Karl-Heinz Streibich is President of acatech, the National Academy of Science and Engineering in Germany. In that role, he is constantly interacting with business and academic leaders, and has a unique perspective on STEM trends in Germany and broadly across the EU and the globe. Before that, he was Chairman and CEO of Software AG for 15 years. In that role, I had helped him write his visionary book, The Digital Enterprise. I recently had a chance to talk to him about the new decade - and the opportunities and challenges he sees for Germany and the world.
Thank you, Karl-Heinz. Let's start broadly with how you see, in your role, the next decade for Germany and the world
I think the next decade will be a great one, again. I don't think that we will have a messy downward spiral or even a big crash. In the past 2 decades, local wars with US involvement, have also caused big economic downturns. To me, Trump is more of a businessman than a hardliner politician and I am hopeful we will not have economic disasters initiated through wars. And I am convinced he will continue for a second term.
What does that mean for global trade because Trump certainly thinks about America First?
The US is not as dependent on global trade as China, Japan or Germany so Trump is not the biggest promoter of favorable global trade conditions. But he has business genes, and at the end of the day, more global trade also benefits US business. At the end of the day, Trump is not a dogmatic hardliner politician, but more of a pragmatic businessman. Therefore, I believe that he's in total good for the economy. Will the U.S. continue to grow and develop? I think yes. Will the dollar's relevance develop and flourish? I think yes. Both will provide the momentum for world economic growth. There will always be a mixed picture around the world, some countries will do better than others, but I think we in the Western world, we should do well based on our level of education and innovation power.
Are German business executives generally aligned with that point of view or are they concerned?
There are always differences in individual opinions , but broadly there is more optimism than pessimism looking forward. We are not always aligned with the style of your president, but overall, we have been aligned with the US people and the US nation for decades. That's an important point. A President has a maximum of eight years in office, but the relationships between the countries, the U.S. and Germany, are forever. It is a great relationship between great nations on both sides of the Atlantic. I mean we are aligned and have a lot of common interests and values we share.
The auto industry is going through massive changes. It is such a big part of the German economy. How do you see that sector evolving?
Germany has several world market leaders in the automotive industry segments. Being a leader today, is no guarantee that you will lead in the future, as we have seen with IT leaders over the decades, like IBM or NOKIA, and others. The auto industry is going through massive disruptions due to innovations in car connectivity, autonomous driving, new mobility services and electric cars. Those are four major changes coming where often just one is sufficient to be disruptive. When you consider the investment that the German automobile industry is planning to make of more than $100 billion in the next five years I believe that we will be fine. The biggest threat is always the potential “leader-downside”, arrogance, a feeling of self-sufficiency, and ignorance to external advice, that can develop within global leaders. The diesel crisis brought them all down to earth It was a horrible shock on one hand but, on the other, the whole industry was rocked and I believe that they are all much more aware now, that they could fail as well.
Let's switch gears to renewables. Obviously, Germany was very, very big on them but they haven't quite delivered in aviation, shipping, many other big chunks of the economy.
I am not sure I agree, Vinnie. We have scaled. In some months, more than 40% of the energy consumed is produced by renewables in Germany. Germany never had its own oil and gas. Sure we had coal, and nuclear reactors. But with the renewables, it's the first time that we can generate largely in a distributed fashion our own energy. Sure, the electricity is expensive at the moment in Europe and Germany but, overall, we are producing a significant part of our own energy and it is renewable. The point is not only how fast are renewables scaling. The point is, can we implement a grid, an energy grid, which is stable where 80% comes from renewables? How do we do that? How do we manage that? How do we balance that? This is the task that we are working on in Germany to stabilize it based on digital technologies, to develop our version of a stable and smart grid.
What's the horizon for that, for the 80%? Is it five years, ten years?
It's probably 8 to 10 years.
That would seem like a rational way to approach it. I just worry about the more radical proposals coming from the extremists saying we should move away from fossils and hydrocarbons much quicker. I don't see how.
That's why they are called extremists. A developed nation always focuses on developing in the middle and not based on the statements or the assumption of the extremists.
In the U.S. we are seeing a lot of pressure on boards to not just focus on shareholder value. Consider more stakeholders, right? More societal stakeholders, more environmental issues and so on. Are you seeing the same pressures on German boards?
