Building an Innovation Pipeline in an Ambidextrous Organization with Bosch

Welcome everyone for joining us. Good to see all the show notes there in the chat room. People from all over are joining. Kudos to everyone who's staying up late on a Monday night in Europe and Eastern European time. I see a bunch of people there and people are joining us in the morning. Today we are working on and talking about building an innovation pipeline with Bosch with our friends Uwe Kirschner and Sebastian Buddhism. I'm terrible with German, so excuse my my pronunciation there. Gentlemen, looking at the entire group of, you know, everybody who's here. I'm your moderator, Alan Smith and I'll be sharing with you guys. Basically very little. However, we've got Alex and we've got Uwe and we've got Sebastian and, and they're going to be sharing a lot. So we're really excited to have them all here on board. Alex, you probably know I'm co founder of Strategizer. Alex is co founder of Strategizer, speaker, author, who you may be familiar with. Our two guests you may not be as familiar with. First we have Uwe Kirchner. He's been vice president of Bosch Management Consulting and lead of Business Innovation at Robert Bosch GmbH since January 2019. Before taking these responsibilities on, he was vice president of Business Model Innovation of Bosch Corporate. So obviously somebody, a man after our own hearts, excited about business model innovation. Then we've got Sebastian. Sebastian has been director of Business Model innovation at Bosch GmbH since June 2016 and he's responsible for the accelerator programs, the Business Model Academy in Asia Pacific, as well as consulting activities for internal startups. Before doing this, he was the head of marketing, business strategy and communication for Asia Pacific for electrical drive businesses. Previously he's been working in the fields of marketing and strategy development in the automotive and FMCG businesses. So quick introduction to everyone there. Welcome, Alex. Uwe. Sebastian.

Hello.

So hi there.

Hello.

Little housekeeping before we jump in. You can follow along on Strategizer, you can Twitter Rategizer, you can use the handle Strat chats. If you get something interesting and tweetable, you can throw that on there. Alex will probably be using that throughout the chat. As questions come up, ask them and we'll be collecting those. I'll be paying attention to the questions and we'll be bringing those some up at the end. And if you're interested in following up on more of this stuff, generally you can find more@stragizer.com blog. A lot of the topics that we're going to be talking about are there, including A repost of this webinar and you could also find that on our YouTube channel, YouTube.com strategizer so what I am so excited about is that the guys at Bosch have been using some of our tools and cutting edge stuff for a very long time. They've been connecting the tools from Business Model Generation, the Business Model Canvas. How do you create value for your business? The tools from Value Proposition Design. How do you create value for your customer? Testing Business Ideas, which is launching in just a few days. They've been using these ideas for literally years using the Experiment card and the Learning Card first introduced in Value Proposition Design and adapting those to their own uses. What they're going to be sharing with us today, this idea of the pipeline and the idea of creating a portfolio is something that we're going to be talking about in our next book coming early next year, the Invincible Company. It's really cool to see them threading together all of these ideas in the wild and how they've been able to do that practically and to hear how they've done that and all of the stuff that they've done obviously outside of these books, it's going to be a nice treat. So thanks again to Uwe and Sebastian for joining us here today. So before we go any further, let's hear from the audience. So I want to put this poll up here. Let's see if you guys can see it. So we'll give you about a minute to answer this. I'm not going to read it out loud because it's a bit awkward. So we've got a lot of results coming in. Coming up at 100 out of a couple hundred. So we've got 40, we've got almost 200 people have answered. Okay, I'm going to end the poll. We've had about a minute to cut that through. So we've got, we have well funded and well respected entity in our organization where ideas can be tested with experiments and where failure doesn't mean career suicide. Strongly disagree, Disagree, agree or strongly agree. Let's take a look at the results, share the results with you guys. So it looks like the winner is agree. We've got a lot of people sort of sitting around the middle around they disagree or agree. Hey Callan, it's not a recording. We're actually here. Some people in the chat room are concerned that we're doing a recording. It's real. So there's the results. Claudia's not sure she disagrees with these results. She feels like maybe people are being a Little bit too aggressive with their belief that this is happening. So let's close that up and move on. And what I want to ask Alex, first, let's go to you. Why does this matter? Like, why is it so important that organizations have this kind of support for innovation? And why is it so hard to do? Right. Can you share with us?

