relile network ever. one that keeps you connected to what matters most. ♪ francine: joe kaeser a rare breed of chief executive, who dedicated his entire professional life to a single 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 a flagship of the german economy. siemens truly powers modern life, making everything from turbines and health scanners to ovens and factories. joining me, chief executive officer of siemens joe kaeser.

thank you so much for speaking to bloomberg. joe: sure. francine: can you tell us about that first day you started at siemens? joe: it has been a while, obviously, but i was coming into siemens and i thought, oh, my god, they have abbreviations for everything, i don't know nothing anymore about what i studied. so it was quite an experience. francine: going into it, what did you think? did you think this is a company i want to work for for a long time? joe: i had multiple opportunities. i was interviewing a different places, but then i thought siemens at that time was still in the semiconductor business, the electronic business. i thought this is really cool. they were about to develop this one chip, so it felt pretty cool. so i said, yeah, siemens. francine: how has the company that is where i want to be. changed? joe: it is like day and night, really. i was coming into a manufacturing environment, it

was about customers. about production and process and cost efficiency, and there was a very technologically focused company. not so much about markets and customers. it was really inside out more than outside in. it has changed a lot, i have to say, really, a lot. francine: what was your favorite day? joe: there are many favorite days. whenever my team comes up to -- comes up great and celebrates some big success. this is the best thing that can happen to you. you have a whole successful team of people who are happy, who appreciate what they do. and they share the reward. francine: how do you measure success? joe: there are several ways to measure success. the first is that you promise something and you make good are what you say you would do. is about accountability, it's

kind of like the ground floor. the icing on the cake about success is when people talk about you to different people. i think that's in the end what really matters, because that is how you will be remembered overtime. whether you make the numbers are -- or not or your guidance good , or bad or something else at the time, but after a generation people say, hey, that guy, he made some mistakes, but he actually left us 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: in the next 170 years, the change will be about 170 times likely to accelerate products and solutions and will likely become more intangible. there will be much more integration, more bits and pieces and products together with platforms and solutions. so i hope the world will have become a much, much better world than today. francine: few companies have gone through as many technological and industrial revolutions as siemens, but rather than just survive then, it has helped lead them, with the advent of electricity to jet jet engines -- to jet engines to wireless communications. now siemens is investing billions in making sure its future of digital. from giant gas turbines in asia that use artificial intelligence to reduce emissions, to train carriages in the u.s. that harness big data to find problems before they occur. are you concerned or worried about the pace of change? if you look at the last 10 years, innovation has gone so fast that you can't possibly do that over 170 years. joe: well, that is probably what people thought 170 years ago also. people are naturally concerned about the future because the future is uncertain. the question really is what concerns us, and innovation, not

so much the innovation. not so much what technology can do, because all those three industrial revolutions we have had so far have made this a better planet, made this society a better society. that is the positive. but it is radically going to change, the speed of this change going forward, the human society may as well not be able to deal with that sort of speed. what i am really concerned about if you don't make this forced industrial revolution inclusive to society it may as -- it may as well face a lot of challenges with unrest, divided populations leading to populism, populism leads to nationalism, all the way down to where we used to be. francine: you think there will

be more problems to provide solutions for because of the rate of change? joe: the forced industrial revolution with the internet of things or whatever you call it, people believe in is only software, only a virtual type of thing, sophisticated, invisible somewhere in clouds. the cloud. terrible, terrible word. that's not quite true. there will always be cars, there will always be trucks, something to drink, to eat there will always be hardware. francine: are people confusing innovation with globalization? joe: that is a good question, actually. maybe, with the speed of technology, what they feel is that they believe the root cause is globalization, but it actually isn't, it's the other way around. technology actually makes it possible to have a global network together. to have our smartphones that we are always on at any point in

time, no matter where we are, we can talk to almost anyone on the planet, real-time. that connectivity is actually a benefit, that is globalization as we speak. if you are negatively affected by innovation or globalization, we don't like it. that is what we need to do 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? ?

joe the customers, the business : partners -- over the past few days, there has been a great deal of media coverage about siemens, about the personnel, about the crisis, and other nonrelated is this matters. that this is not siemens, and that is not what this stands for. nor is it what we should be. francine: joe kaeser made the statement days after taking over as chief executive, after his colleague and predecessor 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 siemens. are you pretty happy with the structure now? with where it is?

joe: i am happy, i am happy with what i see in terms of how our people get into it, how they take ownership, literally, in what we do. my company, my responsibility, my job which i own. so i am responsible. it takes a lot of confidence. francine: do you think investors ever get confused, because you are such a big group? you are such a big conglomerate? joe: they only get confused if i try to explain it in too much detail. then i always know i better shut up, because i got too deep. don't confuse them with the details, just tell them the way they want to be. and the commitment you will do and they will be ok. francine: so what exactly drives you? >> at the end of the day, business is there for society. business which does not create benefits for society should not exist. you need to be more inclusive in society as leaders, in you can't afford to divide society.

