Jim Snabe on how Siemens and Mærsk adjust to the new abnormal
- Jim Snabe has a clear vision for what happens in a post COVID-19 world. It will surprise some, annoy others but makes logical sense.
Jim Snabe, chairman at Siemens AG and AP Møller-Mærsk, is also chairman of the Dreams and Details Academy. In that latter role, Snabe explained to attendees of a webinar how the companies he chairs are responding to COVID-19 and how he sees this as an opportunity to reset what leadership looks like going forward.
Before getting into the specifics, Snabe noted that while climate change was a big agenda item at the World Economic Forum in Davos this year, the pandemic was low on the WEF topic list. He confirmed what we saw elsewhere in that many companies were ill-prepared for the pandemic but that once action was needed, world-leading companies acted quickly.
Siemens and Mærsk act
As it relates to the copmanies of which he is chairman, Snabe said:
In Mærsk's case, ships were kept at sea, in some cases an additional month, to avoid crews contracting the virus. At Siemens, the company tries to automate as much as possible but still requires people to turn up at those factories where products essential to healthcare are in production.
We have crisis management leadership models where we handle at least two times a week; in some situations every single morning, the crises occurring somewhere in the world, trying to find ways to keep our companies running but also keep our customers supplied. We have tried to take care of supply chains at Mærsk for all our customers who are in situations where their critical pieces are missing. We help them find alternative routes for their products and components. And we prioritize the transportation capacity and manufacturing capacity as well at Siemens for health-related activities.
Snabe noted that in both cases, the management has focused on financial resilience, a point he says is critical at a time when 'cash is king.' He also sees a broader role for companies:
I think it's important that companies step up at this time to show that they live up to their multi-stakeholder role and responsibility. At Mærsk, we've made a bridge where we transport masks and other health care goods from China to Europe. We leverage our transportation skills and donate transportation to society. At Siemens, we just launched yesterday a cool COVID-19 Social Fund, where the company will match any donation given by employees. Our CEO started by donating one million euros from his private funds.
Finally, both firms are asking themselves how they turn the current situation into competitive opportunities.
How do we make sure that we become stronger than our competitors as the crisis ends? How do we accelerate the future that we had in mind? And how do we potentially use this situation so that we don't return to the past when we're done with the crisis, but accelerate the future that we had in mind.
The new abnormal as central to the future
Central to Snabe's thinking is the thought that globally, we will not return to what went before but that we will enter a period of change ushering in opportunities to develop new and sustainable business models but transparently. In his mind, transparency is central to understanding both the good and not so good while at the same time making it possible for operational staff to make decisions, the outcomes of which can be shared widely in the business.
It is the opposite of a centralized bureaucratic system. You become a hub of interconnected creative people.
Snabe goes on to argue that the role of the board is to focus on the long term intent. A short term shock runs the risk of defocusing on this, yet it is that long term intent to which stakeholders look. At the same time, Snabe believes that a corporation's purpose needs to be demonstrated by action, and here, he cites the commitments both Mærsk and Siemens have undertaken to help society.
He also notes that some aspects of the business need to continue but in different ways. For example, the recent annual AP Møller-Mærsk shareholders' meeting was turned into a virtual event, and his report of the experience has been viewed more than 140,000 times on LinkedIn. That, in turn, opens the question about how board meetings of the future might proceed.
Some aspects that need, for example, approvals don't need for us to meet, we can use digital processes to complete those tasks.
We are seeing an increasing interest in understanding whether we will return to what passed as normal before the pandemic or whether we will move into a new normal. Regular readers will know I term this the 'new abnormal' since there is nothing 'normal' about what we all face. Snabe is adamant:
I'm arguing we should not try and come back to the previous situation but use this as an opportunity to accelerate the future.
Globalization, climate change and technology
But this begs questions to which, again, Snabe is unequivocal:
Will this reduce globalization? I think the immediate answer for many people is yes and that we need to reduce dependencies from other countries. My conclusion is no. Globalization is happening because it's economically valuable. Denmark will never be a great producer of bananas. And therefore, we need to leverage global skills and talent; we need global trade. It has been the key driver of development and has moved people out of poverty and given a level playing field that we need. And therefore, it's important not to conclude the obvious because that could kill economic growth. And we need to become more resilient, globally.
