Dual Innovation: Key Principles and Future-Proofing Corporate Innovation - Part 4

This is part 4 of a multi-part article series, co-authored by:

Dr. Eva Mitterreiter, Head of New Business Building & Innovation, Consulting at Bosch Engineering (lead author of part 4)

Dr. Ralph-Christian Ohr, Corporate Innovation Advisor on Dual Innovation and Scaling-Up

Sebastian Budischin, VP and Head of Venture Building & Strategy at Bosch Stationary Solid Oxide Fuel Cells (SOFC)

Outline:

• Part 1 -?Cornerstones of Organizational Ambidexterity?
• Part 2 - Dual Innovation: How to Set Up for Organizational Ambidexterity
• Part 3 - Scaling-Up: The Crux of Dual Innovation?
• Part 4 - Dual Innovation Principles at Bosch
• Part 5 - Establishing Dual Innovation at Bosch?
• Part 6 - Dual Innovation in Practice at Bosch Engineering
• Part 7 - Scaling up a Bosch Venture: Solid Oxide Fuel Cells (SOFC)
• Part 8 - Wrap-up and Recommendations

__________________________________________________________________________

?Part 4 - Dual Innovation Principles at Bosch

How do you do innovation in a large and diverse corporate with more than 400,000 associates, four very different business sectors, multiple business units and an annual turnover of round about 79 billion Euros?

How do you fill the funnel inside and outside your core, efficiently and effectively validate new ideas and scale them up? Those questions have been around within Bosch for many years and although not all challenges have been solved by this day, the progress and learnings in the last approximately seven years have been tremendous.

Especially the increasing awareness of the need of different structures for innovations outside the core business (explore) and inside the core (exploit) has in many business units led to the installation of separate processes and KPIs to handle both sides. This includes the challenge of the incubation and scaling-up of validated ideas, and therefore, the Dual Innovation part that connects the two worlds.

As for exploit innovations, classical innovation processes have been existing for a very long time, always slightly adapted to the specific characteristics of the business unit (e.g., producing vs. non-producing unit). A lot of Bosch associates feel comfortable with this process as it covers usual questions with usual KPIs, such as the question about the return of invest (ROI) of a project. Innovation close to the core with known business models allows for typical business case questions already early in the innovation process. Various innovation managers in the business unit accompany and support new ideas of that type.

Explore innovation, on the other side, did not have the attention it urgently requires in order to be successful. This changed with the establishment of the central department of business model innovation (BMI) in 2015. Volkmar Denner, the former CEO of Bosch emphasized the importance of having both types of innovations within the company:

“It is of tremendous importance that the company capitalizes on its own strengths and products while continuously reinventing its business to prevent the attack of disruptors.” Volkmar Denner, former CEO, Bosch (you can read the quote and more about evolving business models here).

It was clear that with the major transformation Bosch is facing from digitalization, e-mobility, automation and many more, new business models were needed. However, it was also clear that business model innovation does not work in a classical corporate environment. Various former projects and lessons learned made that evident – different mindsets, KPIs, and processes would be needed to be successful in BMI.

Next to the central BMI department, “Open Bosch” was founded to enable the collaboration between startups and the business units as well as the grow platform, an internal incubation platform for startups and intrapreneurs.

After the WHY was clear in why we need new business models the WHAT also needed to be clarified – what is meant by the two terms of explore and exploit innovations? While exploit innovation was rather easily defined and understood as innovations close to the core with rather known customer (needs) and business models, explore innovations were differentiated:

1.?????The more “classical” definition one can often find in literature with explore innovations being further away from the core with completely new customers, value propositions, and business models often happens in a project house or the grow platform, ideally away from the core.

2.?????However, there are also projects that are far too new to being an exploit topic but that are still closer to the core – mostly with regard to technology. This, for example, is seen very often with digital business models. Those topics often find their happy home in a business unit.

No matter what kind of innovation Bosch deals with it always has to be consistent with the corporate or the business unit`s strategic fields and direction – strategy and innovation need to be closely linked.

Coming to HOW Bosch implements ambidexterity, the introduction of the Bosch Innovation Framework (BIF), also already mentioned in Part II, was a big step forward. Established in parallel to the classical innovation processes to handle exploit innovations, the BIF is not only a process guiding new explore ideas from the very first strategic thought to incubation. It has also been a mindset changer for doing innovation outside the core.

Its Bosch-wide installation

·??????has led to a new awareness of the otherness of explore ventures including an exploration mindset

·??????ensures a mutual innovation terminology

·??????improves the global comparability of innovation projects to facilitate transparent, consistent, and evidence-based investment decisions and

·??????increases capital efficiency by testing & (in)validating all innovation activities with one framework

Although not an exploratory unit (see Part II), the BIF creates an exploratory framework that internal start-ups follow, which comes close to a ?competence center‘ - approach, as outlined in Part II. It provides logical steps how to transform a first idea into a successful product in the market – or how to stop ideas early. Thereby, the BIF includes state-of-the art methods and tools such as Design Thinking and Lean Startup, adapted, however, to the corporate context. Crucial for the framework to work is its stage-based explore KPIs that lie behind each phase and that guide start-ups through the process.

The BIF helps to align with strategic search fields, to discover the problem space, and to generate holistic business models based on the four innovation pillars of desirability, viability, feasibility, and contextuality (if you want to read more about the latter, have a look at the book Scaling-Up Corporate Startups: Turn innovation concepts into business impact co-authored by Dr. Ralph-Christian Ohr ).

Exhibit 1: Bosch Innovation Framework (BIF); Source: Robert Bosch GmbH

?

[End of part 4]

__________________________________________________________________________

Up to more insights? Stay tuned for?forthcoming part 5!

Do you want to?access the complete paper?(after finished publishing here) or discuss Dual Innovation for your company??Please get in touch?with us by leaving a comment or dropping a direct message – we look forward to it!

Last but not least: We truly believe in?open and free sharing?of our ideas and experiences in order to move this crucial and forward-looking topic forward. In return, we kindly ask you to?credit?us in case you use the insights, made available in this white paper, for your purposes. Unfortunately, we have frequently found that this 'take and give' doesn't seem to be self-evident for all.?