Hi there, I'm Oshin Loney and this is the Siemens Advanta podcast where we invite you to unlock the full potential of IoT. Every episode we chat with some world-leading experts who can help make the vision of an optimistic IoT-powered future a reality. And on this episode, the grand finale of season 1 of the podcast, I am honored to welcome the CEO of Siemens, Dr. Roland Busch. Welcome to the podcast, Roland.
Thank you very much. Hi, Oshin. How are you this morning?
All good. I've had my coffee. I'm ready to talk IoT. This is fantastic to be here. So, I'm really looking forward to getting your perspective on things, your unique view from the top. You know, you've got thoughts on digitization, on the world of work, and much more. We've got loads to talk about, but I wanted to start at the very beginning, if I may. When you were at school, what did you actually want to be when you were growing up?
So after it was the very late in high school when I figured out that I think I wanted to study physics.
And then I wanted to be a teacher or professor. It turned out very quickly that I have to go another path. And the reason was that I thought it's just boring to teach again and again the same things. So this was the major reason why I thought well it's nice, I think I'm good in teaching. My wife always says I can explain things very well, make it easy and understandable. The curiosity my curiosity was in the way to say I have to go ahead.
Excellent. So your career as a physician or teacher long term was sort of sabotaged by this insatiable curiosity. I like that very much. And when did the thought of becoming the CEO of a company first enter your mind? Did it arrive at you or was it something you figured out?
No, it arrived actually very late. So I'm in the managing board of Siemens now for 10 years and this goes back to my first P&L responsibility. And from that on and this was 2002 to five and from that position onwards I was never looking for the next step. I was resting calm on what I'm doing was exciting and maybe that's one of the tips I give to young managers and young people that I say do what you do and do it with passion and rest in it the rest will come.
And today you're the CEO of a company with a market cap of, you know, more or less 110 billion euros. Which is very significant and this is a big responsibility. It's a big role and you actually stepped into it at one of the most challenging times in modern history. It was during a pandemic and a global crisis. So what was that experience like for you and, you know, how have you found the new role?
Since I took over during the pandemic, first thing was really to take care about our people and to organize the whole organization in almost 200 countries in the world that we take care of our people but at the same time take care about our customers so that we are delivering even in difficult times and we kept our promise. I think this is one thing. The other one is that we are living in times of transformation. All our markets are transforming. The pandemic was accelerating all trends we see, in particular the digitalization trend which is really on and it's even more present than we thought. This is the most exciting part about this job because guiding this organization through this huge transformation, and we all know transformational times are times where many companies are suffering the incumbent syndrome. That means market leader will eventually not survive or will not be market leader in the best case after this transformation. We have to manage this transformation in a better way, which is exciting but also challenging at the same time.
Yeah indeed. So these kind of challenging times they really show the focus on what's important. You said you focused on making sure your people were okay, your customers are okay and looking after the whole ecosystem. But this is in the time of digital transformation and the pandemic is shining a focus on companies that are going to be successful and those that are not. There's winners and losers in all industries. But taking it back a bit, why is digital transformation necessary right now to become resilient and to stay resilient? What's the role that digital transformation plays?
There are a couple of elements. It is indeed about resiliency. Companies who invested in digitalization and automation ran through the crisis much smoother than others. We didn't have to shut down our manufacturing sites. Some were running with a handful of people because we were automated and many tasks were done remotely. We could still deliver trains where others couldn't because we have a virtual homologation or acceptance test with customers. We guided them with glasses through the virtual room and they accepted it. There's also a huge demand for higher productivity, shorter time to market, more personalized products, reducing resources or CO2 footprint. All of that requires a step up in how we run our operations. This step up cannot be done by polishing the asymptote, using the same technologies and making it a little bit better. You can have 2-3% productivity, but if you want 7-8-9-10%, you have to do things differently. That's where digitalization and data come in. It's about connecting devices, making them talk to each other, and eventually autonomously doing things based on trained algorithms with machine learning and AI. Also having a real digital thread along the value chain from engineering through manufacturing and supply and delivery. With that, you can optimize the whole value chain and shorten time to market.
Yeah, indeed. Digital transformation does sound like win-win. You're going to improve any KPI you look at: more productivity, more potential for the company, more future growth. So it seems like a no-brainer, but not every company in the industrial world is embracing it. Why do you think it's so difficult in the industrial field for folks to get on board with this?
It requires a new set of competencies and capabilities. That's why we put growth mindset at the center of our strategy. Take a small or medium-sized enterprise. The IT department easily fits on my conference table. If you want to drive digitalization, you need much more capabilities. Remember, this is about connecting the real and the digital world, IT and OT worlds. Disciplines that didn't talk to each other before. This requires domain know-how. If you don't have the domain know-how of your market, you won't identify the problem points and won't solve them. You also need an ecosystem. No company can do it alone. Building a powerful ecosystem of customers, IT providers, cloud providers, application developers, and other parties with domain know-how is key. Siemens can do this best because we live in both worlds. We have a 5 billion software portfolio, invested 10 billion in our software suite. We have domain know-how and consultancy and integration competence. Our customers ask us to help them make this transformation. We offer a lot, but not everything, so we have a strong ecosystem too.
Yes. Right. So it's a mixture of technology, the right leadership, and the growth mindset. Do you think it's an option for any company to sit on its hands and do nothing? What's going to happen to a company that doesn't embrace digital transformation?
If I were a leader of that company, I would not give it a try. I would go with the flow and adapt technology as fast as possible. I'm afraid that the destiny of each company not moving to the next level of deploying technology is that they will eventually disappear. Because if others do, they can show higher productivity and shorter time to market, and you can tune the clock until that company disappears.
Wow. Set your watch by it. Those are words to live by. You need to get on board the digital transformation agenda. So it's important for big players to have the right mindset as well. You mentioned incumbent syndrome earlier. What kind of leadership is required to avoid this and succeed on the transformation journey?
The point is that incumbents have a kind of destiny because they are market leaders, they do something better than anyone else. So the first question is: why should I change? The answer is that transformations or disruptive changes happen at the fringe of your markets, asking for a different set of KPIs. For example, we are market leader in automation devices like PLCs. Customers ask for smaller, faster. But digital transformation is about values, not just a PLC. It's about driving the output of your plant, quality, yield, fault rates. That requires an integrated view of design and manufacturing. Leadership requires that you still make money from what you're good at, but start at the fringe to identify trends with different KPIs. Work on it, test it in the fringe so you don't attack your core markets full steam at first. Once you recognize it's the new thing, shift gear and go full steam. Doing that concurrently within the same organization, running different processes, is the biggest challenge. Also, don't forget your sales force. They can be in your way. You have to start at the customer front to drive transformation.