So does this mean climate is no longer the theme of this decade? I think it's the wrong conclusion. I'm advising investment in green solutions. So we will now see a substantial public investment coming to keep the economy going. And we need to make sure that those investments are future-oriented, not past-oriented. And so my argument is, we should double down on our sustainability agenda. The question of centralization versus decentralization is an issue.
So how can technology help solve this problem? There are many ideas, say location-based applications. I believe they help you decentralize. I don't see the state mandating who stays close to home. We can quickly get warnings on our mobile devices that tell you if you have been close to someone who was tested positive without having surveillance and loss of privacy.
Collaboration or going alone?
That may be an optimistic view given that countries have taken different approaches to manage the pandemic. Snabe is firm in his opinion that a global solution is the best way to move forward, mainly because he does not believe COVID-19 will be the last pandemic. If Snabe turns out to be right, then that implies a logical shift towards meaningful global collaboration. He goes on to say:
That future in my mind is a more digital future where technology is used in a human-centric way. It is a more sustainable future. When companies take a social dimension, they take a multi-stakeholder approach. They win. Most companies that focus on themselves in this survival game tend to be losing out on the public domain. So I think this is the ultimate proof that it's time for a new leadership model.
In a veiled reference to what is happening in the USA, Snabe said he worries that countries assume they can take an isolationist approach.
We must become resilient in the future. We need to be much more connected, much better at optimizing entire supply chains. I've been in a discussion on how we reopen the economy. If we don't synchronize that, imagine healthcare equipment for helping people deal with the crisis. Some of those components come from the UK and Italy. If we don't have a coordinated approach to keeping that supply chain open across countries, we cannot produce a single device.
U, V, L, W or Z?
I was especially interested to hear Snabe's take on the shape of the recovery. There has been much talk about U, V, L, and W shaped economic outcomes. Still, I was interested to hear his thoughts on the potential for a Z shaped economy where some industries disappear, while others emerge to fuel the future. A good example is how Facebook and Google have redefined advertising, effectively killing off print media but which have also carved positions of great power as a result of their ability to act as network hubs generating network effects.
For his part, Snabe sees the crisis as a clear opportunity to deliver on Industry 4.0 through the use of accelerated digital solutions.
Factories with no people are here, but I also see the acceleration of the 'as a service' business model where you pay for what you use and no more. It's a much more flexible way to run your business. This crisis has accentuated the need for these models.
The new social
Another facet of this discussion centers around how we use mobile technology and what it means for the development of cultural norms that spill into both our work and home environments. Here, Snabe takes the view that the combination of smartphones and social media has contributed to our distancing ourselves socially.
I still remind myself of moments in a romantic restaurant. I look around at the other tables. There's a romantic couple, both of them staring at their iPhone. And you wonder why they are even in the same room. That's the reality we were in not so long ago. And now we're using technology to connect to people, and we're cherishing the moments where we can be physically present. So hopefully, this turns that tendency around, and we begin to cherish human interaction.
It's an interesting position given that many people with whom I interact now see themselves going a tad stir crazy and crave for the time when we can spend time together in the real world. Moving on, Snabe noted that even where there are digital opportunities, many are merely replicating what we see in the 'old' world.
If we can take digital and turn it away from productivity to engagement, then we win the hearts and minds of people. That's the way forward.
I've always found Jim Snabe inspirational, and this session was no exception.
The plan of Snabe as the chairman of two large, global companies is in plain sight. But his views go much further into topics of sustainability and responsible business. It's a coherent approach I can imagine many will welcome, despite implying huge obstacles and challenges, especially for those firms that don't have resilient financial resources. The fact that Snabe is so adamant that we cannot and will not return to the past is challenging but plausible. It is not a vision shared by all. Even so, it's interesting to see the results of a poll I conducted on Twitter over the last day:
Just how far his vision takes hold remains to be seen. In the meantime, there is much to learn from the approach he promotes. What do you think? Let us know in the comments.