Bosch MPS

MPS, standing for Bosch Mobility Platform and Solutions, is the newest kid on the block in the large global enterprise of Bosch. More specifically, it is a global business unit providing services and a platform to support multiple actors in the mobility sector. It is part of a 90+ billion Euro conglomerate with four sectors, most of which come from the automotive sector. Thanks to its size and global operations, the group MPS belongs to one of the largest bootstrapped entities on this planet. That means a very high amount of entrepreneurial spirit that let the firm survive over 137 years.

Today, the company is asking itself how to thrive in the coming 100 years, and five years ago, the MPS team started to ponder the shift from the industrial age to the digital one, its change of perspective, and implications with a particular focus on the future of goods, people, and vehicle mobility. This reflection encompassed the shift from an ownership-centric, centralized view typical of incumbents trying to autonomously satisfy all market needs to an ecosystem perspective with numerous players connected by more distributed forms of organization.

Bosch survived the last 137 years characterized by deep transformations such as two global wars, an oil crisis, and multiple recessions and cycles, and this speaks for the organization’s willingness to experiment at the edges. MPS is one of those edges in which mutation is welcome. At the same time, its headquarters are based in India, a country with 1.4 billion people. Thinking about its mobility from a European or American perspective of 600 cars per 1000 people would not scale sustainably, i.e. will lead to 750 million vehicles on the roads in India. That’s why MPS decided to look at vehicle ownership through more responsible choice models, in adherence to the set of values and the experimental approach that characterize the entire Bosch family.

With 8 to 10% of revenues reinvested in R&D, constant innovation and technological progress remain the first pillar of Bosch’s nature and trajectory but decisions are increasingly taken to leave the planet in a better shape than it was in the past. In this regard, platforms have a role in enabling, supporting, and empowering Bosch’s ecosystem of partners and peers to produce the societal impact required by the group’s DNA and overall ambition, according to which profits cannot come at the cost of its people or environment. Its sustainability core is demonstrated not only by a carbon-neutral stance for its 440 locations across the globe during COVID but even more by the 92% of its ownership held by the Bosch Foundation, without any voting rights, to collectively protect broader natural interests and outcomes conceptualized by ESG goals.

While Bosch, and similar companies, can often spot business opportunities and even produce a large number of potential solutions, they tend to struggle at efficiently translating those ideas into business cases and business cases into prototypes to test hypotheses, validate solutions, and scale them to the entire market. MPS desired to dramatically improve its ability to channel widely distributed creativity into tangible results through a systemic mechanism that allowed every employee to act as an entrepreneur within an organization that became more like an incubator than a traditional company. 

In this regard, MPS collaborated with Boundaryless to develop the organizational and conceptual infrastructure to transform ideas into products in a sustainable, scalable, and insightful way. A playbook and a taxonomy have been designed to codify how employees look at platforms, value streams, friction points, and value chains and converge toward a common business and organizational experimentation. Such experimentation and its results attract a broader group of participants, maximizing MPS’s ability to contribute to society. 

Multiple obstacles connected to the firm's specific culture and context made such a transformation endeavor far from trivial. Inertia in front of change wasn’t so much in the vocabulary as in the actual systems and processes. Similarly to other large organizations, Bosch is challenged to accept disruptive innovation due to classic blockers that exist in any large incumbent: fear of failure, impacts on current business, damaging the brand and existing relationships with clients. The group’s focus on quality has always been essential for safety reasons. In addition, the considerable company size meant a need to immediately consider scale as a preferable outcome by identifying standard blocks and composable/modular architectures. Innovation was more accessible at the edge, thanks to the larger freedom teams could enjoy far from the core. All of this had to be acknowledged, considered, and embraced.