Yeah, sure. So I think that the whole topic today is extremely important because a lot of people around the world, us included, have been doing this for quite some time. But I don't think the results are really living up to the expectations. If you look at companies today and ask yourself how many have really been successful at coming up with successful innovations constantly, every couple of years while they're very, very few organizations. The question, of course, is why? Well, I think that the tools are pretty good. People get the tools and processes right. Lean Startup has come a long way. We've created a couple of tools or other tools out there, but there's a big piece missing. And one of the pieces missing is, you know, the dirty secret of the Lean Startup movement is that you can't pivot yourself to success. That actually you need really a space where many teams can explore many ideas, and the best teams and the best ideas will bubble up. You can't pick the winner. And we'll see this, that this is not something that's easy to do because it really clashes with the execution culture where, you know, you give a team money, you expect it to win, you expect the team to deliver on plan on time, on budget, etc. Well, that's not how innovation works. And, you know, a lot of companies are struggling with that. And what's fun to see today is with Uwe and Sebastian at Bosch, really have, you know, a group that has done phenomenal work over the last couple of years to change the approach to innovation beyond technology. Looking at value creation for customers, value creation for the organization, and putting that culture in place that you need to come up with new innovations. So I'm excited to see what Uwe and Sebastian have to tell us, and I think there's a phenomenal amount of learnings that we'll get. It will also be part of our new book, the Invincible Company. So I'm excited and looking forward to the next 50 minutes.

Right, thanks, Alex. The original title of this webinar and what many of you guys may have signed up for, was building an Innovation pipeline in an ambidextrous organization with Bosh. So let's run forward here, Uwe and Sebastian. So I'm Going to stop sharing my screen and ask if you guys can share yours. Beautiful. We see you.

So you can see our screen.

Perfect.

All right, go ahead, take it away.

Thank you, Alex and Ellen. Also, a very warm welcome from our side. My name is Uwe Kirchner and we have the pleasure today to present some Bosch insights together with Sebastian Buddishing. So, think of innovation as a horse race. What is the hardest thing in innovation? It is for sure the question on which horse to bet on. Well, and if you are all honest to ourselves, we don't know. We don't know which innovation really will be successful. So what shall we do? Should we make a big bet? A very, very researched bet. A bet with substantial R and D spending and all this with the expectation that the innovation turns out to be this lovely unicorn. As you know, unfortunately, unicorns are extremely rare. And what happens if the horse fails to win the race? Well, we call these projects the walking dead. These are projects which maybe even after several years, are not able to answer the simplest questions. And innovations which are, for example, who is your customer? Which real problem do you solve? How might your intended value chain look like? What is the most appropriate payment model you want to use for your customers? So the discovery of a new business model is hard. Even the brightest people in Silicon Valley frequently fail in the setup of new and successful business models. We believe it is very important to differentiate between exploit and explore innovation. An organization has to continuously innovate in the core business while at the same time achieving groundbreaking innovations in emerging and strategically important markets. A truly ambidextrous organization has the ability to excel in both the existing core and the explore innovations. Over the last 40 years, as you might know, existing organizations have been disrupted by startups at an ever accelerating rate. We believe that the Fortune 1000 replacement rate might even increase further in the upcoming period 2013 until 23. For this reason, every organization has to successfully innovate. The question is how. Sebastian.

Watch this poll for you guys. We want to ask the question of if you're creating new ideas, how many do you expect to succeed? You'll only see the poll if you actually have the Zoom window selected. It won't pop up for you if you want. I noticed a few people had trouble seeing it in the chat earlier. We'll just give another 30 seconds for you guys to get your votes in. We'll end it when we get to 250. Good question on define succeed. What does that actually mean? Alex shares show a serious return on investment would be success. I Don't think you can change your answer if you already put it in. Okay, we're going to end this poll and share the results. Let's see. So you guys see that looks like the vast majority of people believe that only between 1 and 20% are going to succeed. The secondary is between 20 and 40%. We've got a small set of outliers who basically believe that anywhere 40% upwards are actually going to succeed. Let's jump back to Uwe and Sebastian. Your screen appears to still be sharing, so you can just continue your presentation. Thanks guys.

