John Stoll 

Okay John Stoll of The Wall Street Journal on that right Business column and Barbara Humpton today is my guest. We're going to be talking about a lot about the fourth industrial revolution. But everything in between barber runs in massive organization, we're talking about 25 billion in annual revenue with one of the biggest companies in America. Yeah. And on its own right, and part of a bigger company that we all know of Siemens. 50,000 employees in the US. I mean, this is a one, like I said, one of the biggest companies in America and how you keep all those plates spinning in the air at the same time is a trade secret and of itself. I mean, getting busier getting easier. Our lives were supposed to be easier, but no,

 
Barbara Humpton 

No, no, no. And in fact, the more complex this gets, the more fun it is. Okay.

 
John Stoll 

All right. That's your that's you speaking Not me, but that's what makes the CEO job I'm sure. extraordinarily interesting. And in one of the things I just wanted to clear off the top is in 2020, I mean, how would you look at this job given everything going on a political backdrop The tech moving as fast as it is, and you're running part of a company that has been with us for decades, and has a global footprint. How do you size up the opportunity and the challenge? In 2020? You've got a whole week's worth of, of traction now in this decade, you know, what are some of the big key risks and some of the key opportunities that you're looking at?

 
Barbara Humpton 

Thanks. First of all, thanks, and what a privilege to be here. And it's so fantastic to see so many of you here with us today. We're eight days into the new decade. And here we are, what a perfect opportunity to be at CES talking about the fourth industrial revolution. You know, people have been asking me a lot about how we view this new era that we're in. And and I've been saying and sharing with folks that you think about the technology that has transformed our consumer lives, the technology that has really altered the way we communicate how we entertainment one another. And that technology is now coming to the built infrastructure that Siemens has been so involved with here in the US for over 160 years.

 
John Stoll 

Yeah, and get just a couple examples of what you mean by the building infrastructure. I mean, we all have the computers in our pocket. And, you know, I can play with my families at home in Michigan, and I can play with the thermostat from my smartphone and have all kinds of fun, but in the type of scale in the businesses that you're in, when you start talking about this digital revolution, not just seeping in, but kind of being a wave that overtakes it. What are some of the key products or key ways that we're going to be able to kind of interact with this fourth industrial revolution at Siemens talks about a lot?

 
Barbara Humpton 

Yeah, well, and then let me set the context of the kinds of things we're working on at Siemens. We are experts in energy. We're experts in infrastructure, meaning building comfort, security, safety. We have a huge presence here today in mobile ability, because we have capabilities for transportation systems, both in building trains themselves, but also all the systems that connect and integrate transportation systems. In manufacturing, you'll find us in both the hardware and the software now being part of the industrial revolutions that have gone before now bringing us into the fourth industrial revolution and in healthcare. So across that broad portfolio, what's happening in the fourth industrial revolution is this opportunity to use data. We've we've Siemens has been part of every Industrial Revolution, from Steam to electricity to automation. Now the opportunity we have ahead of us to take data from these many systems that we've been building and experiencing these last many decades, taking data analyzing that data aggregating learning from it. And then from that creating new products, new services, even new business models. So I'll give you an example. Think about the way we travel from place to place. And we were all familiar with needing to get a ticket to get on a train needing to use an app to get a car, we pick up that, that scooter that will get us in the last mile. There are so many diverse ways we interact with a transportation system. Siemens in Columbus has delivered the capability to go from point A to point B with a single user interface. And what that's going to do for residents in Columbus is make their lives so much simpler, allowing them to think about

 
John Stoll 

to get a ticket and transfers and things like that they can

 
Barbara Humpton 

they can do point to point they can do all of that format come to our booth you'll have a chance to see it in real life. But But think about every one of those markets that I've shared with you. And you'll realize that every single one is recognizing that harnessing the power of data is going to transform their market overall. And the scary thing here is that there are going to be some folks who get left behind unless they actually get engage. So So that's our focus right now. I

 
John Stoll 

I mean, you're dealing with this data collection that every company is dealing with right now, how much data how do we use it? Where do we store it? Siemens has had some movement along having a charter basically a covenant with the, with the public, right? I mean, how do you guys view this role that you're in that you do can, you know, bring in a lot of data, but you your steward of that data?

