i was thinking to myself, i do not know anything anymore about what i studied. it was quite an experience. francine: do you remember going into it? did you think, this is a company i really want to work for? joe: i was interviewing at different places, but i saw siemens at the time, it was still in the semi-conductor business and the electronics business. so i thought it was really cool, we were about to develop this one megabit chip. we are now at gigabit. so i thought this is where i want to be. francine: how has the company changed? joe: it is like day and night really.
i came in to manufacturing environment, it was about production and process and cost efficiency. there was a very technologically focused company, not much about markets and customers, it was much more inside out than outside in. a lot has changed. francine: what was your favorite day? joe: i had many favorite days. whenever my team celebrates some big success, i would think, this is the best thing which can happen to you, having a great team. people are happy, the initiate what they do. -- they appreciate what they do. francine: how do you manage success or how do you measure success? joe: when you promised something and you make good on your promise, it is about accountability. that is the ground floor.
the icing on the cake is when people talk about you two o different people, at the end that is what really matters when you are remembered. whether you make the numbers or not. after a generation, people say hey, that guy, he actually made some mistakes but actually, he really left a better company behind. francine: talk to me about innovation. what will siemens look like in 170 years. how much do you have to innovate and how much do you have to stay close to your roots? joe: i think in the next 170 years, it will likely change a lot. they will accelerate out of solution, it will become more intangible, much more integration necessary to put bits and pieces of products together. so i hope the world will have
become a much, much better world than we have today. francine: few companies have gone through as many technological and industrial revolutions as siemens, but rather than just survive them, it has helped lead them with the advent of electricity to jet engines to wireless communications. but now, siemens is inventing -- is investing billions in making sure its future is digital, from giant turbines in asia which use artificial intelligence to reduce omissions, to products in the u.s. harnessing big data to find problems before they occur. are you worried about the pace of change? if you look at the last 10 years, innovation has gone so fast that you cannot possibly do that over 170 years. joe: that is just what people thought 170 years ago. people are just naturally concerned about the future because the future is uncertain. the question really is what
concerns us, not so much innovation or what technology can do because all those three industrial revolutions that we've had so far made a difference in the planet and made this society a better society. it created wealth from poverty and peace. that is a positive. what is radically going to change is the speed of the change going forward. human society may not be able to deal with that sort of speed, so what i am really concerned about is that if we do not make this industrial revolution inclusive to society, it may create a lot of challenges, unrest, divided populations, which leads to obviously populism and leads to nationalism and you go all the way down to where we used to be 100 years ago. francine: do you think there
will be problems to provide solutions for because of this rate of change? joe: the fourth industrial revolution, the internet of things or whatever you call it, people believe it is going to be virtual, sophisticated, invisible, the cloud, a terrible word. that is not true. there will always be trucks, there will always be something to drink, to eat, there will always be cars, there will always be hardware, tangible things. francine: are people confusing innovation with globalization? joe: interesting question. maybe. the speed of technology, what they feel is they believe the root cause is globalization, but it is actually the other way around. technology makes it possible to have a global network. that we have our smartphones,
that we are always on at any point in time, no matter where we are, we are always connected, you can talk to almost anyone in the planet, real time. that connectivity is actually a benefit. that is globalization as we speak. we like it. if you are negatively affected by innovation and globalization, you do not like it. and that is what we need to better explain going forward. francine: it was pretty controversial when you went to see vladimir putin a couple of years ago. are you ever concerned about being controversial? ♪
>> over the past few days there has been a great deal of media coverage about siemens about personal and other nonrelated business matters. but this is not siemens, and that is not what we stand for, nor is it what it should be. francine: joe kaeser made the statement days after taking over as chief executive of siemens after his colleague had been removed. it said a lot about his appeal as a leader, providing clarity during confusion and stability in unrest. he spent the last four years trying to simplify the complex structure of the company. you have overhauled, are you happy with the structure now? joe: i am happy with what i see in terms of how our people take ownership literally in what we
do. saying that it is my company, it is my responsibility, my job, i am responsible. it takes a lot of confidence to act like that. francine: do you think investors will ever get confused? you are such a big group and conglomerate. joe: they only get confused if i try to explain it in too much detail. then i know that i need to shut up, do not confuse them with the details, just show them the way that they want to be. then deliver what you said you would do, and it will be ok. francine: what exactly drives you? joe: at the end of the day, business is there for society. business needs to be more inclusive of society, and if society is successful, we will be. we cannot afford to further divide society between the haves and have-nots.