Perfect, thank you. Okay, so let's continue and ask ourselves, so why do we really start thinking and what is kind of the purpose we are driven by? And so it's really that we believe that we need to transform dramatically the way we do innovation at Bosch. Because if we want to deliver the next generation businesses, we need to act differently, especially when we are looking into the explore space. So our approach is really to think differently and building together and leveraging all the best know how that we that there is available to really validate those new explore businesses in a much faster, much more systematical and also more capital efficient way for Bosch. So within the programs and the framework we set up, of course our objective is to really run an excellent innovation program for Bosch. Now just to get that back, and it's been mentioned, and as you already correctly answered in the poll, most of you really the number one challenge in innovation is that nobody can pick winners. And if we look at a lot of those numbers, for example, on the startups itself, so up to 95% of them fail, the rate of actually startups becoming a unicorn is below 1%. But that is not only in startups, it's also if you look in venture capitalists, they have the failure rate of up to 80%. So you would think people that do a lot of research, do a lot of investing into this new startup ideas that are doing a thorough background check even they have a very, very low success rate. Now, why is it, why do so many startups fail? So if you look at the top five reasons, the first three are very closely linked to it's no market, it's no business, and really ignored your customers because you're trying to solve a problem that doesn't really exist or that nobody's really willing to pay for. And then if you look at the other two, it's really about you either pivoted in the wrong way or you fail to pivot at all. And if you think about this Is the startup world, if you look in a corporate environment, and Alex mentioned it briefly in the beginning, when it's, you got to set up team, you got to set up funding based for this specific project and that specific idea, it's even harder to start pivoting, going back to your bosses and tell them, well, you gave me funding, but actually we'll have to do something different now because we learned there is something bigger that we should be solving now. Taking all these numbers from the external world, we ask ourselves, is this somehow a systematic and structured way to do innovation? And the answer for us clearly is yes. And that is what we've been working on over the last years is to really build up this funnel, build up this partial innovation framework, which on the one side starts with very early identifying, of course, what is the strategic framing, what is the areas we want to be in beyond our today's core business. And then all the way to the far right is how do we operate, how do we really scale those new businesses very successfully? And then getting on that way, it's not only setting the strategic frame, but then really going deeper. Try to understand what is the precise problem, what are we really trying to solve? What if those issues are not solved or are not solved good enough to then come up with proper ideas on how they could be tackled? And then turning those ideas into real business models, taking a very comprehensive approach on those, defining all kinds of hypotheses around all your critical business model elements to then go out and do the full validation first, before you do a full tech development, before you set up a huge project team, before you start really investing the big bucks. And once that validation has been successful, then the teams would move on into what we call this incubation space, which is basically closing the gap between a fully validated business model all the way to scaling it successfully into the market. Now, what we found within, especially a corporate environment like Bosch, that the biggest hurdle, or the most difficult thing is, is to really do a thorough validation and incubation of those new business ideas. So once you have a nice concept, once it's all well defined, you've got your huge slide deck. There is a tendency to move very quickly into tech development and building an organizational unit to scale up that business. But the validation incubation part is really the most critical in order to cope with those numbers that we saw in the beginning and to really build up new businesses more efficiently and also more faster than we used to do. So one of the program we've been setting up and Working on to ensure this very fast and structured validation approach is what we call internally this accelerator program. And it's exactly tackling those phases I just mentioned. And what we're bringing together is not just working with one or two teams, but it's really bringing between 20 and 30 innovation teams together, bringing them together from around the world, also tackling different topics. And then it's an off and offsite approach. So people come together, they meet physically, but then also throughout the whole program it's been an off site support, there's video conferencing and that comes not only from us, from an internal mentoring coaches, but also from external experts that we are bringing in specifically for the topics which are then especially relevant for the teams. And we broke that down into two different phases. So the first one is really to validate more on the customer side. So does the problem really exist? Who exactly has it? How does the complete customer ecosystem look like? And do you really have a solution that's tackling the problem and is there a market need in order to move forward? This is usually the phase where we have a dropout of being two thirds of all the teams already. And for the remaining ones moving into the next stage, it's really about building up your MVP going out, test it with your target customer segment. Of course you acquire your first paying customer to really have this initially validated business model at hand in order to have enough evidence and then convincing your investor board for you to continue support and for the team to move forward. Now also one of the learnings we had along that journey, that it does not help to just apply the KPIs that we use from our, our core business, our exploit world business. But we really need those metrics that matter, that are relevant for the teams based on their maturity they're currently at. And then if you go down by the logical sequence, it starts with the empathy stage where it's really about the real need. Is it really something worth attacking? And then moving on in the stickiness and virality phase where it's all about do you have the right solution to offer to solve a problem? Is your product or solution offering good enough? And only then once that has been fully validated, you would move on and say, well, can we make significant revenue out of, can we successfully scale it? Is it really sustainable business we are growing in? Is it a healthy market? So is it worth continue? But again that comes after the teams have done the successful validation of the stages upfront. Now linking this a little bit to some of the tools you all are very likely used to and known to. So if we look at the business model canvas, we would start on the top right corner, which is really all about desirability. Does anybody care about what you want to offer them? Do they really need this? Do they really want that? Are you solving what we call a must have problem? And only if you successfully validate that, then you would think about, well, can we actually build it? Is it feasible to really do this from a technical perspective, from a partnering perspective? And once that has been fully validated, then comes the third stage was really about the viability where you really have to ask yourself, should we do this? Can we turn this into a profitable business? Can we turn this into a scalable business? Is it worth for others as a company to further invest and really work towards scaling up that business? So breaking that down even one step deeper, what we guide the teams through in that logic is really using each of the nine building blocks of the business model canvas and then have them run very team specific and topic specific experiments on each of those in order to really test it. And along this also the teams have to very clearly work out their specific metrics that matter for them at that specific stage in order to make a decision. Is it worth to move forward in the direction that we thought or do we need to pivot? Do we need to change? Do we need to move into a different direction based on the learnings that we had throughout this program? And there is really kind of a testing catalog behind that that gives the team all kinds of ideas on how they could be running this in order to come up with a very fast and efficient validation of the business. Also what we give them, and that's been something also we've been working on together with Alex and his team, is really giving them kind of a cockpit chart where they can really run all their specific individual tasks, really drilling down what's the hypothesis, what's the very concrete experiment we are going to run, what's the metrics we want to measuring, what's the go or no go criteria for us in order to say yes, that's been validated or it hasn't been, what are all the learnings out of it? What does it mean for us in terms of what are the concrete next actions we need to take? And then if you look at the lower part, it's also something for them to track. How much time do we spend, how much money do we spend on that type of experiment? To also have then some kind of evidence and proof to go back to the investor board and say, hey, this is what we did, this is how this cost, that's what we learned and that's the next steps we need to take. And that's the amount of money we need in order to bring you the next level of evidence.