 
Barbara Humpton 

Right, I mean, we've seen this in our consumer lives, right, the number one issue is going to be privacy and security. And so we're already working on that as Siemens with a data charter. Last November at the UN's meeting about information security, the our CEO, our global CEO Joe Qasr introduced this charter. And it's six tenets, that by the way, we believe that those of us in industry really need to be responsible for establishing practices that are going to really respond to our societal needs for security and privacy. And, you know, rather than waiting for regulation, we want to be part of the regulatory process. We'd love to see regulatory processes, stay lightweight, and then have industries like ours really participate in a leadership role in establishing the norms and and what's acceptable Now, think about, think about the data needs and that the data charter that you'd want to establish and you think first and foremost, a user of data needs to be clear about it. intent, we need to be public and open about how we intend to use data. Second, we've got to enforce and actually confirm that the people who produce the the systems and the people who produce the data own that data. Then we also have to commit to cyber security and the ability to secure data that is entrusted to us. But we also need to establish agreements for collaboration. co creation is it is a hallmark of industry for Dotto. And so it's going to be important for us to see this as part of the charter of for control of our data. Now, there are two more elements to this and I consider them to be some of the most important one is to recognize the power of anonymous data. In fact, if we can anonymize data, make it available so that our systems can learn from it, we're actually going to accelerate the pace of change and the systems we're trying to develop. And then finally, and foremost, really what we have to think about is the sustainability of the systems that we're creating and thinking about the future and the future years.

 
John Stoll 

That's interesting because when you, you sort of, for lack of a better and maybe using a bad word, to view you as a conglomerate, right? And so I wonder if there's your response to that. And this idea that we need conglomerates do we not is the is the nature of what a conglomerate is changing? The advantages are clear with the type of balance sheet that you can have and the type of research and development you can spread out. But that there may be too much of a lack of focus. I mean, what what what is the view of that word in 2020 and how you guys are able to, to work across different industries and yet be the same one company.

 
Barbara Humpton 

Okay, this is the core Question that we're dealing with as a corporation today, and a lot of people have been commenting on the fact that Siemens is going through a global change, and asking us why, why we've just had some of the most successful years ever in our business. And our answer is now is the right time to make change. Now, here's what markets around the world are telling us. Pure play companies really return the highest value to shareholders, activists, investors all around the world are coming in and making that statement and and disrupting conglomerates that may be resisting change. Well,

 
John Stoll 

there's another way of saying a hyper focus on a certain category. When you say a pure play, what do you mean by

 
Barbara Humpton 

a pure play? I mean, think about a market that consists of customers, experts who deliver service, a supply chain, etc. That is an economic ecosystem. And if we're able to Focus a company on that marketplace, give them the ability to develop the governance that they need. Give them the ability to develop the tools they need select the human resources, processes that they're going to use to develop the workforce that they need for their successful future. That is a successful play in this market environment. And we used to believe that there was goodness in in aggregation. You know, we get a lot of synergies out of bringing diverse companies together, organizing and uniting and their management. But actually, there's a downside to that right. In Siemens, you can see this very clearly. A couple years ago, we actually iPod our health and years business. We've got a health care business and imagine how different is a health care business from one that's focused on mobility? Do you think they need the same governance and infrastructure? Well, it turns out the helfen years have done fabulously well. Siemens maintains a majority stake in the company because that is important to us achieving our overarching objectives. So let me share the second part of this, which is what is then the value of a conglomerate today? Is there value? Is there value in a brand? Is there value in reputation as an entity? Well, at Siemens we know there is and the kinds of things we're focused on are the things that you're going to see and read about a lot. So, I want to share with you the five mega trends that govern the Siemens corporate strategy overall, climate change, urbanization, an aging demographic, people all around the world are simply getting older. The ever increasing integrated global supply chain despite the global geopolitical political situations that we have going on in fact, there is Global Trade going on and it will multiply in the future and then the digitalization of everything. So what we've done at Siemens is focus each of our businesses selected businesses, where we have know how in electrification automation digitalization to address those mega trends that defines our purpose. Each of our businesses now can operate separately as pure play companies within the markets they serve. But the other thing the corporation brings is a rock solid foundation, a commitment to safety, a commitment to compliance, a commitment to fulfill our purpose in in the appropriate way. So so that is the definition of I'll call it corporation for

 
John Stoll 

your for your fourth point on globalization is a bet that you need to make in an environment when politics regionally Brexit what's going on in United States, India, China. We're seeing this, the China marketplace shift dramatically, for instance, for the auto industry. I mean, it was grow until you can't grow any I mean, the growth was incredible and all sudden that gets flipped off. So there is still a bet at Siemens that globally, we are going to continue to globalize that global markets matter and making the global bet versus kind of dicing it up and regionalizing. your view on this is that so how do you see the current atmosphere changing, contributing, shaping, reshaping the future of globalization?

