Solutions for Success
“Our planet can only provide a livable home to billions of people if we find innovative solutions to pressing issues.”
While you might imagine that a quote of that nature might have come from Bill Gates, Al Gore or Richard Branson, and while they probably have all said something close to it, that’s not the case here. Rather, that statement was made by Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH.
While many of us might think of Bosch in the context only of things like fuel injectors, antilock braking systems or really appealing home appliances that we wish we could afford, the company is actually quite a bit more extensive than those things—important though they may be—and it is representative of what is still arguably a handful of companies that understand the importance of making a business transformation in order to address the needs of consumers, needs that may require stretch goals to be established and pursued.
In 2017 Bosch had sales of 78-billion €, a 6.7 percent increase over the previous year. Earnings from operations before interest and taxes (EDIT) were 5.3-billion €, or a 6.8 percent EBIT margin.
That’s important because as Professor Stefan Asenkerschbaumer, Bosch CFO and deputy chairman of the board of management, stated, “Bosch’s success in its core business finances its efforts to become a leading supplier of IoT technology and mobility solutions.”
In other words, in order to make a business transformation, it is important to have the fundamental financial wherewithal to do it.
It is also essential to recognize that while it may be possible to make excellent returns on existing operations, chances are good that what exists now will be insufficient in the future.
So today may be good, but preparations must be made for tomorrow.
In the case of Bosch, for example, they’re pursuing connectivity and digitization to the extent that they even established a new operating unit this past January, Bosch Connected Industry, to focus its Industry 4.0 efforts in one place. And to circle back to the quote at the beginning of this, ways that Bosch is addressing the livability issues facing the planet’s population includes connectivity, as in using sensor-based solutions and artificial intelligence even to facilitate “smart farming.”
What’s more, there is the issue of increased urbanization. When you have more people living in close proximity, this generally means there are a whole lot of motor vehicles in close proximity, which typically means that the air quality may be less than desirable, as has been the case in places like London and Beijing over the past several months. To that end, Bosch has developed the Climo mobile air lab that provides real-time measures of city air quality so countermeasures can be taken sooner rather than later.
And to enhance urban transportation—which Bosch reckons will triple by 2050—they’re developing autonomous technologies as well as electrified powertrains. What’s more, they’re looking not at the vehicle as a discrete object but as an element in a larger infrastructure, which is the city. This gets to the point of sensors and connectivity not to increase the output of asparagus or strawberries, but to make getting from point A to point B quicker and safer—for everyone’s points A and B.
Although Denner said, “By 2030 at the latest, fuel cells will play a key role in the powertrain mix. We are stepping up our development activities and gradually expanding our product portfolio,” this is additive to what they’re doing in powertrain, where internal combustion engines—including, yes, diesels—will continue to hold significant positions in the market. Denner acknowledged, “It is unlikely that we will meet our CO2 targets in Europe without diesel.” So it is incumbent upon them to develop the technologies that will permit diesel systems to meet the requirements that are only going to become more stringent—
and more likely to be diligently enforced around the world.
Although Bosch is truly a global company, fundamentally it is a German company. And while it is certainly chauvinistic to make a blanket statement of just what a “German company” is, the large ones, in particular, that I have had the opportunity to interact with have tended to be somewhat more thoroughgoingly bureaucratic than those in other locales. Denner seems to recognize that bureaucratic behavior that exists as he said, “There can be no digital transformation without cultural change.” They’ve claimed to have eliminated more than two-thirds of the red tape that exists in the organization (and it would be interesting to know exactly what the metric for that is.)
As examples go, in this context Bosch is a good one. Companies that just stick to their knitting are fundamentally producing their own winding sheets.
Honda is an engine company.
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Although the term “continuous improvement” is generally associated with another company, Honda is certainly pursuing that approach, as is evidenced by the Accord, which is now in its ninth generation.