Reinventing Bosch: A Radically New Way Of Working
Many people feel stuck inside large, traditional, soul-sucking organizations. They know their company culture needs radical change, but feel as if they can't influence a damn thing. Luckily, several pioneers have cracked the code. Today, we share the inspiring case study of Bosch Power Tools.
Recently, I interviewed Jochen Goeser, Project Leader of Bosch's so-called "Agile Transformation" project. The full interview has been recorded and is now part of the Corporate Rebels Academy.
While nearly each company has set up an agile transformation project these days, the one undertaken by Jochen and his team goes way beyond the typical hypes, buzzwords, and superficial fixes that don’t actually make a dent in much of anything.
This truly is a remarkable transition towards less bureaucracy and more entrepreneurship.
Let's dive in.
Bosch Power Tools
Robert Bosch GmbH, commonly known as Bosch, is a massive company by any standard. The German engineering and technology company employs around 400,000 people and its products are—consciously and unconsciously—part of our daily life.
Over the past five years, an exciting transformation has taken place in the company's Power Tools division. The consumer goods section makes all kinds of power tools, measuring tools and accessories such as drills, chainsaws, sanders, and more things that hammer, cut, and smash stuff. It consists of around 20,000 employees (associates, as Bosch refers to them) and is split up into six different business units.
Six years ago, things started to scour. The division was still successful, but a team of employees felt it needed to face several significant changes in its work environment head-on.
“We really saw a major change in our organization and in our business environment,” said Jochen. “If I had to summarize it, it would come down to three major trends."
This seems like a good time to let him cover those three trends.
Transforming Bosch Power Tools: Why?
Jochen: "Because of digitization, our customer changed. Previously, when we talked about making our customers happy, we talked about retailers who sold our products. But that changed. The people who use our tools became our top priority. We had much more direct interaction with users. You know, the famous five-star rating on Amazon or the one-star rating on Amazon. That started to change the way we interact with the markets.”
"As a company, we were not really set up for that. We needed to become much more focused on our end users."
Jochen: "We saw another trend emerge when we looked at the major growth we experienced in areas outside our home markets. Asia, Africa, and Latin America became very interesting for us. With this globalization of our business, we needed to step up our game in order to take full advantage of those opportunities."
Jochen: "Besides digitization and globalization, we also asked ourselves, "How can we create a more motivating work environment? What do people who work for us really want? How can we attract new talents and skills? How can we attract people who don’t have Bosch on top of their employer wishlist?”
"On top of being a more attractive place to work, we also needed to attract new talents and skills. Because of the changes we faced, we needed, for example, more digital marketing skills and more "Internet of Things" skills. We started to realize that we needed to compete with the big tech companies for talent."
For Jochen and Bosch PT, the changing digitization, globalization, and collaboration needs led to three important questions:
- Are we close enough to our users?
- Are we innovative enough?
- Are we fast and flexible enough?
These questions forced the start of a remarkable journey.
Transforming Bosch Power Tools: How?
1. Set the direction
Wisely, Bosch PT did not follow the herd by downgrading their "agile transformation" into over-hyped frameworks like SAFe or off-the-shelf solutions like Scrum.
Says Jochen: "We looked into how other companies are doing this. And I think the biggest learning from what these other companies told us was that it's very difficult—or not recommended—just to copy and paste what others are doing. It simply does not work. So that’s also why I encourage others not to copy what Bosch Power Tools is doing."
"However, the underlying assumption is to go in with strong principles. That gives you direction. Are we on the right path, you know, even though you don"t know where you might end."
Therefore, the transformation team focused on defining which elements would form the guidelines of the change project.
They came up with five:
- Strong purpose
- Permanent cross-functional teams
- Flat hierarchies
- New understanding of leadership
- Open communication
The application of each was to be decided upon by the different business units. There was freedom in how to apply them, but the vision was clear. Bosch PT wanted to move in a progressive direction, and these five elements had to be part of it.
2. Invite volunteers
The organization set up a project team to facilitate the transformation. The team was strongly connected to the leadership team, but it wasn’t there to push any changes. Instead, its actual goal was to facilitate a broader discussion in the division and support business units to start experimenting.
The transformation team then invited volunteers to set up transition teams for each of the six business units. These local transition teams were the ones who were going to define what the new (and improved) Bosch PT should look like.
Perhaps surprisingly to some, one particularly strong partner in this journey from the beginning was the HR department, as they put a lot of emphasis on driving a new mindset when it comes to leadership and collaboration.
Jochen: "It shouldn’t be a big surprise that not only leaders are interested in what the organization looks like. I mean, every associate is really also keen on answering questions like, "What is my new team? Who are my new teammates? Who is my new boss?” All these things that impact our day-to-day work are essential for people. That's why we wanted to get many of them involved in the process."
3. Doing beats planning
While the rough vision was set by those at the top, the actual design of the transformation and its execution were in the hands of the local transition teams. To the surprise of these local teams, they didn’t have to spend their time defining work packages, setting milestones, or creating overly elaborate slide decks with overused gifs and outdated television references. Instead, it was about action.
Jochen: "This was a big, but positive, shock for many. We didn’t force a top-down transformation but rather allowed each of the business units to experiment and iterate. You cannot start such a transformation, call it "agile," and then do it old school. We decided to focus on action."
4. Start small, learn fast
The transformation was started in one business unit.
Jochen: "We gave them the opportunity, the guidelines, and the freedom to experiment. Based on what they did, we learned lessons for the next business units. We didn’t have to wait for everyone to be ready but could instead focus on doing and learning. Plus, this way, they could focus on the needs of their specific business unit."