So coming back to the title of our today's presentation is how to build up an innovation Pipeline. We really want to share some real figures with you. As you can see again, the pipeline or at least the processes, first of all, from ideation to incubation, in accordance to our Bosch innovation framework. And as you can see, it's a real funnel. For example, approximately 240 ideas have entered the preparation phase. And then this critical phase Sebastian was mentioning earlier on is the validation phase. Of these 240 ideas, 170 business model ideas have entered the so called phase one of our Bosch accelerator program. And you can see that only 50 projects continued in phase two. And coming back of the duration of our Bosch accelerator program, we told you that phase one only has a duration of, of eight weeks. This means we are able in this program to already eliminate approximately 70% of innovation projects just after eight weeks. And if you then, you know, continue to look at the channel for Those of those 50 projects in phase two, finally only 15 projects enter what we call the incubation phase. So that's another approximately 70% of the projects finally ending up in our incubation phase. That's one. So it's really about building up a relevant high enough number of innovation projects in order to have this innovation fund. 2. What we believe it's very important since we are a global company, we. And should you also work for a corporate organization, we recommend you should really set up a, a program which covers the whole world. With our accelerator program, we are active around the globe, as you can see on the slide. So for example, batch 7 and 8 are still running and we are about to start batch nine in the UK and batch 10 presumably in Asia, early January next year. One of the other, you know, being in good contact with Alex and his team, you might already know this slide. It's from Strategizer and we believe this slide nicely demonstrates that an organization has to run two portfolios, meaning one portfolio for the exploit business and a second portfolio for the explore business. And this is precisely what we are doing at Bosch. For example, on the next slide you can see some of our innovation projects. On the explore side, we frequently assess our innovation projects along the Bosch Innovation framework in order to have a good overview of the substantial progress these projects are making over time. And second, in a corporate environment, it is also very important that one is able to compare the projects against each other to really derive appropriate portfolio actions to come to an end. And so that we also have sufficient time for your questions, a couple of, or at least one idea or one project we've seen in our Bosch accelerator program. This project is called bima. So let's start with the problem first. Typically, customers in Asian countries suffer from a lack of energy reliability, high pollution and energy costs. So that's the starting point, the understanding what really drives the potential customer. Now, bima, with this solution, they are an innovative, integrated and scalable IoT solution for energy management in commercial applications like cell phones, towers or hospitals. So basically the value is that with this project, with this solution, we are able to optimize the diesel generator running time, which leads to significant energy cost savings. And the trick is that the customer do not have to pay upfront capex, and that the revenue is shared between the customer and Bosch. With this innovation, we are particularly successful in Asia, as I said, and particularly there in Vietnam and India. So if you like, I can, you know, point out some more elements or some more bits and pieces about this project. These were the insights we wanted to share and now we are open for your questions.