francine: you seem to have very strong ideals. is that why you empower your employees through stock? joe: we call it ownership culture. there are two aspects. all, if your family business, no matter what size it is and you own it, it is your personal business. maybe you have gotten it from your parents. what is your natural desire? your natural desire is very likely that you want to give that business to your children in better shape, a natural desire. there are exceptions, but this is probably what the natural desire is, so, inherently, you built in a sustainable element of long-termism. the second element, more importantly, i own the company, i am long-term oriented, i do the best because it is my company. this is, no matter who you are,
no matter what you do, always act as if that was your own company and you will be fine. even in meeting rooms, we put it on the table and say hey, if that was your company, what would you do? they put so much pressure on meaningful debates. francine: it focuses the mind. joe: yes, because if somebody says, i would do it anyway. really? really? is that what you want? francine: does that mean that you worry about short-termism? joe: a little bit. francine: in business over all? or more in america than everywhere else? joe: it is only a matter of time. many things are invented and cultivated in america, and it comes to different places. francine: how do you change that? you are trying to change it within the company. joe: that is a very good question. you need to be successful in the short term, yet not lose out in the long-term. it is the balance you need to strike.
in essence, you need to keep the difference between the short-term aspect and the long-term aspect, you need to keep the distance very close because the wider it gets, the more activists you get who say this is not the performance got we want. francine: it was pretty controversial when you went to see vladimir putin. are you ever concerned about being controversial? joe: the intent was not to be controversial. francine: in march 2014, joe kaeser met with the russian at his residence outside moscow, days after russia had annexed crimea and just as the west was launching its own showdown. president obama: together we condemn russia's invasion of ukraine and reject the legitimacy of the crimean referendum. joe: the outcome was complicated , to put it positively. i did not know that president obama and the european leaders at the same time that i was
meeting the president were having a press conference in brussels about sanctions. the american president did not bother telling me his appointments, so it was unfortunate timing. and later on i gave an interview, and i remember it was crimea before ukraine, and i gave an interview on german media, and i was asked, how the hell could you even go to see this person? >> [speaking in german] joe: and i said look, it is good to talk to each other, not about each other. of course territorial integrity
matters, of course it matters, but honestly, given what we have been through with the russian people, between two world wars, i said, you know, this is a temporary issue. now what happened was, and we know this well, what was in the news and media, it was not about the two world wars, crimea is maybe not as material. obviously if you only read that, you would say, what the hell is going on with this person, saying such crap? so it was unfortunate. but the intent was, i made a commitment to the crimean people to industrialize the country. so where are we at? that was the intent. the outcome was learning of me to be more mindful and be more careful about my responsibility. i still do believe that talking to each other in any sort of crisis is more important than
president trump: chancellor, thank you very much. such a great honor to get to know you, to be with you. i want to thank all of the business leaders who have joined us. francine: siemens executive joe kaeser was one of those leaders with the merkel delegation to the white house in march. siemens employs 50,000 people in america. this came with a backdrop of uncertainty after the new president had been less than
complimentary about german trade. what do you think will come out of the trump administration? joe: i think the jury is out on this one, obviously, because we hardly made the beginning of the first year, and it could be all the way up to eight years. i don't know. i want to believe he is trying to do the right thing for his country. the style is different as to what we have been used to in the past, and i think the europeans are also well advised to look into what matters to them and what doesn't. whether it is russian collusion or any other things, whether it is business. the united states business. the other topic is global trade, how to interact together in a modern world of manufacturing,
