The Drive to Change People's Minds. The Siemens Leadership Story


One thing that marks out true leaders is that they strive to influence people and not just achieve things for themselves, Dr. Nicolas von Rosty, corporate vice president of Siemens AG told Executive MBA students at a Global Leadership Series session in Barcelona today.

Introduced by IESE Dean Jordi Canals, von Rosty began his talk, titled "The Siemens Leadership Story", with some background to the 160-year-old company that now employs 405,000 people in some 190 countries. The company is divided into four main sectors: energy, industry, infrastructure & cities and healthcare.

Siemens has transformed itself into a green company, von Rosty said, pointing to its work in reducing greenhouse gas emissions, its involvement in the giant solar power consortium Desertec, and Masdar City. Siemens has helped to create the city – located outside Abu Dhabi –, which is entirely powered by renewable energy sources.

However, the company's very survival was threatened by a huge bribery scandal in 2007. The board avoided an Enron-style debacle by acting swiftly and firing a high share of the top management. They brought in Peter Löscher as CEO who, though relatively unknown, had impeccable ethical credentials.

Löscher, whose catchphrase is "never miss a good crisis" took this as an opportunity to preside over a huge management clear-out, as well as dealing with the compliance case. He got rid of cash payments and slush funds and hired 650 compliance officers, not to police the place but to act as business facilitators. Within a year of cleaning up the company's business practices, profit margins and turnover were both up. Part of the trick, von Rosty said, was that these changes were all executed very fast.

He pointed out that – according to several studies – the quality of leadership accounts for 15-20 percent of total variation of a company’s performance. "Leadership is like swimming," he said. "You can’t learn it from a book." The received wisdom is so often wrong that good leaders are almost inevitably disruptive, he said. The key characteristics, aside from wanting to influence people, are mobility, persistence, emotional intelligence, courage, cultural awareness and the willingness to empower people and build a high-performance team culture.