Trust and optimism for change

REMI ERIKSEN

Welcome to Trust and Transformations - Leaders Navigating Change, a DNV podcast. I'm Remi Eriksen, DNV’s Group President and CEO. 

In this series, myself and our business area CEOs sit down with other global leaders to talk about how they tackle transformation, build trust in their business and people, and what they think is coming next for their industry. Right now, they are experiencing a series of historically significant transformations, making trust more important than ever. 

In this episode, I'm joined by Christian Bruch, President and CEO of Siemens Energy. Christian, Welcome to Trust and Transformations - Leaders Navigating Change. It's a pleasure to have you with us today. 

You are one of 90,000 Siemens Energy employees who get up every day to tackle the energy transition. On a typical day, what do the first two hours of your day look like? 

CHRISTIAN BRUCH

Thanks Remi and thanks very much for having me. It depends if I have a good day or a bad day. On a good day my first action is really doing some sports and going running for an hour, which is always giving me the energy to sustain through the day. And then obviously trying the second hour really to catch up with all the news of the last day and see what has happened in the world. 

On a bad day, I'm not able to do any sports and that is always a challenge. And then it's only the news and then rushing relatively early to meetings to more or less structure the day. But I try as much as possible to reserve my hour for some sports. 

REMI ERIKSEN

Excellent. And you are leading a very large organization. What do you do to make the 90,000 people feel that they are part of one global team? 

CHRISTIAN BRUCH

Yeah that is a super important thing. And keep in mind, Siemens Energy is a company which has been listed or has been founded more or less four years ago only. Even so, it has a long, long, long legacy of more than 175 years. What we did at the very beginning when we started the company is to have a small, let's say, guide for ourselves in terms of what our key behaviours. 

And there's four key behaviours which we define for ourselves and we group everything what we're doing around this. And I'm just coming back from India and I was pleased to see all the activities, what the teams, different teams were doing, were structured around our four key behaviours, which is decisively move forward, focus on the customer, be open and inclusive and build strong partnerships and you can see that the teams are acting according to that and we obviously have a colour for ourselves. We are team purple and you see everywhere if you look at how the people communicate via social media, this is how they identify themselves. And I find it stunning in the meantime, after now close to four years, if I go to locations, even very much far away from the corporate centre, you'll see the same colours, you'll see the same behaviours. 

And what I get from people who join us at the moment, they say ‘Hey, you have a very consistent culture across the board’ and this gives me a lot of comfort because we are as a company not in an easy situation. We are transforming ourselves heavily and really the thing which makes us successful is our company culture. And I'm pleased to see after four years that we came a long way. It's still a lot of work to be done, but in that regard, this is all grouped around what are the behaviours we would like to strengthen in our organization.  

REMI ERIKSEN

One last question before we move on to the main part of the podcast. Do you have a particular philosophy or approach that characterizes you as a leader?

CHRISTIAN BRUCH

I'm trying to be authentic as much as possible and I'm normally very frank in terms of voicing my opinion, irrespective of whom I talk to in the organization, because at the end it's about honesty and trustworthiness. 

And obviously I ask my team and my colleagues and my people and our company to come a long way together with me. And then authenticity is a very important element to make sure that people trust in what you're saying. And I mean do what you say and say what you do. 

REMI ERIKSEN

And so let's move on to the core of this podcast. Some call this decade the decade of transformations. This is the decade where we will either succeed or fail in reaching the U.N. Sustainable Development Goals. And it's the decade where we will need to make major changes to our food system or health systems, and also to our energy system. And to set the right pace for the energy transition. 

What is your view of the energy transition and how it plays out in different parts of the world? And has the needed pace of the transition been set do you think? 

CHRISTIAN BRUCH

First of all, with all the things, what you're mentioning, I think there's a lot more even changing. If you see you on geopolitics, if you see global traits, so we all do this very fast transformation in a completely changing environment, which puts an additional complexity to it. We also have to see if you talk about energy transition, energy was an industry which actually never grew or transformed fast. So, we asked an industry to do something which it had never done before, and that is something which we should not underestimate. 

If you talk about take electricity like 4% growth per year, which is needed to achieve the energy transition to decarbonize certain elements, this means building a complete electricity infrastructure in 25 years globally and then on top of it, anticipating growth and that is something which is really obviously stunning. The speed is not sufficient. We very clearly have to say this. If you look back on COP, I was surprised, right. I mean, I think was a success with the commitments which were achieved at least there’s a tangible outcome. But we also at the same time passed the 1.5 degrees C and I heard very little about that. So, we are not fast enough on the trajectory. We are still in, if I have right from the top of my head, still the highest CO2 emission in 2022 if I recall correctly. 