 
Barbara Humpton 

Yeah, it's true that all around the world, we have businesses that are needing to adjust as conditions change,

 
John Stoll 

right. Just for backdrop. You have five and a half billion dollars of net exports. We have

 
Barbara Humpton 

we have five and a half billion dollars of exports out of the US. Okay, yeah. And and we are medx. We are a net exporter from the US and here in the US, we represent about 25% of the corporation business. Business globally. And by the way, the US is an It's a unique market within Siemens. Because here you find everything. Every one of the businesses has chosen to pursue business in the US, whether it's healthcare or infrastructure or smart, digital industries or our energy business, it's all here. And with 50,000 employees, you can imagine it could be a company unto itself, but that's not the way we've chosen to organize. What we've chosen to do is have each of the businesses tied to their global entities. There is so much power in taking lessons learned innovation, best practices from other places around the world, and you know, transporting and building on those, but what's vitally important is is maintaining a laser focus on the the local market as well. So Siemens in 190 countries, maybe, maybe more depending on how you count The the what you'll find is that Siemens is local everywhere. What we are able to do here in the US and you can tell by the numbers you know, there's it is massive Import Export going on. But when you think about it here within the US boundaries, we have a huge customer said and tremendous demand for our products and services. Orders last year grew in by double digits. So we can see there's a real need for what we have. And and then likewise, we have a very, very conducive economic environment for what we're trying to do and what we're trying to lead. So on the question of, you know, hey, how does the US fit into the Siemens global view? It is very much the the largest market for us and very, very important. I would I would say that there's a desire to see well, how much more could we be Doing within these borders. as CEO of Siemens us, I'm looking for every avenue I can to continue to build whether that's through supply chain or otherwise. But realistically, it's going to be important for us to continue to maintain positive global supplier relationships as well.

 
John Stoll 

Yeah. And then another one of the pillars that you mentioned, was really interesting, because you're talking about a business that's kind of running in these directions. That are they're very much established in ideals and how does the investor you'd mentioned activist investors earlier kind of, you know, making determinations about that laser focus and having pure play businesses? How does the investor community responding to that as well, this idea that, you know, these are pillars that we're moving in these directions. So in for instance, you're spinning off the energy business, but you're remaining committed to renewables. So how does that shake itself out? And what does that pretend to for the future of Siemens and then How do you get that business profitable more, you know, more profitable than it is today?

 
Barbara Humpton 

Well, yeah, let's talk about investors for a minute. If we this is such an exciting time, because investor expectations are, are changing, I think investors are recognizing the power of their voices in guiding corporate decisions. And of course, generating shareholder value has always been a cornerstone of any of our corporate practices. And it but it within Siemens, we were proud this year to last year to sign on to the business roundtables, new statement of purpose, because of that recognition. What we've been doing now as a corporation for quite some time, is is recognizing our role in serving society,

 
John Stoll 

stakeholders being wider than just investor, the investor shareholder, but you're talking about multiple stakeholders, and that kind of dovetails with our investors are kind of pushing you to at least on the institutional level to pushing where to go

 
Barbara Humpton 

well, yeah. Alright, so let me take this in sort of two different directions, one on the investor path. So what's powerful now is investors recognizing and I'll say institutional investors are really interesting segment, you know, the, the asset owners, the asset managers are, what would happen if say, CalPERS, the the largest, you know, governmental Employee Retirement System were to support the idea of sustainable development. What turns out Marcy frost and her team are doing just that. They're expecting the companies they invest in to have sustainability plans and to actually share those results and show them it's that kind of behavior. That's actually, I believe, also encouraging corporate behavior, but it's not just investors. It's also customers were working and by the way, a lot of them are here today. Customers in the automotive industry have been fantastic about turning to their suppliers and Saying I need to understand your sustainability plans, and then looking for real action and and putting their money where their mouth is. So what we're seeing is a true shift where there are market forces that really are supporting the societal benefits that we've been driving

