Siemens CEO Roland Busch Aims for Total Automation in Industry

Today, I’m diving into a conversation with Roland Busch, the CEO of Siemens. Siemens is one of those colossal, crucial companies that often flies under the radar, but it’s a key player in the tech landscape. At its core, Siemens provides the hardware and software that enable other businesses to operate and automate their processes. You’ve likely spotted the Siemens logo in various places, from the inner workings of cars to sophisticated control systems in modern buildings and bustling factory floors. However, since it’s not a consumer brand, it can be tough to grasp how all these elements connect and what the 320,000 Siemens employees worldwide are actually up to.

The organization and collaboration within Siemens are incredibly intricate. Roland and I spent a significant amount of time unpacking the corporate structure, which I found absolutely captivating.

We also delved into the broader topic of automation and the shift as AI transitions from the physical realm of factories to the digital domains of accounting and procurement—essentially the decision-making processes that dictate factory operations. Roland envisions a future where Siemens automates the entire manufacturing process, both upstream and downstream. He describes this vision as quite utopian: a flawlessly efficient operation. However, I pressed him on the potentially dystopian implications, as it seems to suggest a future where many people might find themselves without jobs, and those who do work may lack autonomy, merely serving as extensions of AI systems. I asked him directly about this concern.

Adding to the complexity, Siemens operates as a government and defense contractor on both sides of the Atlantic, and its growth is closely linked to free trade and globalization in the postwar era. With rising tensions between the US and Europe, I had to ask him point-blank: What’s the plan if NATO were to collapse? It’s a question that feels increasingly relevant.

There’s a lot to unpack here, and Roland was open to discussing it all. I think you’ll walk away with plenty to ponder—especially the next time you spot a Siemens logo.

Let’s get into it: Siemens CEO Roland Busch, here we go.

This interview has been lightly edited for length and clarity.

Roland Busch, welcome to the conversation. You’re the president and CEO of Siemens.

Thank you, it’s great to be here.

Siemens is a massive company with a rich history, having been involved in various sectors and exited others. You’ve been with the company since the ‘90s, and given the current complexities of the world, I’m curious about your perspective.

Let’s start with the basics: Siemens isn’t a consumer brand. Many listeners may recognize the logo but might not fully understand what the company does. How would you describe Siemens today?

It’s a complex question. We’ve evolved significantly over our 170-plus years. Our history is marked by constant reinvention. Right now, we’re undergoing another transformation, and it’s the most rapid and fundamental one we’ve experienced due to technological advancements. When people ask what Siemens is about, they often mention Siemens Healthineers and Siemens Energy, but Siemens itself is less straightforward. I explain it like this: we transform everyday life through our technology.

When you see a car, chances are it’s influenced by Siemens technology, whether in its design or manufacturing. About one-third of manufacturing lines globally are controlled by Siemens systems. In urban environments, you can’t walk a block without encountering a building automated by Siemens technology. We touch nearly half of the electrons in our distribution systems. In healthcare, if you get a scan, there’s a good chance it’s from Siemens. Our role is to enable others to transform their operations, and that’s the essence of Siemens.

I see Siemens everywhere, from automated buildings to discussions with automotive CEOs who mention Siemens as a key supplier. It sounds like you’re essentially providing the operational backbone for various industries. How do you organize the company to identify opportunities for growth and investment?

That’s a great question. We’re active in numerous industries, including manufacturing, process industries, buildings, grids, and mobility. Our foundation lies in our technology platform and design software, making us one of the largest industrial software companies globally. With our software, you can create comprehensive digital twins of products. We’re also venturing into molecular automation.

We’re the largest automation company, automating everything from grids to buildings and manufacturing. Our technology is the core value driver. We apply this technology across various markets, including industrial sectors, food and beverage, chemicals, automotive, and utilities. Domain expertise is crucial for deploying our technology effectively. Additionally, we’re integrating AI technologies into our operations, building on a long history of AI development.

I’m eager to discuss AI and automation further, especially the concept of digital twins. It seems we’re transitioning from automating physical processes to digital ones, which is a significant shift.

Before we dive deeper into that, I want to clarify how Siemens is structured today. I read your recent letter to shareholders, where you mentioned divesting from certain businesses and investing in others. How is Siemens organized currently?

We operate through distinct business units. One is digital industries, focusing on software and automation. Another is smart infrastructure, which encompasses building technology and grid automation. Siemens Mobility handles our transportation solutions, including trains and rail infrastructure. Lastly, we have Siemens Healthineers, which is a separate listed company.