So, this is still something where energy transition is not yet going fast enough. Even so, also clearly saying we see things in a speed which we have never seen before. We have a record order book, we have an order intake which far exceeds our revenue. We see regions changing very, very fast with a very clear plan. And what we do see is a very different set up in the different regions of the world. Which also means there’s not one solution for everybody, it will be different and in that regard I think we will obviously see the energy transition being very diverse.  

REMI ERIKSEN

I believe trust is a key enabler for any transformation, and particularly the energy transition. How do you see this? Do we have the necessary trust embedded into the stakeholders that needs to work for this to happen? 

CHRISTIAN BRUCH

I have a challenge with this word trust in that regard because it means or my question would be trust and what, and I would call it a bit different. I think what we do need is an optimism for change and embracing change. 

And maybe it's trust in our ability to digest change a bit. And I see this very differently in the different parts of the world. I mean, Europe tends to be on the glass half empty side a bit and might not always trust that the future could be better than the present. I today came back from India, where you see completely the opposite. I mean, the society embraces change. They see the energy transition as a massive opportunity, which it is. It's the biggest business opportunity which we ever have seen, I think, in our business lives. But I see that very diverse. I think what we need to instigate as a narrative really is this optimism for change, if this is called trust also good, right? 

But I think we have to make sure that we’re specific enough when we think about what do we want people to understand. We can’t avoid change going forwards. Energy transition will cost money and energy transition will probably require change of behaviour. Energy transition will not be easy, it will be complex. But it's a massive opportunity to build a future which we aspire. And this optimism I'm not seeing in every part of the world on the same level, and this is heavily needed as a narrative to really make sure that we achieve the energy transition. 

REMI ERIKSEN

I think of the energy system in two parts. Very simplistic. One part where end use can be electrified and one part that end use cannot be electrified. And I believe the world is making good progress on the first part in terms of electrifying the end use and making that electricity greener through more solar, wind and hydropower and so on. 

However, the other part that cannot be electrified, the world is not making sufficient progress. But there is some hope and there are some good solutions for this. And many of those solutions involve hydrogen and hydrogen derivatives. You and Siemens Energy are working hard, and at both parts of this energy system. So maybe you could shed some light on your side what you are doing to address these two parts of the energy system? 

CHRISTIAN BRUCH

Yeah, let me take a look on the two things you have flagged up. I mean, I do agree the electricity or the electricity generation and also turning it to renewables came a long way. If you see the stocktaking which was done at COP 2023, 510 gigawatts added globally in terms of renewable production, solar and wind, this is massive, right? This is really already a good speed. It needs to increase slightly, but it's possible really to at this generation. I think we have a delay in two areas. And it's not just the hard to electrify sectors. The one thing on the electricity side is really this interconnectivity connecting all the generating assets, the grid, the storage. How do you balance it? There's something where we definitely need to speed up. I think it is identified at the moment. Everybody sees that, but this is something which we need to push more in the next years to come.  

On the hard to electrify, I think we have to acknowledge that the business models are very often not there to really drive that. I mean, we very early started to be present in the green hydrogen. We have projects where we demonstrate the production of other derivatives, green molecules of transport, and you see a lot of interest for the developments. But you also see that there is hardly any global project in the hard to decarbonize sectors, for example, driven by green hydrogen coming as a commercial business case. And this is delaying the roll out and that is something where we need to strengthen also the approach on how we can push these type of projects to bankability.  

At the end we always have to be clear energy transition doesn't fail on the technology, it will fail on the financing. And this is something for the hard to decarbonize sectors, which is, I think, even more challenging than for the electrification. There is a third element which I in that area particular this industrial decarbonization would flag up. It's really the efficiency, it's an element which was always on the agenda, which might have been a little bit out of focus over the last couple of years and this needs to be strengthened because efficiency and obviously the approach of using assets better will be a key element, particularly in this decade, because certain other things, green hydrogen whatsoever will simply take time. So, if you want to achieve something before 2030, we have to do everything on the efficiency side, what we can. 

REMI ERIKSEN

A common topic related to this is the twin transition, implying that the deep digital recession is essential for decarbonising to happen. How do you see this, Christian? 

CHRISTIAN BRUCH

I fully support it and I absolutely agree, there's also connecting it a bit to my last point I said before, right, if you want to really achieve that, we will need to drive efficiency and digital will be an instrumental part of that and really more getting more out of less right would be my view. And AI and digital can help us in in multiple ends. The one thing is really using installed assets better, let me give you an example, I mean the electricity grid will be instrumental to make renewables happen, to balance the volatility, to bring the electrons to the consumer. There's so much installed capacity which can be used heavier, I would say, and needs to be used heavier if we want to make it happen fast enough. And grid automation and grid stabilization, grid digitalization will be a key element for that.  