francine: you seem to have very strong ideals. is that ultimately why you empower your employees? joe: we call it ownership culture. there are two aspects to that. first of all, it's a family business. imagine you own a business. no matter what side it is, it's your business, your personal business. it might be a different continent from your parents. but what is your natural desire? your natural desire is very likely that you want to use that business for your children in a better shape. that is a natural desire. there are exceptions, but this is probably what is the natural desire. so inherently, you build in a sustainable, long-term element of culture. the second element of ownership culture, more importantly, the sense of i own the company. i am long-term oriented, i do the best because it is my company. no matter who you are, what you do, always act as if it is your

own company and you will be fine. even in meeting rooms, we sat around the table and say, what do you do with this company? they put so much pressure on a meaningful debate. francine: it focuses the mind. joe: if someone says, i will do it anyway -- is that which you want? that whole dynamic. francine: so does that mean you worry about short-term? -- worry about short-termism? in business overall, or more in america than everywhere else. joe: it's only a matter of time. many things are being invented and cultivated in america and other places. francine: how do we change that? you changed it, you are trying to change it from within the company. joe: that is a very good question. you need to be successful in the

short term, but not lose in the long term. this is the balance you need to strike. it is necessary to keep the difference between the short-term aspect and the long-term aspect, to keep the distance very close. because the wider it gets, the more active it is to say hey, this is the performance cap i want now. 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, he met with vladimir putin at his residence outside moscow. it was days after russia had annexed crimea and just as the west was launching its own showdown. >> together, we have condemned russia's invasion of ukraine and rejected the legitimacy of the crimean referendum. joe: the outcome was complicated, to put it possibly -- positively. i didn't know that president obama and the european leaders were meeting at the same time i was meeting the president, i had

just had a press conference in brussels about sanctions, since the president just didn't announce the sanctions. the american president did not bother telling me the appointments, so it was unfortunate timing. later on i gave an interview in -- and i are membered it was crimea -- i remembered it was cranny of. i gave the interview for the german media, and i was asked, how could you even go see this person? >> [speaking german] joe: [speaking german] i said, it is good to talk to each other. not about each other. i was committed to help these people.

yeah, and it was crimea, and it was -- of course it matters. honestly, given what we have been through with the russian people in two world wars, this is kind of a temporary issue. what happened was, and you know this well, it was not about the two world wars on the media. crimea is maybe not as material. obviously, you read that and say what the hell is going on with that person saying that? so that was a bit unfortunate, but i said i made a commitment to the people to industrialize the country. that was the intent. the outcome was learning, with the broader respective -- respect of responsibility. we believe talking to each other in any sort of crisis is more important than talking about each other.

that has never helped anybody. francine: does making america great again necessarily mean the rest of the world becomes worse? ?

leaders who have joined us. -- pres. trump: chancellor, thank you very much. such a great honor to get to know you, to be with you. i want to thank all the business leaders who have joined us. francine: siemens chief executive joe kaeser was one of the business leaders at the angela merkel delegation to the white house in march. siemens employs 50,000 people in america, and is one of its biggest foreign investors. but the visit came against the 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, because we hardly made the beginning of the first year, and it could be up to eight years. you know, i honestly do believe he is trying to do the right thing for his country. the style is different as to what we are used to. i think that the europeans are well advised to look into what matters to them and what doesn't. and if he has these issues with any sort of russian collusion or other things, you need to deal with it.

it is his business. it's the united states' business. the other topic is about global trade, and how do we interact together in a modern world of manufacturing and specializing on certain tasks in the global world. that one matters, i believe, to europe, especially in germany, with a trade deficit and 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. every customer is not a consumer, and every tumor is not a voter. we had better be mindful about people's desires. no one forces our goods and products to any american customers. they want to buy it because they believe it is good. so in the end, global competitiveness, we believe, is about innovation, and it is also about a fair dealing with it. so i guess that is where we need to sort out a few misunderstandings on that front. how trade actually starts and how it ballots.

-- how it develops. we will find a way to make it work. francine: does making america great again necessarily mean the rest of the world becomes worse? joe: i think that's the point. pres. trump: millions of hard-working u.s. citizens have been left behind by international commerce, and together, we can shape the 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, you know? the googles and microsofts of the world, the tech leaders. dow chemical, among others. the car manufacturers have been catching up pretty well, after the devastating situation a few years ago.

so this is a great country by any means, and obviously the greatest of it has always been that it was a free country. so there is nothing wrong with america first. the thing that would be wrong is if we go from america first to america only. that will be complicated because there are still 7.2 billion people around. 300 million in its greatest country. that is where we have a bit of confusion. not everyone is being understood what is really meant. francine: is europe great? joe: it has its challenges, because without the european union there is nothing that holds them together. but i believe we have seen the

worst in terms of being pulled in different directions. it seems to me it is more integrating -- francine: so we don't somehow forget the concerns of populism, and then it comes back uglier in five years? joe: i am very encouraged that when people saw this is not going my way, this fiscal populism. people stood up and went to vote. there are more people going to elections to vote than there used to be in the past. this was the most encouraging topic to me, that people said, hey, we are the people. now it is time to take that into our hands. that is quite positive. francine: how do you see china? joe: china -- the chinese way is typically sit down and smile. francine: and behind closed doors? joe: and look what happens. today, with the western world, we've not yet fully straightened out what we mean what we say. china says, if they are nervous -- if there is no western lead anymore, things

like that, why don't we do this job for them? we have 1.6 billion people, so we are more than europe and the united states together anyways. why bother? just a couple months ago, i was at the one belt, one road summit and president xi was the keynote speaker. it was his summit. we're going to build a silk road. 65 nations signed up, 100 state leaders. there might be more than the 65, but they are going to bring about $200 billion in finances to build this. he said, the coordination has silk said, you know, the times hascient brought peace and trade and all that good stuff, so why not build it again? if you take this one step are there, think about it. 65-100 nations and the rest of the world doesn't know how to do

-- how to deal with global trade and things like that. they are going to be, this one belt, one road, it might as well be the new wto. francine: such a big economy. they are trying to move a supertanker, right? are we going to see a bump as china tries to become 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 to direct it and be outgoing. there are very little multiple opinions about what could be done, should be done. 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 execution is strong. i'm not saying if it is good and bad, because there are human

rights, this and that, challenges associated with that but so far they have been very effective in doing what they set out to do. francine: joe kaeser, thank you so much. >> my pleasure. ?

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