Guys, thank you so much for sharing that really in depth look actually at how you guys structured this process, some of the language that you use and your philosophy on it. So first, thanks for sharing. I guess we could leave it on this slide. Or here, why don't I. I'll jump over to our Q and A slide. So we remember that we're here doing Q and A, as if we could forget. So there were a lot of questions that came up. I've been able to synthesize a few. I'm going to start with one that sort of a few people asked in a more indirect way and that was how do you convince the company leadership that it's not possible to pick the winner, that you need a funnel approach. A lot of people mentioned that they believed that the success rate was going to be very low, but perhaps leadership believed they could pick the winners, that they were smart enough to beat the market, as it were. How do you convince the company and leadership that it's not possible to pick winners?

So, as you might know, there are several answers to that question. So first of all, you know, we believe you have to differentiate, coming back to this, what we explained earlier on, between Exploit and Explore. It's a difference Whether you talk about a new product for an existing market, in an existing customer relationship, in a market you've been in for years with established partners and all that, on the other side, you're really talking about a real new innovative idea in the explore space. That's one part of the answer. The other part of the answer is, first of all also that when we went on our journey some years ago, we were not shy and we are still not to cooperate with the best in the world. So what we did, and Alex and team, they might remember. So first of all, we reached out to Alexander, Alex Osterwalder, and we talked with him, you know, what have you done and what can we learn from you and who are the best companies in the world with which we can talk to? But we didn't stop there. We also have been, and we are still in contact with our friends from UC Berkeley and also with Stanford and as I said, leading organizations around the globe. So innovation is so difficult. There's numerous reasons, as you know, and we talked about a couple, why organizations frequently fail in this. And that's why you really, first of all need to have best in class insights on the topic. Another element is that we are constantly reporting about the results of our Bosch accelerator program. And we are also frequently talking about the right KPIs to use along the validation. And with that, we've been quite successful in convincing the leadership that we know what we are doing. And there is a shared understanding in our organization. Which criteria to use, in which moment of time.

There were a lot of questions about KPIs. I know that you shared a few throughout the presentation. Maybe you could just speak more to a few KPIs that people might be able to use or pay attention to. Like if you were to just say you can can only measure three or four things. What were the KPIs that you would suggest? Because there are a lot of questions around what would we measure throughout an innovation process to be able to see who's winning and who's not winning.

Exactly. So it's again, first of all, as we said earlier on, there is a certain logic to successfully validate innovations. That's one. And of course you need to have an alignment of the right criteria. And I think that's precisely the trick to use the Right1, for example, not to ask, you know, that for a business plan or for a profitability number very early in the process. It just doesn't make sense to give you an idea what kind of criteria we use in an early Stage process. We for example, ask who do you believe? Who is your customer? And then we make these innovation teams to talk to the corresponding customers. And then very important that we truly understand the problems of these customers. We decided to concentrate on, we call these problems so called must have problems. And although we don't know how big the market can be, particularly for upcoming or emerging markets, we already very early in the process look at do we believe that this problem exists frequently around the world. As we always say we don't want to use or to solve unique problems around Stuttgart. So our ambition is always to strive for businesses which are relevant on global scale. Another good criteria later on in the process, for example, is stickiness. So it's not good enough to just ship your early solution to the customer. You also have to analyze, you know, how are they using it. You need to get data out of this usage and this we call stickiness. So and numerous more so but again, you know, you need to put them in the right order and then you are really able and you have to align them and then you are able to come to a clear set of criteria after phase one and phase two of the validation.

Okay, great. I think there was another question around the idea of not just evaluating the success of a project, but a theme was how do you evaluate teams? So helping us really understand how you might evaluate a team. So you know, maybe there's a certain evaluation for the project and the metrics that are showing us if that project is successful or not, but how do you know who in the organization is going get into the next round of these batches that you suggested? The question I'm trying to synthesize here is how do you evaluate teams and individual performance in innovation?