The second point I just want to raise why digital is so important for us, some of the implementation speed will be dependent on people. How fast can you do engineering? How fast can you manage supply chain? And we see a lot of activities or a lot of activities are happening in our organization in terms of organising or automating engineering, having faster execution processes by AI, having better control on the supply chain by AI, and that is at the end something where you would also say getting more out of less, having less people needed to implement to certain projects and this would be instrumental. So I think it is a fantastic tool, it’s also, let's be honest, we talk a lot about AI and it's the prominent piece at the moment, but it's not new. I mean, we are working on AI a long time. With the large language models now it gets to a different level and it will help us really to decarbonize. But also some of the things will also take time to have implemented in our day to day work.  

REMI ERIKSEN

In order to take advantage of all digitalization and artificial intelligence, I would say that to reap those benefits you need a strong approach to cybersecurity, which is the other part. When things get more connected that all the operating assets are getting more connected. What do you think about this and what is your thinking in Siemens Energy on protecting your assets from cyber threats? 

CHRISTIAN BRUCH

Yeah, look, we have a relatively strong team on cybersecurity for a reason because we are also providing this as a service to our customers who are operating infrastructures or critical infrastructures. And obviously we develop models ourselves in terms of providing cybersecurity and connectivity. And this will be a continuous race and battle. I mean, it's something which never stops. And I do believe that we all continuously underestimate the amount of money we have to spend on cybersecurity. I think we've got a little bit more sensitive on this over the last 12 or 24 months with also attacks we're seeing increasing. We're seeing it really used as a weapon. 

We have it put really as one of our underlying principles in our strategy, acting cyber secure or acting resilient and cyber secure in a transforming world. But it also will mean that we continuously have to face new challenges because this will never stop. I do agree with you, this will be an underlying principle to make energy transition work because in electrical sustainable world, we'd be more interconnected. And that is something where we also then have to ensure how secure is that? And if I take always the trilemma of the energy transition, the affordability, the sustainability and the availability, we have all seen in the last two years that more and more the aspect of security at the end of energy supply becomes more and more overwhelming, and it's more about the resilience of systems, which will be the determining the success of the energy transition. So absolutely, yes. And I do believe we all cannot overestimate the effort which is required to ensure cyber security. 

REMI ERIKSEN

At DNV we are committed to investing 5% of our revenue, yearly revenue, on R&D and innovation every year. I'm excited to see Siemens Energy also has an ambitious research program, and I believe it's some 4,000 researchers. What technologies are Siemens Energy looking at which really get you excited? 

CHRISTIAN BRUCH

Yeah, actually, it's more than 4,000 people, because this is only the ones which are really the dedicated R&D teams. There's obviously a lot more people working on the R&D projects. And we also do it a lot with partners. We spend around €1.2 billion every year on R&D, and this is for us an instrumental piece as an energy technology company. There’s lots of different technologies and one of our beliefs is that energy transition will be very diverse in the portfolio. It's much more than renewables and batteries. So, we're working across different technologies. Obviously a lot about grid, a lot about hydrogen, a lot about even nuclear and fusion in terms of what could potentially come. 

The key element, what we are trying to change at the moment in our R&D world is how we do innovation, which means build strong partnerships. So, we are opening up our innovation systems and our innovation centres. We have inaugurated in the last two years for global innovation centres in Orlando, Abu Dhabi, Shenzhen and Berlin, where we really tried to bring different people together, some from us, some from suppliers, some from customers, some from research centres, to really find cross collaboration and good ways on how to leverage technology to solve energy transition. 

But the key thing, what we are at the moment pushing there is how to do innovation and how to do innovation fast and how to move innovation into scalability. So it’s not so much about hey that’s now the hottest technology, it’s more about how can you turn technology in a product that creates value at the customer.  

REMI ERIKSEN

We have talked about some of the big transformations that are defining business and society today and the years to come, I believe. But Siemens and DNV are defined by the people we are able to retain and attract. And on the attraction part, what advice would you have for young people that are now starting or just about to start their career? 

CHRISTIAN BRUCH

I mean, obviously I'm not so young anymore, so I always do it from my perspective. But I just as I said, I just came back from meetings with very young employees from our side who some of them recently joined. And if I want to convince them of Siemens Energy, we always talk about our purpose, we energize society. And this is attracting, this is attracting people and obviously our ability to cut across from just providing in principle access to electricity but also being at the forefront of the energy transition is attractive to a lot of young talents and they want to have a purpose for the work. And if you want to create an impact, work with us. 

I mean, this is what we are trying to make clear and we also obviously are aspiring to really change the way on how we take decisions and that people who join us really can influence what they're doing and really take decisions themselves and move forward in a continuously transforming world. But the key element for me is really what I really love, our fascinating purpose of energising society. And this is what we do every day. And I have to say I'm pleased if I see the passion in my organization embracing that. 

REMI ERIKSEN

It's been great talking to you Christian. Thank you for sharing your insights on this podcast and thank you so much for your time. 

CHRISTIAN BRUCH

Thank you very much and thank you to DNV for all the collaboration.  

REMI ERIKSEN

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