How the management mindset needs to change, and other lessons for the digital transformation from Siemens’ CEO

Businesses are facing a raft of interconnected transformations, ranging from digitalization to the race to net zero and greater sustainability.

“If you ask me what my biggest challenge is, it’s not developing the right products. It’s transforming how we run our business and changing our mindset,” says Roland Busch, president and CEO of Siemens.

Talking to Linda Lacina for the World Economic Forum’s Meet the Leader (MTL) Podcast, he cites empowerment, delegation and a growth mindset as the key ingredients for managing this successfully.

With trends such as digitalization and connectivity, “we are really creating an impact on the real world”, Roland Busch told MTL. Shorter cycle times and other efficiencies generated by the digital transformation enable continued economic growth while using fewer resources, he explains. This includes “not only energy but any kind of resources”.

And, labour, which is becoming an increasing issue with an ageing workforce. “We have less and less labour available and therefore need this kind of productivity on the shop floor.”

“We want to use the people in a much more productive way,” levering the advantages of digital and robotic automation, Busch says.

For example, staff shortages in nursing could be addressed by giving nurses more time to spend with patients rather than on logistical tasks such as locating medical devices and other tools they require. As on an automated factory shop floor, the tools of the trade have to be where they are needed when they are needed, he explained to MTL.

This aligns with the key role of automation in companies’ workforce strategies identified by the World Economic Forum’s Future of Jobs Report 2023, which gathered insights from 803 global companies that collectively employ over 11.3 million workers.

The acceleration that comes with digitalization and automation affects the very way businesses are managed.

“If you have to make a decision, you cannot afford for it to go all the way up the hierarchy and come back down. We need to push the decision level as low as possible,” Busch explains.

This means giving people from senior management to the shop floor the confidence to make those decisions. “But empowerment is not anarchy. It’s a clear target. We ask people to do their job according to their best knowledge and the skills they have,” he adds.

“It’s a two-way street: we let go and trust our people but they are also accountable. And if there are mistakes, then we correct them, and we go on and learn from them.”

But Busch admits that delegating decision-making to such an extent is not always easy.

Busch cites his own experiences of handing over control in the run-up to a strategic workshop.

“I thought I had to control everything. And then I got really clear feedback from my team to say, ‘Why don’t you let us do it?’ It was a really clear signal – ‘Please get out of our way and come back later.’”

“So that was the point in my career when I realized that I had to change and trust people,” Bush continues. He points out that his next learning was to not only let go but support people in what they are doing to make them successful, which “is so rewarding”.

“Digitalization is shortening cycle times and development times. That means you have to learn much faster. The way to approach that is lifelong learning,” Busch says.

The Forum’s Future of Jobs Report 2023 finds that 44% of workers’ core skills are expected to change by the middle of the decade. Talking to MTL, Busch suggests that this trend will require a more evolutionary approach to training.

“I do believe that in a couple of years, we will be sending people to university – maybe for a shorter time – then bring them into the job, and after a couple of years, we’ll send them back to university to catch up with the latest technologies.”

He continues: “And this is what we call a growth mindset. We encourage our people to live this growth mindset. We want them to be curious and learn constantly, which also means being allowed to make mistakes. That’s something I believe will determine the future.”

To enable this continuous learning and development process, Siemens has put in place a learning platform which, according to Busch, is a “living environment” that people constantly add new training content to. The company is working on a degree-like system that helps people grow their skill sets. While some training is voluntary, there is some mandatory training, too, he explains, “because we have to help people stay relevant in the future”.

Busch also stresses that, rather than focusing on hiring people with the right skill set, the better – and more cost-effective – approach is to reskill existing employees who might otherwise be let go.

For managers, the digital transformation poses another challenge: working within the platform-based economy. Here, the focus is on building ecosystems where a range of companies work together to deliver a product or service.

“This change in mindset requires a change in management skills. We have a training programme for managers involved in developing and selling products into our ecosystem. We developed the training together with a professor from MIT who specializes in the platform economy,” Busch says.

The training focus is on how business models need to change to work within the platform-based economy. This includes finding and integrating with partner companies, designing products for those partnerships, making them accessible to partners and managing partnerships for mutual benefit.

Underpinning it all, aside from a growth mindset, are an empathetic approach and listening skills, which Busch believes are vital to getting buy-in and taking people along.