Sure. Larry Fink, the CEO of Blackstone has written we all should not only focus on shareholder value, but broader stakeholder value. The issue is touching hearts and minds of the leaders in any company. The Internet has democratized information. Every stakeholder group is in a position to make their own case and communicate it through the information scaling internet.
How are German boards balancing that?
The point is seen and understood by most of them. However, as everywhere, some are still irritated and paralyzed. A few might still ignore it, but at the end they are all beginning to think about the relevance for their business and are starting to adapt. That is the normal cycle of big changes.
It doesn't sound like Europe is that far ahead when it comes to addressing these challenges. You're going through the same evolution.
The big disadvantage, Europe has compared to the U.S. is we are heterogeneous and slow in decision making on EU level. The US is a more efficient homogeneous block. Europe is an extremely diversified region. However, we have learned the hard way to constantly find balances of interest. That is sometimes slower in impact. But overall, the mentality is more open, more agile, more accepting of differences in opinions and, therefore, more open to change, I believe. And around the world, there are more heterogeneous regions than homogeneous ones.
How will Brexit change that?
Brexit is scaling down Europe a bit but I am absolutely sure the next thing that Boris Johnson will do is, to have an economic agreement with the EU benefiting both, the UK and the EU. Like Trump, I see him as pragmatic and he will do what is good for the economy and the country. He will then be a hero, and people will not focus on what he said the year before or two years before. He will do whatever the situation requires him to do.
Karl-Heinz, let's switch gears. You were a CEO for a long time and now you are in a think tank in a very different role. How has the transition been? What have you enjoyed? What have you missed from the corporate life?
First of all, in my heart, I'm a business man. I love to make win-win deals with customers, partners and even with employees.
Well, would you like to negotiate with Trump?
[Laughter] I'm not sure about that. You know I also have dealmaker genes, and I have quite a good network of partners, former customers and friends in the industry. Thinking win-win is useful in all roles of life when you deal with people. However, I very much enjoy that I do not have the day to day operational responsibility and the quarterly pressure for results anymore. I had 60 quarters at Software AG, and I do not have any more the responsibility for 5,000 employees. I also perceived this as a big weight on my shoulders. From that point of view, I feel fine.
I have a lot to do today as the President of the National Academy of Science and Engineering in a country which is very much technologically attuned and industrialized. Therefore, I'm very happy to use my knowledge in digitization, artificial intelligence, my network and my business sense in approaching innovation programs and projects and to motivate people around me to give their best. I enjoy that.
What are the top three or four things you want to accomplish in your role?
First of all, seeing that the German auto mobility markets, the companies and ecosystem evolve successfully. Second, that the energy conversion we have in Germany -- you know we are about to shut down all the nuclear and coal reactors - continues to go well. We are focusing on renewable energy and to develop a stable grid for that. For a highly industrialized country that is a big task.
Third that we achieve --in the perception of the citizens in Germany--a more positive attitude towards technological advancements. When society increasingly is against technology and technological advancements because things moving too fast and they don't understand what is going on, then we have a challenge. Making inroads on that and helping to have a more positive attitude and culture regarding technological advancements is our goal.
Your last point, Karl-Heinz is a prophetic one. I see the more people have access to personal technology, the more cynical they're becoming about technology.
It is a big concern and, you know, there we are probably even more sensitive in Europe than you are in the U.S. because you are still more in the wild west phase in terms of using private data of people in your B2C platforms. I would like the world to adopt our European data privacy and data security regulations. I heard from California that they looked at the European Data Privacy Act when they developed theirs.
I think the world is becoming split. If you look at China and India, their view is the public good is more important than the need for privacy. Half the world is not adopting your model. In the U.S., we are kind of split in the middle.
I hope that we don't move into a hostile, bipolar world where the U.S. and China fight each other and that we have two technology standards in the world. This would be a disaster for everyone because then everyone has to decide if they want to adopt the technology of A or B. And the total market for each standard would only be half. In total, that would be a disaster.
Any final thoughts?
I hope that I'm right that the “businessman politician” Trump will not start a war. Point two, I hope that we will succeed in Germany, in Europe, in maintaining a culture which is positive towards the technological advancements in the world. Point three, I hope that we all stay healthy, and fit when we are 100 years old.
Karl-Heinz, you are so positive and pragmatic. Thanks and here's to a great decade.
