Siemens x Bosch: Four Reasons Why Corporates Should Co-Operate
Co-written by Franz Menzl from Siemens and Dr. Uwe Kirschner from Bosch Innovation Consulting (article only available in english)
When it comes to cooperation between corporates around innovation, most people first think of a cooperation with an innovative start-up. The cooperation between Siemens and Bosch Innovation Consulting shows that there is another way. Franz Menzl and Dr. Uwe Kirschner, who have been driving this cooperation forward, provide the 4 most inspiring reasons for such an innovative collaboration:
#1: Solving challenges together
Corporates are facing a particular challenge: ambidexterity, which involves the efficient use of what is already existing and the simultaneous exploration of what is new. The core business of every company must be both maintained and further developed. At the same time, the risk of disruption of the core markets is clear, and corporates must also grow beyond their core business – Franz and Uwe agree on this. But it is precisely this that brings up new tasks. First, corporates must be aware of this need. “Many companies focus on what they can do: Horizon 1, which reflects their core business, and forget that there are Horizons 2 and 3”, explains Uwe, using 3-Horizon-Model from McKinsey.
Success in the core business creates an expectation that is unrealistic in unknown areas. “The further away new topics are from the core business, the more uncertainty you have and, logically, the higher the probability of failure” emphasizes Franz. Some investments will not bring the desired success. You must be aware of this in advance, recognize a failure early on and withdraw from the corresponding market.
“Failure is part of the game and accepting that as a successful company in explore activities, that’s the challenge!”
Meeting the challenges of innovation projects outside the core business (Explore) with the maintenance and further development of the core business (Exploit) is called organizational ambidexterity.
But precisely because this affects most corporates equally, it is worth looking beyond the confines of one’s own company. Perhaps you can be encouraged to grow beyond your own core business through cooperation or exchange at one point or another – after all, the goal is to be innovative across all three horizons.
#2: Opening new markets and business models
At the same time, stepping up innovation outside the core business means considering which markets of the future a company wants to be successful in the long term. “We have to deal with the question of what are the businesses of the future, which are still exploratory today, but which of course will become part of the future core business of the respective companies in the future”, says Uwe. Organizational capabilities, characteristics of the organization, application possibilities of new technologies or the question of how industry and customer expectations develop in perspective are possible criteria that determine where a company can make a profit.
Choosing the opportunity field inherent potential failure of an investment. Before investing, you will have to deal extensively with the market and decide where to invest based on many customer discussions – but this is not a guarantee for success. Ideally, the innovation opportunities identified in the market of the future are systematically processed by several teams. The methods used by the organizations can be decisive. The ability to see if something . . .
- . . . can be successful,
- . . . is scalable,
- . . . and can be reproduced,
needs to be implemented. According to Uwe, a stronger thinking on business opportunities should be anchored in the company, where technology itself was often the decisive factor for innovation in the past. You must ask yourself the question: “How could business be done in the future?”
But where is the advantage of cooperation at this point? Not every company has the same expertise in systematically and effectively capturing such opportunities. An exchange of experience on such methodologies is extremely beneficial. If it is also found that certain organizational characteristics needed for a particular market are lacking, a solution must be found. Here, it is possible to invest in training and further education or to acquire externally via mergers & acquisitions. Cooperation can be a great solution to acquire new properties as a company and to survive in the markets of the future.
#3: Advancing evidence-based innovation management
Innovation management can be seen as the heart of the cooperation between Siemens and Bosch Innovation Consulting. One prerequisite that both Franz and Uwe see as essential for successful innovation management is the support and commitment of executives. After all, many important decisions about how investments are made and where they are used (e.g. in which horizon) follow the top-down approach. And that’s perfectly fine. Companies can thus send a clear signal, commit to innovation and encourage employees to become active in this regard. In addition, the company’s innovation strategy must be communicated openly and clearly to people in the organization to implement it successfully.
“Only if the strategy is also known to the employees one can expect a targeted ideation and processing of these innovation ideas to take place.”
But the innovation strategy itself is also a fundamental part of innovation management. The wrong strategy is often the reason why, despite many innovative ideas in the company, things fail in the end. A common phenomenon of today’s times is the Innovation Theatre: innovation efforts of a company that primarily serve the purpose of training and activating employees and not to build a real business for a company. Whether an innovation idea is ultimately successful or not, however, depends above all on the customer. What is the most innovative idea if nobody uses it in the end? To illustrate this customer benefit, it is important to engage in dialogue with as many (potential) customers as possible. Siemens has undergone a clear rethinking: from a technology-centered approach to a customer-centered approach. Consequently, in completely new markets, there are special challenges, as access to customers is often not yet available. And despite the great importance of validation and sharing in the innovation process, it is just one of many aspects that need to be addressed to be successful in innovation. Therefore, a systematic approach is essential, starting from strategic framing to incubation. Everything together aims to create real customer value. The Innovation Framework provides the perfect basis for such a systematic approach.
The framework provides teams with an innovative idea with a foundation that creates structure and enables them to make their own decisions on whether to proceed with a project or not – based on evidence-based insights. For Franz in particular, the development of such a framework was a decisive point for the cooperation. And it was worth it: “The teams reflect, that this approach is extremely valuable for us!” says Franz.
The benefits of cooperation should be clear by now. Especially for companies that have a similar starting situation and challenges, such as Bosch and Siemens, a cooperation offers tremendous potential. Uwe sums it up: “We ourselves are learning every day how to further develop innovation management and make it even more successful.” And Franz can only agree with this: “It couldn’t be easier to get experience and good ideas.” Working together in ecosystems across companies provides the basis for handling issues of the future. These include constantly emerging new technologies, automation, digitalization and sustainability – topics that a company can hardly manage on its own in the end. And so, the challenges faced by corporates both internally and externally highlight the added value of cooperation, perhaps even the necessity.
“We are working to become better together, and that’s something I can recommend to everyone. Force oneself to cooperate.”
Thanks to Uwe and Franz, for these exciting insights into the cooperation of Siemens & Bosch!