The RenDanHeYi to foster a global mobility ecosystem at Bosch
This new 3EO conversation represents a unique opportunity for an exclusive deep dive into one of the most complex, rich, and exciting experiences of organizational transformation inspired by Haier’s RenDanHeyi of all times. Through a series of questions with Prashanth A, Chief Business Officer and Executive Director at MPS, Bosch India, we go behind the scenes to learn the valuable secrets and lessons learned other firms should be aware of when considering a transition towards entrepreneurial and ecosystemic organizational designs.
Emanuele Quintarelli
Abstract
Since 2019, Boundaryless has been studying and collaborating with Haier Group and its Haier Research Model Institute to contextualize, abstract, evolve, and take inspiration from RenDanHeYi, their disruptive philosophy and organizational model, outside of China. Its open-source 3EO Toolkit, training, and consulting services have pragmatically helped firms to embrace an entrepreneurial, enabling, and ecosystemic mindset and constructs across the globe.
This post is part of 3EO Conversations, opportunities for exploring and reflecting on the rationales, solutions, and lessons learned from the evolutionary journey of companies adopting practices in line with Haier’s RenDanHeYi in different industrial sectors and regions.
- The reasons for a large, successful incumbent to see value in entrepreneurial and ecosystemic organizations
- Intertia and resistance preventing most corporations from embracing the future
- How Micro-Enterprises, Ecosystem Micro-Communities, Industry Platforms, Valuation Adjustment Mechanisms, and Shared Service Platforms have been tweaked to a specific business and cultural context
- A new meaning for failure and its crucial role in organizational evolution
- Incentivation mechanisms and hurdles connected to the adoption of progressive practices and organizational constructs inspired by Haier’s RenDanHeYi
If you want to learn more about RenDanHeY, Please consider joining our online 3EO/ RenDanHeYi Self-Paced Training at any moment or express your interest in 3EO / RenDanHeYi Live Masterclasses that will be scheduled in 2024.
What is 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.
Thanks also to Boundaryless’ tools and ideas, a progressive design of how MPS will work is being launched in a draft playbook that will empower the team to experiment, iterate, and amend according to a perpetual beta approach.
The propellant towards the future for a successful incumbent
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.
The drivers of the transformation
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. The transformation addressed in this interview is thus mainly about how to channel widely distributed creativity into tangible results through a systemic mechanism that allows every employee to act as an entrepreneur within an organization that becomes more like an incubator than a traditional company. We wrote about this idea here.
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 are expected to attract a broader group of participants, maximizing MPS’s ability to contribute to society.
Roadblocks due to company size and historical success
Multiple obstacles connected to the specific culture and context of the firm 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 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.
A new organization design inspired by RenDanHeYi
Within this context, MPS decided to act as an enabling platform offering on one side common directions, principles, and rules for the actors in the system and, on the other side, common services both for internal and external players to give a contribution.
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 and Boundaryless’ 3EO 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, 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 participant in the system to navigate the complexity of a modular product strategy.
As part of providing an organizational answer to its unique business and product strategy challenges, MPS looked for a tailor-made model that suited its market approach while respecting the firm’s specific cultural traits and DNA. Multiple ingredients such as Haier’s RenDanHeyi, Boundaryless 3EO and PDT toolkits, Value Stream Mapping, the Scaled Agile Framework, and the Viable System Model have been leveraged to avoid starting from scratch. Still, their composition had to be intentional and uniquely aligned with who MPS was and the position it wanted to achieve.
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 are currently in a pilot phase. The new structure and mindset are still being finalized and rolled out, but the potential looks promising.
Addressing failure and bureaucracy
When reflecting on the transformation at hand, MPS believed the concept of failure was too static and limiting for two reasons:
- Innovation and experimentation naturally involved failure intended as the possibility of encountering obstacles while reaching expected results. As long as progress was made and multiple solutions were tested, the only relevant question was how quickly the team could generate impact. Psychological safety has been considered the crucial enabler for this progress, as the net for people to keep experimenting, failing, learning, and improving.
- Failure could be overcome when the organization trusted that upsides would have been associated with pioneering teams while well-intentioned mistakes would have remained on the leadership. Without it, no risk-taking and, thus, no learning would be possible. This was a clear responsibility of the hierarchical ladder.
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 RenDanHeYi was instrumental to this aim as:
- 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.
How innovation is incentivized
The first rare benefit employees received from being entrepreneurs in Bosch 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.
The biggest hurdles MPS faced to embrace the RenDanHeYi
Quite understandably, employees demonstrated a spectrum of reactions, 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 trial will generate additional learning both for the organization and for them. Similar dynamics are familiar with most organizational experiments. The first successes will help convert more people into ambassadors.
At the same time, it was necessary to get Bosch’s buy-in for MPS to receive the freedom to try. The request 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 had to 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 indicators of success for MPS’s future
When looking at the future and how MPS will evaluate the final impact of its transformation towards the RenDanHeyi, Prashanth reveals that on one side, success will be judged in the form of a stream of new business proposals so intense to saturate Industry Platforms’ capacity to follow up and assure proper capital allocation.
In adherence to its values, a different but not less critical kind of impact MPS aspires to is positive change at the societal level. Indicators will include the mutated behavior of its end users, for example, the drivers, and the improvements in the sustainability of people and goods movement by reducing carbon emissions and the pollution for every kilometer by kilogram of goods.
Still, final success will be achieved when other companies will join this ecosystem of entrepreneurs for a more sustainable mobility and world.
Are you into future-proof organization design concepts, techniques, and tools?
If you want to learn more about RenDanHeY, Please consider joining our online 3EO/ RenDanHeYi Self-Paced Training at any moment or express your interest in 3EO / RenDanHeYi Live Masterclasses that will be scheduled in 2024.
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