♪ 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. 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 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 comes of great and celebrate some big success, i would think, this is the best thing which can happen to you, people are happy, having a great team. 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 about success is when people talk

about you two different people -- you to 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 about hundred 70 years? -- 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 had 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 ai 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 probably what people thought naturally 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 better planet and made this society a better society. 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 that 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 more problems to provide solutions for because of this rate of change? joe: the fourth industrial revolution, internet of things, 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 hardware, there will always be trucks, there will always be something to drink, to eat, there will always be cars, there will always be tangible things. francine: are people confusing innovation with globalization? joe: a good 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, 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 we are negatively affected by innovation and globalization, we 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? ♪

joe: ladies and gentlemen, over the past few days there has been a great deal of media coverage about siemens, about personal crisis 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 the company, 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.

that they take it on and say, that it is my company, it is my responsibility, my job, i am responsible. it takes a lot of confidence to give them the freedom to act like that. francine: do you think investors will ever get confused? joe: they only get confused if i try to explain it in too much detail. then i always know that i need to shut up, i went to deep. do not confuse them with the details, just show them the way that they want to be. 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 of that. arst of all, if you are family business, no matter what size it is and you own it, it is your personal business. maybe a different continent 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 build a sustainable element of long-termism. the second element of ownership culture, more importantly, i own the company, i am long-term oriented, i do the best because it is my company. 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: if somebody says, i would do it anyway. really? really? is that what you want? it is a whole new dynamic. francine: does that mean that you worry about short-termism? joe: a little bit. francine: in business over all? or more in america than anywhere 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're trying to change it in 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 -- performance cap 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 him were having a press

conference in brussels about sanctions. since 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, you know it is good to talk to each other, not about each other. i was committing to these people. this was crimea, 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 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 said i made a commitment to the crimean people to industrialize the country. 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 talking about each other, that has never helped anywhere in the

world. francine: does making america great again necessarily mean the rest of the world becomes worse? ♪

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: the siemens executive joe kaeser was one of those leaders with the merkel delegation to the white house in march. siemens employs thousands of people in america. the visit 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. if we have these issues, 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 a 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 american. 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 which holds them together from a policy standpoint, it is not much, but i think the 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. more people going to elections then they used to. this was what was the most encouraging thing to me. 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 are 1.3 billion people, more than europe and the united states together anyways? 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 were 100 state leaders there so there might be more , than 65, they are going to raise over $100 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 are going to one belt, 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 what they said they would do.

francine: thank you so much. joe: my pleasure. ♪

♪ 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. thank you for joining me and speaking to bloomberg. fashion h