I think first of all, what's important to understand also in the whole program is before the teams actually side. So one of the things we do, for example, at the kickoff is make very clear and very transparent what are the criteria in terms of maturity teams have to reach and what are the specific KPIs we're going to measure on where did the program move to? And that is usually where the teams get very engaged into because they understand, okay, if we want to push our idea forward, this is where we have to move and this is the criteria we have to decide at the end, is it worth to move on or not. So it is not a decision by us where we say you should be stopping or you will continue. It's a decision made by the teams. So really putting the teams and the whole team members into the driver's seat. What we call kind of simulating a startup within a corporate environment is really making them responsible and that gives them usually enough strength and power where they will really come up on stage after the end of phase one or after the end of phase two with a very clear decision based on we have learned, we thought this is the case. Unfortunately it's not. So we recommend to stop or to pivot or whatever. So that is something I would say we're about 80 to 85% of all the teams are very highly dedicated to. And then of course you would also have teams that are very much in love with the idea of that are really struggling to let go. But then this is something from the coaching perspective since we are really mentoring and in very close contact with the teams on a weekly basis, which we usually get a pretty good notion of in order to, you know, then also be very direct with the teams to tell them, hey, you have to move on in that regards. You have to really look into these learnings. And again, if that is not being successful, we usually also have interaction then with the kind of the investors of those teams to also look into where can we bring in additional team members that can take the topic further?

Great. Speaking of those teams who do not get to go further. So you know, we're focusing on the winners, but let's look at the losers for a minute. Or non winners. Is losers a mean thing to say? I don't know. But basically the teams that did not get greenlit.

Right.

How do we motivate the teams that didn't get follow up investment on one idea to continue with the next one knowing that it wasn't necessarily them, it might have been the idea.

Yeah. So I mean first of all we would always say they're winners in any case because if you see it from a capital perspective, if they go out, they have a great idea and they successfully invalidate it in a very short amount of time at very low cost, they save the company a lot of money. So in the alternative way we would just go set up a team, give them money, have them build whatever, and they'd be up and running for, I don't know, a year or two years. And we can eliminate this to a very, very short amount of time. So it's always a success if teams go up and claim a no go. And then the demotivation part, and this is really, it kind of goes back to what I said before is as the teams are the entrepreneurs, as the teams go out in direct customer Context, they're really out in the field 24, seven within the program. So they learn directly from their customers and then they're usually open enough to reflect. What are we hearing? So what you could think is a demotivation and not getting to go on actually turns into motivation because they have learned it doesn't make sense to go on. Because even if we would go on, there is no customer out there. Nobody would be buying our project. It wouldn't become successful. So therefore, the demotivation actually turns into, let's claim a no go, but come back with a better idea. And we see teams and team members coming back throughout the various batches to really continue the journey following the same logic, but with different ideas or with, with pivots to really find that unicorn to move forward.

Alex, maybe you could add something to this topic of not following up investment teams, coming back and going through it again, et cetera, what we've just been talking about. And you might have a question around this too.

Yeah, no, I think it's extremely important and I'm happy, Sebastian, that you pointed this out because we see this in other organizations that it's very, very crucial to, you know, not call these projects failure to a certain extent.

Right.

Because yes, they were retired. And actually it reminds me of an anecdote with the CEO of Logitech, Bracken, Darrell, where we were talking about, you know, the need for failure. And he said, well, Alex, let's not call it failure. Let's just call these projects, you know, something like a book that we retire. We put a book back on the bookshelf, let's call it shelved. You get value from a book, you put it back and then maybe later on you take it out again. Because there's also a timing issue here and it's something we definitely see at other organizations. Now, just a follow up question to this because a couple of people were asking, well, Bosch is very big and we hear this question a lot. Oh, is this just for established organizations? What would the both of you, Uwe and Sebastian, recommend to smaller organizations? What can they take away from what you're doing? And what would be something, you know, for a small or medium sized company or a Mittelstand in Germany? What would your suggestions be to take this from a global giant like Bosch and bring it into the mainstream of maybe even smaller organizations?

Well, there are all sorts of answers, lovely questions. So I maybe start. So first of all, you know, what we are doing here. You could say at the end of the day, every organization can do I would even say maybe then the fact that Bosch indeed is a relatively big company, you might even argue that alignment, the management alignment in smaller organizations might be even easier. Which brings me, for example, the point. Of course, you need to have the total support of the CEO and CFO that they know what is going on. So our recommendation would be establish this process, trust the process, do alignments on the right KPIs and you will see that innovation, successful innovations, these winners will emerge over time. You also need some, some time. You need to calm down a bit and wait also for the results. What you can't expect is, as we said, you put two, three ideas off the shelf and then you expect that you have already the unicorn towards the end of the process. So again, everybody can do it.