Over the last five years, MPS itself has become an experiment for Bosch’s Executive Board. The initiative introduced a new vocabulary to understand how the world moved in an increasingly competitive setting, blurring walls between industries. This outside-in perspective accelerated a systemic, market-based, customer-driven mindset shift that anticipated this project’s needs. All this fluidity kept mobility as the central scope and overall source of coherence for the freedom, autonomy, and entrepreneurship newly introduced in the firm. More than a strict and static prerequisite, the team considered coherence a journey, a way of evolving, with decisions taken as soon as new data was collected and analyzed. 

Within this context, MPS decided to act as an enabling platform, offering, on one side, common directions, principles, and rules for the system's actors and, on the other side, common services for internal and external players to contribute. In addition to protecting an outside-in perspective and preventing a not-invented-here syndrome, MPS recognized its market’s unpredictable and emergent nature and intentionally promoted a probabilistic organizational design. MPS’ leadership studied, designed, and decided to roll out several organizational innovations inspired by Haier’s RenDanHeYi to cater to the foundational needs their reference personas (e.g., Parking Operator or Software Developer) had in specific businesses (such as Parking). Based on it, they built the infrastructural components (e.g., e-commerce) and composite experiences (e.g., people mobility) the market desired, reaching 40-50 Million requests and a significant number of transactions every month.

At the organizational level, it introduced: 

• Distributed contribution in the form of Micro-enterprises. To help a mindset transformation, MPS empowered teams to sustain and pursue their business ideas entrepreneurially.
• Microenterprise received a mandate and rights described through a 3+2 box framework. Achieving quantitative leading goals represented the first box. Box 2 was about continuous process and operational improvement to guarantee the space for innovation and experimentation, represented by box 3. In line with MPS’ desire to transform employees into leaders / entrepreneurs, a learning journey and cross-functional collaborations were suggested to facilitate interactions with colleagues that didn’t fall under the same chain of command (this was conceptualized as the +2). Such a rounded approach had the goal of not only achieving results but also amplifying transformational impact and involvement.
• A repeatable process for micro-enterprise creation and evolution. Letting a new mindset become pervasive was a daunting task. Still, all of this would have been hardly sufficient unless a clear and repeatable process for micro-enterprise creation and evolution had been implemented to smoothly allow the path from new ideas to design canvases to real business with revenues attached. A playbook has thus been prepared to help employees understand the taxonomy of products, services, and mechanisms MPS follows to interact with the market and the new organizational constructs it is experimenting with to sustain its portfolio of products.
• The Role of Industry Platforms. Micro-enterprises and ecosystem micro-communities representing products are supported by multiple Industry Platforms and Shared Service Platforms. Three Industry Platforms, internally named Themes and currently made of Logistics, Parked Vehicle Ecosystem, and People Movement, have the responsibility to foster internal coherence, guide action, help with prioritization, and provide investments in MEs and EMCs. Industry Platforms are further divided into Product Areas (for example, Industrial Logistics versus Small & Medium Businesses Logistics).
• Allowing economy of scale through Shared Service Platforms. Shared Service Platforms encapsulate central enabling services through bundles of horizontal, sector-independent capabilities supporting digital products. They include talent attraction and management (Talent), applicative (eCommerce, Fintech, Data, Digital Store), and infrastructural (Tech) services helping all MEs and EMCs.
• From agility to adaptivity and entrepreneurship with the RenDanHeYi. Given MPS’s operating model based on agile principles and practices freely borrowed by SAFe (Scaled Agile Framework), micro-enterprises often emerge from agile teams that want to own and develop a self-contained, scalable business idea.
• Autonomy and coordination through VAMs. After an initial discovery phase, new micro-enterprises are formally created by a future employee/entrepreneur by negotiating their focus, targets, and resources with an Industry Platform through a VAM (Valuation Adjustment Mechanism). Micro-enterprises receive both a product strategy and profit and loss autonomy within a portfolio, budgeting, and planning responsibility that remains in the hands of the Industry Platform that invested into them.
• Contracts over reporting lines. To accelerate experimentation, MPS is now functioning around 10-week windows to evaluate progress, identify potential roadblocks, eventually pick new routes, and redefine expectations. This fast feedback system has been operationalized through VAMs and EMC contracts. VAMs contribute to establishing the skin in the game, outcomes, and refinements through a negotiation between the team and the organization. EMC contracts have been introduced to clarify and iron out overlaps and interactions within a fairly large portfolio of products and components that involve collaborations with SSPs or between multiple MEs.
• Clear product taxonomies and a common view of the product portfolio. MPS developed and visually synthesized its product lifecycle, taxonomy, and strategy to empower every system participant to navigate the complexity of a modular product strategy.

