Bosch's baby The Multinational Start-up

The engineering and electronics giant Bosch is putting aside its conservative tendencies and investing in a new innovation unit that it hopes will rival successful start-up incubators.
I think I've got an idea.

What Volkmar Denner, chairman of the management board of Bosch, misses most since he took the job two years ago is a willingness to take risks.

With almost 300,000 employees, 225 plants in 50 countries worldwide and sales of €46 billion ($57.4 billion), the company is famous for the high quality of its products, which range from car parts to sensors.

But Mr. Denner would like to see it take a few chances when it comes to innovation, speed and risking change. “We also need a culture of failure,” he said.

In October, Bosch invited 30 hackers to a former art gallery close to Checkpoint Charlie in Berlin and let them loose on its in-car mySPIN platform, which allows drivers link their smartphones to a car's infotainment system. At these so-called “hackathons,” young computer experts work together to tackle a specific task within a defined time limit. They can win prizes such as a trip to London, though developing apps for cars seems incentive enough.

It may be a small step, but it shows that one of Germany’s most conservative companies - whose security measures rival those of a defense firm - is opening up to the kind of people who would like nothing better than to hack the Pentagon’s computers.

We also need a culture of failure. Volkmar Denner, Bosch chairman

Parked outside the hackathon was a €78,000 Jaguar F-Type convertible from the brand that will become mySPIN’s first customer, so everyone could use its touchscreen to experience the apps in their real setting.

“Our system becomes more attractive with every app the car driver uses and likes,” said Kay Herget of Bosch SoftTec, explaining why the hackathons were created.

Bosch is the first German industrial company outside the IT sector to work with young computer whizzes from outside the company.

Since 2013, Mr. Denner has allocated an additional €500 million to the development budget to fund new business initiatives more quickly and, above all, making them consumer-focused-

The first step is making existing knowledge more widely available throughout the company. Special interdisciplinary teams have been created to make this happen and “innovation clusters” have been developed to improve connectivity.

“I am firmly of the opinion that the race for the connected world has yet to be won,” Mr. Denner said. Bosch cannot leave Internet innovation solely to Silicon Valley, not when billions of things are interconnected, he added.

For the past year, Bosch has housed the company’s start-up divisions in a former factory near its Stuttgart headquarters. It’s a mini version of the start-up scene in Berlin.

Quelle: Bosch
Germany's one-stop Silicon Valley?

 

Nikolaus Demmel is a robotics specialist who spurned a promotion at the German Aerospace Center to join Bosch. “I can work here on something that is like nothing anywhere else, not even in a start-up,” said the 27 year old, who also worked for a half-year in Silicon Valley. He is currently working on uses for Bosch sensors in fields that, until now, where not part of its core business.

The start-up unit works differently from the rest of the company. Everything developed is tested immediately on customers because fundamental applications and objectives can change quickly. In the past, this would have meant the death of most projects because they would have to run the gauntlet of Bosch's notoriously nit-picking and laborious approval process.

“Bosch is a very special company with very rigid procedures,” said a trade unionist familiar with the firm.

I can work here on something that is like nothing anywhere else, not even in a start-up. Nikolaus Demmel, Robotics specialist

Bosch’s 20 young stars - soon to be 50 - can draw upon almost unlimited resources. They do not need to worry about space, money or administration. In contrast to a start-up, they do not receive shares in the company, but there is the potential for large bonuses combined with the security of a career with a major company.

The firm has been building its Software Innovation division in Berlin for the past four years in a bid to create its own software and systems. Three years ago, Bosch purchased Berlin-based Inubit, a former software start-up company, for a double-digit million euro amount. Michael Hahn stayed on as business manager after the takeover and now leads the team developing open platforms for the Internet.

Christiane Kersten, a technical computer scientist in her 30s, is responsible for client liaison. “We have to meet the customers’ needs better than the customer originally wanted,” she said.

Bosch also believes in proactive consulting. Wilma Weps, a recently graduated mathematician, wants to explain to customers the advantages that come with connectivity and what Bosch has to offer in various business fields. This has never been done before at Bosch.

Mr. Denner is also breaking up company-wide structures used in long-term research, though automobile technology remains at the core. While the auto industry still thinks in terms of model rhythms, the IT industry is installing higher performance processors every couple of months, new smartphones are arriving seemingly every week and every day a new app hits the market. This creates a huge discrepancy for Bosch.

Previously, the company spent €250 million annually on research and development. Some 1,000 ideas for products and business concepts were developed each year, but only 30 ever made it to the executive board.

To help address this, Bosch has spent €310 million building a corporate campus on the site of a former airport near Stuttgart, which is set up like a university.

 

The author is a Handelsblatt correspondent specializing in the economy of Baden-Württemberg, the state where Bosch is based. To contact the author: [email protected]