Every 6-12 months, another business unit joined. They learned from each other, but they didn’t copy & paste each other's approaches. Instead, each transition team felt the need to create their own solution, as their business wasn’t entirely the same.
5. Share and scale
Once more business units joined the transformation journey, the transformation lessons were more actively shared between them. This fostered learning from each other without forcing the business units to implement the same way of working.
The benefit of scaling the transformation is that you can learn and adapt more quickly.
Nowadays, the six business units have reinvented their way of working significantly. The transformation approach worked and has led to increased success and engagement.
Let's look at the specifics of what they have changed during this transformation process.
Transforming Bosch: Now What?
We know your next question. So, after five whole years of this experiment-and-iterate approach, what has changed in Bosch PT's way of working?
Let's summarize the most consequential changes.
1. Decentralized organization design
First of all, the business units moved from functional departments to cross-functional teams. Instead of having separate marketing, manufacturing, and engineering departments (that frustrated each other just as much as in other traditional companies), they ditched the silos and replaced them with cross-functional teams.
Teams are responsible for their own business and are granted lots of autonomy. This setup breaks down bureaucracy and unleashes entrepreneurship and creativity within the teams.
The six business units have now been turned into over 50 business teams. However, not every associate of Bosch PT works within these so-called "business teams". Roughly 60-70% are a part of the most entrepreneurial units, while the remaining 30-40% work in so-called expertise teams.
These are supporting teams that provide specific expertise to the business teams, very similar to Haier's supporting microenterprises—yet without the internal contracting mechanism:
2. Scenario thinking
For each company moving to cross-functional teams, there's an important decision to be made: "How do we divide the teams?” Well, you can divide teams on a number of topics. To name a few:
- Geography (i.e. making teams responsible for a specific neighborhood, see Buurtzorg)
- Clients (i.e. making teams responsible for a single client, see FAVI)
- Products or services (i.e. making teams responsible for a particular service, see Finext)
For each organization, the way to organize its customer-facing teams is different. It all depends on the type of business, market sector, geography—standard stuff like that.
The most important thing when breaking away from silos is to keep two essential things in mind:
- Which division of teams puts customers at the heart of your business?
- Which division makes teams as autonomous as possible?
At Bosch Power Tools, they decided to focus on “scenarios" (or applications). As you can see in the image above, this means that some teams focus on drilling or cutting while others focus on removing. (And yes, this was an easy analogy to make.)
People with various engineering and manufacturing skills work together in permanent teams to provide applications that fit the customer's needs.
Jochen: "This new organization design helps us to focus much more on the needs of our customers. Plus, it allows teams to be much more entrepreneurial and autonomous."
As teams gain full responsibility for their own performance, lots of transparency is obviously required.
Teams need to be able to assess their own performance to truly unleash entrepreneurship. At Bosch, business teams can rather easily assess their own performance through, for example, their profit and loss account and customer feedback. Expertise teams rely more on metrics like feedback from their internal clients: the business teams themselves.
It's important for such autonomous teams to continuously know where they stand. Without that transparency, the "experiment and iterate" approach makes absolutely no sense and entrepreneurship can’t be properly unleashed.
More transparency is created through a renewed business rhythm. For example, in some business units, representatives of all teams within a business unit come together for thirty minutes, twice a week.
It’s important to note that this is not one of those boring and usually unnecessary status meetings most organizations frustrate their people with. Instead, these meetings are short and focus on specific bottlenecks.
Jochen: "As teams have end-to-end responsibility, we ask them what their bottlenecks are. What can’t you solve yourself? Where do you need help from other teams? That's it. We try to reduce the amount of complexity and detail as much as possible."
4. Supportive leadership
As part of the transformation, Bosch PT had to reinvent the role of leadership. Senior leadership played a vitally important role in that.
Yes, sometimes it takes company leadership to reinvent leadership. It’s really a chicken/egg type of thing.
Jochen: "It was imperative to create a feedback culture from top to bottom and from bottom to top. Our senior management, for example, is having a monthly TV show format in which they update everyone on how the division is doing and what is going on."
"On top of that, they are doing a lot of feedback sessions. Not only with the leaders but also with the associates. They meet every week with a smaller group of people to encourage them to give feedback."
5. Reinventing HR
In order to focus on making teams more autonomous, it has been a significant success factor that underlying HR processes have also been adjusted to the new needs. New tools such as team target workshops (in which teams define their yearly targets), competence camps (in which teams define the competencies needed to achieve their targets), and individual development dialogues (to put each individual in the driver’s seat of their own development) are some of them.
The story of success
So, did this all work?
We’ll let Jochen close us out:
"Employee satisfaction numbers increased. Our review scores on Kununuu and similar websites increased too. But, more important, if you ask the people, "Do you want to go back six years from now?" a huge amount of people say “no way.” I think that's an excellent indication of where we are."
"When you speak to them, it's clear they are now closer to users and more sensitive to their needs. Teams ask themselves, "Is the need for this new product that we try to launch really still there?" There's much more user testing in our product development process.
"That means we also have the intention to kill projects earlier if we see that it doesn’t make sense, as opposed to keeping the project for two or three years and then later realizing that it doesn’t make sense.”
So, there's much more iterative testing in the development process as we are actually much more closer to the user now."
All in all, this is a transformation worth going for. Wouldn’t you agree?
The full interview of Bosch's transformation journey is part of the Corporate Rebels Academy. To learn more, join our course "Understanding and Designing Progressive Organizational Structures". We've just opened enrollments for our 2022 cohorts.
Visit the Academy page here.