 

John Stoll 

for time. And we were talking earlier about maybe there's a misperception about where we're at, and for instance, wind and solar, you wouldn't be having that as a focus in your business if you didn't think it could be profitable, and at a price that's market competitive, and where do you see that market going in the next 10 years? And what's the Siemens commitment in the US to and on what level will we see that type of energy begin to matriculate into the everyday?

 
Barbara Humpton 

Yeah, so we're smack dab in the middle of an effort to spin off the energy assets within the Siemens Corporation. So think about power generation of all sorts, transmission and distribution. Imagine in one corporate entity having the capability to do power generation of any sort of customer may need from renewables to clean natural gas to the most efficient use of coal that's possible. Recognizing that around the world, the energy ecosystem is changing rapidly. And this one company will have the the ability to get on that journey with every stakeholder who's who's worried about this around the globe. And with the technology, they know how to take them through whatever energy transformation they're driving. So wind and solar because of scale. And by the way, I think we have a lot of thanks go to the US Department of Energy, who created initiatives that generated market conditions for us in the US that have really first brought renewables into the affordable range. And now the market has been able to take off and and we're seeing we're seeing a competition Now between our traditional forms of power generation and renewables, but but what a lot of people don't understand and I really want people to, to really grasp, we are in a period of transition. And we have a real need to be responsible with the fossil resources that we're going to be using as a globe in the coming years. And so this is what our new energy group is going to be dedicated.

 
John Stoll 

And one of the interesting things is when we talk again, back to that conglomerate ideas, these different companies kind of doing their own things then they roll up into some you know, parent organization and then they're trying to you know, squeeze synergies out and, and and earn ever increasing returns. But you had said something to me earlier about how the organizations are becoming far more about networking, running, running these companies successfully being in your job having counterparts in other parts of the world and another businesses, business units, more about networking and less about hierarchy, explain what how that looks in Siemens and then on the macro level, You know, have you been observing that trend?

 
Barbara Humpton 

Well at all right, so any of you who belong to an organization of any size, I'll say greater than 10. Think about the difficulty of drawing an organization chart, right? The day you draw the organization chart, you say, You know what? This command and control is going to introduce some problems. And so what a lot of companies do, and I've actually participate in this as let's draw on or organization chart, let's see how it works a little bit and then let's just change, we'll go turn it 90 degrees, and we'll we'll restructure and, and yes, for the next several years, we're going to get a different behavior, but guess what different unintended consequences. So here's my premise. My premise is the future is networked. Not hierarchical. Yes, we draw organization charts and that's to make sure that we take care of everybody that people understand, you know, what business they're actually in and and understanding what troublesome functions are Actually, so I'm going to tell you swimlanes ends up being one of those trigger phrases, right trigger words. Because you know, everybody's looking for Hey, what do you expect me? Here's what I'm looking for. I'm looking for people who say, I'm focused on the end customers need, I recognize what I bring to the table, but I recognize the people around me also contribute that network, the ability to work across organizational boundaries, to get really important things done. That's the the success was a blurring

 
John Stoll 

of the I'm a swimmer. So I'm a little worried when we get outside is that a blurring of those lanes is that a redefinition of of the way that companies work together as there is a digital life of a company now becoming a greater equalizer so that if I'm in healthcare, if I'm an energy or if I'm in you know, mobility solutions, I may be more prone to work with one another? How do you how do you view some of the secular forces that are there forcing companies to to be more set of integrated,

 
Barbara Humpton 

integrated Well, let me give you an example from right in our booth here and mobility, I got a chance to talk to one of our mobility employees who came to the show. She had started her career and helfen ears, and then she went into our digital industry software group for a period of time and now is in mobility. She's actually responsible for our minds for application center in Austin, Texas. And, and, and so she's had that experience of actually working in different parts of the organization. You've seen this, you know, right, this, we hope this happens. Employees care about the overarching purpose, and they want to bring their talents to bear and so what I'm looking for is a strong enough organizational structure that we're going to deliver business results in each of the markets we serve. And enough, I'll say, combined the IQ of knowing that technical role with the EQ of being mature and understanding how to relate to people Now, the dq, the digital quotient that says, yep, I know how to grasp new tools and techniques and get into this collaborative environment and be successful for my customers.