Thank you. So the next question, we've had a trio of Michaels asking some really interesting questions here that have been getting some traction in the group. And one of them was from Michael Stahl, and he had a few different questions. His number one, most burning question was, get some suspense here.

Yeah.

What is your kill criteria for each stage? Is there metrics and threshold here that like. So he's looking for two things. Well, one is what is the metric and what is the threshold, if it is specific? And then the second one was how do you document the learnings from each experiment and from each project? And in turn, how do you disseminate that information? Because this is all important organizational learning. Right? So I'll repeat one more time. What's your kill criteria for each stage? Is there a specific metric and is there a specific threshold that you look for? How do you document learnings and how do you spread those around?

So let me take the first part of the question. I wouldn't say there is this one kill criteria or kill KPI or metric. It depends on the stages. So if we look, for example, in the preparation stage, it's all about, have you a full set of hypotheses around your business model idea and are you able to have it formulated in a way that you can test it very fast and efficiently? So do you have some kind of sense on how would you move forward before you built the technology and how can you test to validate? Then when they move, for example, end of phase one, it's all about, can you prove that you have found that the problem solution fit? So is there a big enough customer segment? Can you describe in a very precise way, do we have a value proposition that's compelling to them? Can you solve it in a way that isn't solved yet. And do you think that you can generate enough value revenue out of this that moves on? So that may still sound a lot of qualitative feedback, a lot of fuzzy feedback, but what we give the teams is very clear structure behind those empathy metrics that we force them to present as evidence. And then if you move later, metrics become more, let's say more quantitative. So have you have an MVP out in the market? Do you have customers using it? Do they not just use it once, but do they keep using it? So proving that stickiness metric, did you generate first revenue based on your revenue module logic? So not just find one or two customers that pay you a pilot project, but that are actually paying you in a way that your business model assumption on the revenue part is built up. And then comes things like customer acquisition cost. Can you really prove that you can scale up the business towards a very repeatable sales process in order to reduce this cost, in order to make it a profitable business? So then those KPIs become more mature the further the teams move along the program.

Can I just emphasize one thing? I want to jump in because one of the things that you guys have done that's really impressive is that you made these metrics clear to the teams to the point that they can self evaluate. So it's not really a management decision anymore. Right. That's something that's very, very rare. And maybe you can just talk a little bit about it because it's not about selecting from a management perspective anymore. It's really letting the evidence speak. And that's something that was very, very impressive when you talked about it. So maybe you can share just a little bit about that to show how the teams actually understand if they should go to the next stage or not.

Yeah, exactly. We believe that also contributing a lot towards our cultural change in times of transformation, which of course Bosch is facing as well. You're absolutely right, Alex. Once you are aligned on the criteria and they are absolutely transparent for the innovation teams, everybody knows on what they have to work on, then the only question is, do we have enough evidence? And it's a totally automated surveys with, for example, teams not successfully in the sense that they continue terminating our program. And we asked them, for example, would you recommend this program to other Bosch associates and do you believe it should be standard the way we do? And we validate innovative ideas and it's a fact we are at 100%. So really everybody, until today at least has claimed we totally get it and we totally support this approach. You Get a totally different buy in compared to the former times where you maybe had to go to your board of management. And I don't know how it is in one of the other organization, but at Bosch, we really make sure that we are not told what we are doing. We are really convinced. And this evidence comes from those who really have the insights. Let's be also frank again, only the innovation team, they talk to so many customers. They have the empathy, they understand what they need and what they could offer. And they are also then the first people to ask, what should we do with the innovation? I also come back briefly to this question. How to document and make it short. Just to say, we talk to the teams on a weekly basis, we send out weekly assignments, a reading list and all the videos to watch. And how do we orchestrate that? We have implemented JIRA at Bosch, which means every criteria has set, a slide deck on which the corresponding teams have to work on. And then after one week, for example, we come back, look at the slides and we discuss them in office hours with our teams.

Great, thank you. Along the lines of just sort of building on the answer to the previous question, there was a big thread in the questioning of how do you staff a team? What are some thoughts on staffing a team and regarding diversity as far as tech versus business versus marketing, sales focus, et cetera, how to potentially structure the team? Do you have any thoughts on that that you could share with the group when it comes to team structure?