We also have corporate functions like strategy and IT, which run horizontally across the organization. We invest about 8 percent of our revenue—around $6.5 billion—into research and development, including advancements in quantum computing and AI. Our workforce is distributed globally, with significant numbers in the US, China, India, and Germany.

That’s a substantial workforce.

Indeed.

Regarding the regional split, it seems many companies are larger than people realize. You have both divisions and regional operations. How do these interact?

This is an ongoing discussion. We have strong regional leadership and robust business units, creating a matrix structure. In our case, the business units take precedence, with full P&L responsibility. Regions play a supportive role, but the business units drive the primary operations. For example, our low voltage business is managed regionally, while automation has a more complex structure that includes various levels of specialization.

This three-dimensional matrix allows us to serve different verticals effectively, as each has its own language and applications.

I often say that understanding a company’s structure can reveal a lot about its challenges. In Siemens’ case, it seems quite intricate. How do you approach investing in core technologies across this structure, especially when divisions might duplicate efforts?

You’re right; understanding our organization can highlight both challenges and opportunities. We allocate our $6.5 billion R&D budget across different business units, with some receiving more investment based on growth potential. Capital allocation decisions are made at the business level, and we focus on areas with higher growth prospects.

We’re also implementing our ONE Tech company program, which aims to streamline our organization. We want to reduce complexity by consolidating our operations into larger units while creating horizontal “fabrics” for data, technology, and sales. This approach allows us to scale more effectively and leverage our strengths while maintaining our unique market strategies.

Transforming a large, established company like Siemens is no small feat. How are you managing the cultural and operational challenges that come with such a significant shift?

It’s challenging, indeed. In the past, we’ve undergone many restructurings, often with top-down approaches that didn’t resonate well with employees. This time, we’ve established a clear vision—a “north star”—and defined specific tracks to guide our transformation. We’re engaging employees in the process, allowing them to contribute ideas and feedback.

Communication is key. We need to explain the rationale behind our changes and the benefits they bring. We’re also investing in training to foster collaboration and adapt to new processes. Additionally, we’re bringing in external expertise to help guide our transformation.

It sounds like you’re taking a comprehensive approach to change management. How do you empower decision-making within such a large organization?

Empowerment is crucial. We aim to make decisions at the lowest possible level, which speeds up processes and engages employees. However, empowerment comes with accountability. Employees need to understand their responsibilities within the framework of our strategy.

For larger decisions, like M&A, we have structured processes in place. We gather input from various stakeholders and encourage open discussions to arrive at informed decisions.

Let’s shift gears and talk about the future of Siemens. As an engineer working on low voltage switchgear, how do you connect the dots between your day-to-day work and the broader corporate strategy?

It’s essential to recognize the contributions of all employees, including those in traditional roles. They play a vital part in our overall success. We need to communicate the importance of their work and how it fits into our larger vision.

For instance, our mobility division is transforming transportation systems, and employees can take pride in being part of that change. We need to ensure that everyone feels valued and understands their role in driving innovation.

As we look at the global landscape, Siemens has thrived on globalization and free trade. However, with rising nationalism and trade barriers, how do you see Siemens adapting to these challenges?

We firmly believe in the benefits of free trade and the opportunities it creates. Our global presence allows us to adapt to local markets effectively. We’re increasing our resilience by localizing production and sourcing materials closer to our markets. While tariffs may impact some customers, our direct exposure is relatively low.

We’re also investing in manufacturing capabilities in the US, India, and China to strengthen our position in these key markets.

When it comes to manufacturing in the US, there’s often a lot of talk but limited action. How do you ensure that Siemens’ investments are genuine and sustainable?

It’s a mix of both reality and theater. Some sectors, like pharmaceuticals, are seeing real investment, while others lag behind. The challenge lies in workforce availability and uncertainty around tariffs. However, we believe there will be a wave of manufacturing returning to the US, particularly in semiconductors and other critical industries.

We advise our customers to prioritize automation and digitalization in their new manufacturing lines to maximize efficiency and productivity.

As we wrap up, I want to touch on the potential of AI and automation. How do you envision the future of fully automated factories, and what role will they play in the economy?

Fully automated factories will increase output while requiring fewer workers. As societies age, the focus will shift from creating jobs to deploying existing labor where it’s most needed. While automation may reduce certain roles, it will also create opportunities in higher-skilled positions.

The key is to ensure that as we automate, we’re also fostering economic growth, which will ultimately drive demand for products.

Thank you for sharing your insights, Roland. It’s been a fascinating discussion, and I look forward to seeing how Siemens continues to evolve in this rapidly changing landscape.