 
John Stoll 

Before it would be remiss not to ask because you are in DC, and we've seen so much of an intersection between, you know, whether it's been area of era of deregulation, or it's been tweets about trade, or policies about trade. I, how do you view this current situation? I mean, clearly, we've now been through, you know, three and a half years or four years, you know, coming up on four years of this administration and, and I don't need you to speak directly to the politics as much as I'm wondering, your view on on how we go forward. Regardless of what happens next November How was your view, particularly being in DC? matured, I guess I would say, particularly as you've been able to open some pathways for the administration to see your business and and you know, we all look at is Washington that's broken, but you can't You can't live in uncertainty and you can't live in, you know, just saying, well, it's broken, we're not gonna deal with it. How do you deal with this on a daily basis in such a large order?

 
Barbara Humpton 

Did you all expect he's going to get to this question? I was pretty sure he was going to get to this question. Hey, listen, think about what we do at Siemens. And what you're going to discover is that it has broad bipartisan support. We've worked effectively with every administration and, and and I've come in during the Trump administration at but I've had the chance in my earlier years at Siemens working at a different role to really appreciate the fact that what we do and who we are, is really important on both sides of the aisle. And and really, people have flung open their doors and and brought us in to help educate and help inform how policies Get set. where we are right now, I've got to tell you, we are at an A really important time, and actually our German headquarters informs part of the way we think about who we are here in the US. I mean, we are in fact working across boundaries all around the globe. And I think a lot of us in our business roles are working very effectively across international boundaries. The way we've chosen to interact with the current administration is to be very deeply involved in the things that matter the most, Ivanka was here yesterday talking about workforce development. And I've had the privilege of serving on the American workforce policy advisory board. You know, creating jobs for all Americans is actually one of the most important things we can do. And what we've discovered is that we have a lot to share in the way we do employer led training. The apprenticeship model that has been you know, Obviously a hallmark of German society has been a real value for us here in the US

 
John Stoll 

that were the bulk of the 50 million that you've committed at an annual number. What's the you guys are? We're spending an awful lot of money on?

 
Barbara Humpton 

Yeah, we're spending about $50 million a year on employee training. And, and not all of that is going into apprenticeship programs, we're actually working in a quite a bit of digital skills training. And really one of the things that's important to all of us and I think all of us in this audience ought to be engaged in this. The idea of what know how do we have and how can we bring employees along in their career journey now as careers are going to last 40 maybe 50 years? Yeah,

 
John Stoll 

right. That's a whole ball of wax. You got to think about the fact that the people that you're bringing in today are thinking much longer term than maybe their predecessors. Were coming into jobs and thank you 30. And now that's kind of a an outdated concept. So you have these rescaling programs and stuff. It helps you retain skills internally not watching those walk out the door. And people want some flexibility and in their, their agility to move around in the in the organization, particularly when there's probably different places they can leap to.

 
Barbara Humpton 

That's right now, all right, I look out into the audience that I see a lot of digital natives. But I expect I also see a lot of folks like me, who are veterans of a field a domain where you've grown your expertise. And you recognize that expertise has true value. So what we're working on right now in Siemens is creating multi generational teams. Think about factory in Norwood, Ohio, just outside of Cincinnati, where we have folks who've been on the manufacturing floor for literally decades, and are experts at what they do. Now bringing in our digital tools, bringing in new technologies, and marrying up the expertise so Those veterans with the new folks who are introducing them to new approaches for using data. Here's where we're seeing the ability to successfully bring an existing workforce into the future.

 
John Stoll 

Yeah, yeah, I've talked to the company recently. They call them for lack of a better term, they call them elders, but eldership for mentorship and things like you can call me and I'd be fine. I've got a notebook full of things we didn't get to. So maybe we can follow up with my column. At some point we'll do a deeper dive. But this has been fascinating. I appreciate it. And a lot of stuff we touched on and I wish you the best of luck. Thank you. Thank you.

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