Yeah. So we. So if teams, if teams are applying kind of to go through that type of program, we require a team to consist of at least three to four people and they have to have at least one tech and one business capability in the team. So that is the minimum requirement in order to make sure it's not only, you know, marketing or business people, or it's not only the tech people, but that we have a mixture. Also, if it's a topic like we mentioned, the bima, which is heavily focused on the Southeast Asian market, of course the team needs to be consisting of people from that region. It's okay to have one or two joining from somewhere else. But then the team, of course needs to be familiar with the local market they're investigating. Obviously, they need to be in the market. They need to talk to those potential customers inside their market. So that is something in terms of diversity where we say, well, if you're investigating, I don't know, Vietnam, you have to be in Vietnam and you have to speak Vietnamese. And that's just a prerequisite. And then usually what we see if teams are moving throughout the different maturity stages, we also have replacements in the team. So if they move on to MVP development, they need additional tech capabilities. Then of course those people are added in the team or people are really getting replaced if they cannot keep the momentum of moving forward. So that is then also something we are looking at from a mentoring perspective to make sure that they really have the capabilities and competencies together that they need in order to move on and.

Just to build one thought, which I believe is also very important. And we've done that since the introduction of the Bosch accelerator program. And I know Alex and team that they share our convictions here. We believe again that business model innovation is a full time activity. So we require our innovation team to really join our program full time because only then they can work on all these criteria. And of course in later stages of the program, we use shared services from our corporate organizations like financing, like Legal, also HR questions to really benefit of the insights and to have also similar professional answers to the innovation teams for similar questions they may have.

All right, so we've got time for about one more question. I just want to thank everybody who asked a question. I've got a huge list here, so I just want to shout out a few names who, who gave us great questions. Martin, Michael, Suzanne, Marco, Ian, Shannon, the other, Michael the third, Michael, Steffi, Will, Alejandro, Andreas, John, Marea, Noka, Mary and Patrick uti. You guys all had great questions. Chris, Helen, I've copied all yours into a document and thrown them into a document. We're going to try and maybe I'll share some of these with Alex and he can tweet them out as just Q and A and get his opinions on it. We only have so much time with Uwe and Sebastian, so let's wrap it up with one final question which is really what are this question comes from the crowd. I'm choosing between a question that Alex shot me and one from the crowd. I'm going to pick one from the crowd that I thought was really good, which was I should find the name. But it was basically along the lines of so this is from Chris Olson. And Chris said it's definitely hard to get a culture of innovation started within an organization, which I think we could all agree. What do you think are the very easy first steps a company can or should make at the beginning of their innovation journey? And maybe speaking from experience, what were some of the first steps for you to that actually got some traction. So we've just got A couple minutes for that one. Thanks, Chris, for that. And Uwe Sebastian, what do you think?

Excellent question. So we would say probably get started. Yeah, go on and do things. Yeah, so don't. We learned, for example, some years ago that other corporations, they decided to train everybody, every manager in the respective organization. Of course, we also do offer trainings for our senior managers and associates in innovation projects, but we really believe, let's start with concrete projects. In such an organization as Bosch, there are always wonderful ideas. We always have been able to approach and to talk to our colleagues and to really support them. And everybody knows that innovation is difficult. And so it was rather easy to convince our teams that we join efforts, we join forces and go on this journey together.

Guys, thank you so much for sharing all that stuff with us. It was really great to have you. If there was a way for us all to clap and for you to hear it, I'm sure we would do it. You're just going to have to assume that there's thunderous applause on the other end of the webinar at the moment. Oh, we've got some claps coming through the chat there. It's thunderous. Chris is really happy that we were able to answer his question.

Excellent. Cool.

So thanks for all the Q and A. Just as a reminder to people, the Testing Business Ideas comes out November 12th. There were a lot of questions that I didn't address about testing. People had questions about how to test without just asking the customer what they want, different metrics for product, market fit, the Sean Ellis question, etc. All of that is covered in Testing Business Ideas with David and Alex. I wish I had a copy of it in my hands. Very few people do as of today. But it's a beautiful book and we're really proud of it and we really want to share that with you. The Invincible Company we're releasing in very small chunks and if you get on the newsletter list, maybe you'll be selected to get a sneak peek at some of the stuff that's in there. So sign up for updates on the Invincible Company. That's a placeholder cover. It probably won't end up like that, but we're interested to see what you think about it. Again, thanks to everyone who showed up and took time out of their day here today to hang out with us. We all only have so many hours in a day and it means a lot that you'd spend some of them with us. And with that, Uwe, Sebastian, Alex and everyone on the call, thanks for joining us. And until next time. Bye, everyone.

Thanks very much from our side.

Bye.

Bye.

Thank you. Bye.