specializing in certain tasks, in a global world. that one matters. i believe, to europe, especially to germany with trade deficit and things like that. people underestimate the desire of the customers. francine: which is what? joe: the desire of the customer is to buy what they like to have. an unhappy customer is an unhappy consumer. an unhappy consumer is an unhappy voter. so you have to be mindful about people's desires. no one forces our goods and products to any american customer. they want to buy it because they believe it is good. so in the end, global competitiveness, we believe, is about innovation and also about a fair sort of dealing with each other. so that is i guess where we need to sort out a few misunderstandings on that one, how global trade actually starts and develops, and then we will
find a way to work together. francine: does making america great again necessarily mean the rest of the world becomes worse? joe: i think that is the point. president trump: millions of hard-working u.s. citizens have been left behind by international commerce, and together we can shape a future where all of our citizens have a path to financial security. joe: he is the president, and you respect the office, but america is great. it is a pretty darn great country. it is the leading economy in terms of next generation manufacturing even. you know? google, microsoft, silicon valley, what have you, of the world, they are global leaders. dow chemical cured even the car manufacturers have been catching up pretty well from a devastating situation a few years ago, so this is a great country by any means.
and honestly the greatest of it has always been that it was a free country. there is nothing wrong with "america first." i think what would be wrong if we went from "america first" to "america only." that would be complicated. there is still 7.2 billion people around the 300 million in this greatest country, so that is where we see a bit of confusion, nobody really understands yet what that means. francine: is europe great? joe: it has challenges because there is no fiscal union, nothing holds as together in terms of a policy standpoint but i believe europe has seen the worst in terms of jumping into all sorts of directions. it seems like sentiment is more integrating. francine: you don't think we can come back? that we somehow forget the concerns of populism in europe and it comes back uglier in five years?
joe: i am very encouraged, first of all that people are saying hmm, people stood up and went to vote. because they saw that things were not going their way. this was what was the most encouraging thing to me. they said, we are the people, it is time to take it into hand. that is quite positive, honestly. francine: how do you see china? joe: china, hmm. the chinese way is to typically sit down and smile. look what happens. today, in the western world having not yet fully straightened out what we all mean by what we say kind of, the chinese say, hey, if there is no western leader anymore in global trade and things like that, then why don't we do this job for them because we have a 1.3 billion people, more than europe
and the united states together anyway, so why bother? it was just a few months ago at the one belt, one road summit where president xi jinping was the keynote speaker at the summit, and he said, look, we are going to build the old silk road. 65 nations have signed up already. there was 100 state leaders there, so there might be more than 65, they are going to raise about $200 billion in financing to build this. -- he said, the silk road in ancient times had brought peace and trade, so why not build it again? if you take this one step further, think about 65 to 100 nations, the western road really does not yet know how to deal with global trade and things like that, what fair trade is all about.
they're going to build one road, and it may as well be the new wto. francine: yes, but it is such a big economy. they are trying to move a supertanker. are we going to see a bump as china tries to be a more consumption-led economy? joe: i think china is not exactly a democratic state under western standards in a way, so the government is very clear with the directive of where they are going. there is very little multi opinions about what could be done or not be done and things like that, so they are very effective in what they do. francine: so they have a good handle on it? joe: they have a very clear direction, and their execution force is very strong. i am not saying it is good or bad. we know that there are human rights challenges and things like that, but so far they have been very effective in doing
♪ francine: he has been dubbed the geek of chic. he is a tech entrepreneur in the world of luxury fashion, founding the online retailer yoox as an online marketplace. 15 years later, he merged it with its biggest competitor net-a-porter, creating the -- creating an online shopping giant. joining me on "leaders with lacqua" is federico marchetti.