At the cultural level, more than commanding and controlling operations, leadership in MPS has been intended to wisely introduce and maintain an appropriate level of entropy to let a coherent and emergent approach unfold. Some hierarchical responsibilities are thus intentionally still present. What is instead fading are signs of hierarchical privileges and differences such as the weight of job titles, the distance between managers and other colleagues, or any other nonverbal clue coming from the past. Each individual had to be able to wear different hats and play both the team member and team leader roles. Leaders have been required to evolve themselves and to act as role models of new behaviors for their colleagues. This is a deep, human maturation process regarding knowledge and culture under the belief that a much flatter organization will convince more people that the transformation is happening.

Multiple MEs and EMCs have been launched early on: 

• L.OS, an independent, significantly sized "Product Area" has been structured both as an independent ME taking care of product-related decisions connected to MPS's Logistics platform and an EMC connecting the platform to other product components requiring its capabilities to offer more sophisticated, higher level, competitive services to the market
• Composability was an example of a much smaller, autonomous team with self-contained responsibility for building one of the lower-level product components in MPS' architecture and bringing it to the market through a VAM contract.
• Finally, the Go-To-Market team, acting as the single point of contact for products with large business clients, has been reimagined as an SSP providing standard and scalable support to all product teams across regions.
• At the same time, multiple product components have been supported in rethinking their business models to optimize their impact and speed of market access.

Micro-enterprises offered a perfect construct to turn failure into a source of constant exploration and feedback. They also acted to eliminate organizational debt and address the inertia often connected to enabling services.

Throughout its 137 years of existence, Bosch has always catered to protect itself from risks related to security, compliance, and legality by translating wisdom and lessons learned into safeguards and processes. A shift in decision-making is still underway to balance protection and coherence with adaptability and autonomy.  A bit of bureaucracy becomes easier to accept if, instead of getting rid of valuable checks and choices, responsibility is pushed into a framework that empowers teams to make decisions closer to where information is gathered (the market). For example, MPS teams received autonomy in spending budgets and moving initiatives forward. Still, some architectural decisions (such as the software stack) had to remain centralized to protect consistency and economies of scale.

The first iteration in MPS' evolution gave ample insights about its organization's reaction to the new ideas and dynamics brought by the RenDanHeYi:

• Shared Service Platforms took over the role of fostering coherence, even in front of all the freedom micro-enterprises enjoyed. Branding, customer experience, purchasing, and technological infrastructure were all enablers and building blocks to accelerate innovation closer to the market.
• Even Industry Platforms contributed to alignment by serving as telescopes into the future. A microscope over the details needed to manage operations was complemented by a telescope that envisions upcoming direction. Industry Platforms became the bridge because they helped to hypothesize and pursue potential future outcomes, temporarily isolating teams from operational urgencies.
• The first rare benefit employees received from being entrepreneurs was being able to innovate without the need to face the consequences of failure. Even if a ME fails, the employee would still have a job. Such a condition is not available in most startups. On top of this, incentivization has been connected to the maturity phase an idea/product is in. Initially, creators may appreciate the joy of introducing and scaling up something new. After a while, sales get rewarded for a certain number of years. Product managers are incentivized based on how many revenue lines have been built onto the same product, for example, through feature compatibility. Rewarding is a component MPS is still tinkering with through mechanisms that will be launched and validated during 2024.
• Quite understandably, employees demonstrated a spectrum of reactions to the transformation, including those who hadn’t yet been exposed and didn’t get it, people waiting to see how it went and be a part of it after initial success, and those who wanted to try from the beginning. For sure, the initial set of pilots generated learning both for the organization and for them. Similar dynamics are familiar with most organizational experiments. 
• At the same time, it took some time to get Bosch’s full buy-in, as an enabler for higher levels of freedom at MPS. The initiative had to be structured to mitigate the risk for the larger organization by establishing reasonable guardrails. Considering the project as a calculated bet required having Bosch’s leadership onboard regarding its nature, goals, time duration, and how to measure success and failure. The sponsorship and spirit behind the experimentation were the guarantees for unlocking the right kind of learnings from it.
• Even while facing multiple complex structural evolutions, the mindset shift still represented the most challenging area MPS had to address. Since organizations are made up of people, their beliefs and behaviors must change to achieve new objectives. More specifically, it has been hard to overcome the expectation of having a third party jumping in (usually from above, hierarchically speaking) as a guide, a hero, or a rescuer, when multiple teams couldn’t collaborate across silos. The organization is still challenging this attitude and replacing it with a default behavior of contribution and cooperation. Role modeling by the leadership will be a steep and mandatory catalyst for reaching the egoless cultural maturity required to extract maximum value from the RenDanHeYi.

The learnings from the initial RenDanHeYi transformation cycle have been further collected through a series of interviews with all SSP and Product Area leaders. Based on their suggestions and requests, the project is now evolving in a second phase that will focus on 5 additional opportunities:

1. Transforming India's entire Go-To-Market organization by getting it closer to local product teams and value-added sharing through EMCs
2. Better formalizing the role of Industry Platforms as an environment for portfolio-like management and incubation of new product components and areas, starting from Logistics and potentially replicating it to the bigger Bosch structure
3. Helping 2 new product components to get better formalized and accelerated both from an organizational and market perspective
4. Transforming the initial playbook through a more bite-sized, accessible, easy to comprehend and consume format to onboard the remaining part of MPS.

In summary, we believe the case is very relevant, meaningful, and insightful for the Zero Distance Award because:

• MPS' mission is human-centric with a broad definition of internal and external stakeholders, looking for much more than profit (societal impact)
• Its strategy and overall direction have been largely co-created and shared with the entire workforce in a flat, transparent work environment
• Value creation has been codified (through processes, systems, and the playbook) as an open, participative mechanism going from ideas to scalable products with time and budget investments from the firm
• After an initial customer and market-based validation phase, ideas quickly become self-managed, autonomous micro-enterprises with full P&L responsibility and the possibility to interact with customers. ME leaders and team members are in charge of targets (through VAMs) and actual results achieved. All of this is periodically discussed and acted upon through SAFe rituals. In a sense, all nodes have internal and/or external clients.
• MPS' structure is quite totally flat. The board is small, lean and totally accessible by all employees, physically and through digital tools. More than this, the leadership is inclusive and interested in acknowledging and embracing multiple perspectives, even strongly diverging ones.
• The organization is gradually transitioning to small, flat, autonomous, self-managed Micro-enterprises. This is true also for SSPs. MEs are also dynamic and constantly rearranged based on results, priorities, and customer feedback.
• Employees are actively invited to attend training, get exposed to new ideas, and experiment with new frameworks. Systems are catching up with the very progressive internal mechanisms the firm is experimenting,
• Most Product Areas / MEs have been imagined as enabling platforms since the very beginning. In a SaaS fashion, they tend to provide a catalog of services to be consumed both by internal and external counterparts. The business is built on partners (software integrators, software vendors, resellers, etc.). MPS is even co-investing with these external actors with very few barriers between the inside and outside of the firm
• MEs have distinct P&L responsibility, a flat team structure and are in charge of most of their decisions within alignment and orchestration rituals brought by SAFe. From this perspective, power is largely distributed but without compromising the system's coherence.
• Thanks to VAM and PI Planning, teams own their targets and results with incentivisation schemes that are also evolving through profit-sharing mechanisms.