Remaking a German Giant With American-Style Tactics
Interview with Klaus Kleinfeld, CEO, Siemens
By Abrahm Lustgarten

(Fortune Magazine) -- Since Klaus Kleinfeld stepped into the top job at Siemens 18 months ago, he has been doing just what he promised: giving the German mega-conglomerate an invigorating shake.

In June he backed Siemens (Charts) out of one of its largest businesses, telecommunications, and dropped $5.3 billion on the acquisition of Bayer Diagnostics of Tarrytown, N.Y. That places the company among the top medical-equipment makers worldwide. Fortune sat down with Kleinfeld in July to hear what else the 48-year-old CEO has planned.

How's business in the host country of the World Cup?

This is the first time in my life I've seen a positive emotion in Germany being associated with the nation. I've always said the biggest issue in Germany and Europe is an attitudinal one, but really, the fundamentals are good. The unions understand what global competition is all about. We've gotten longer work hours and more flexible workdays and reduced perks.

What is your model for rebuilding Siemens?

We have this huge tailwind, and that's the tectonic changes on this planet. By 2050 we'll have nine billion people, many moving to mega-cities. We are addressing that. We are [also] playing in the environmental field in water-filtration systems and energy production.

GE and Wal-Mart have made a big deal about thinking green, but Siemens hasn't.

We are doing the same thing and seeing it not only as green but as efficiency. Europe was at the front end of this from the 1970s. Now the debate is becoming mainstream.

You are also betting big on health care.

We did three major transactions - all U.S. companies. We focus on helping hospitals reduce administrative costs with IT, an imaging segment, and now a preventive side with Bayer Diagnostics. Health care represents roughly 10 billion euros [$12.5 billion] of our 80 billion euros [$100 billion] in revenues--before the last two acquisitions.

And you seem to be running away from telecommunications?

We believe that it's about having a leadership position in an industry, which we did not have in telecommunications anymore.

So it's still important to be No. 1 or No. 2?

That is a fact of life. If I look at all our businesses, I see that only when we are in a leadership position are we able to sustainably make profits on a level that allows us to continue to invest heavily in innovation.

Sounds like an American business model.

It's good business stuff, but America does not have a patent on it. Bear in mind that this company turns 160 next year.  Top of page