When talking about a startup most of the people think about a small garage company with the goal to build a sustainable business, developing a new disruptive product or service. However, in the automotive industry, these kinds of startups are rather rare. The market is split between big companies with mostly a clear and stable business case. In this environment, a "startup" is frequently related to the question: How can a new business (new customer/partner or product/service) be raised and scaled in an already established organization? In this context, the new business could become a startup within the organization.
One of the main challenges when establishing such a startup is, to define the right setup which allows the new business to grow. Also, the competence transfer from the established organization to the startup needs to be smooth and should not jeopardize the general growth of the company. If the new business comes with many products, services and projects which need to be developed in parallel, the challenge becomes a provocation.
We at Bosch Engineering Center in Cluj have experienced this kind of internal startup for the automotive business. Together with our partner Bosch Engineering GmbH from Abstatt and Holzkirchen in Germany we are shaping the setup and structure of a new business at Bosch Cluj locally.
The following article describes the steps, which we see as relevant in this assignment. Furthermore, the described approach can be adapted for non-automotive business as well.
In the automotive industry, the engineering organization is usually structured based on commonalities. This means either based on competences or based on business-unit (product oriented). The Bosch Engineering Center in Cluj is structured as a hybrid model, having departments which are competence oriented, but also departments which are business-unit oriented.
In our case, for the new business setup we decided to target a stand-alone business-unit organization as final state, using as much as possible from the available synergies (competences) and taking advantage of the already existing infrastructure (cross function resources like HR, controlling, employer branding, etc.).
First, we will describe the portfolio planned for the new local organization. With our partner, Bosch Engineering GmbH, we decided that we want to develop automotive components in Cluj-Napoca which we plan to use in diverse business fields:
Assisted and Automated Driving (products like Radar, Front Video Camera, Near Range Camera and Driver Monitoring Camera - all products for niche customer manufacturers like sports car, ultra-sports car and start-up car manufacturers)
Off Highway (products like Ultra Sonic Sensor and Near Range Camera - all products for non-automotive usage in the areas of logistics, agriculture and construction industry)
Rail (products like Radar and Front Video Camera - ADAS functionalities for light railways and trains)
Two new dimensions of complexity can be considered as we plan to establish full project responsibility (having responsibility also for the sub-projects System, Software, Application) and to have different customer projects with different end-customers for each product.
The main challenge which we looked ahead was the high number of diverse products, planning to raise all competences in parallel would be one of the most complicated business developments at Bosch Cluj.
To be able to use fast decision channels for the business development, we set up a "project house", a temporary organization unit lead by a project manager. He had the goal to evaluate the business, define the ramp up scenarios and shape the startup to the final setup.
For our approach we considered to make use of the BAPO model, which gave us more orientation and guidance. BAPO stands for Business, Architecture, Process and Organization.
This model is described by Prof. Jan Bosch in the article "Structure eats strategy" [1]. He says that the Business (how to generate revenue and profit) influences the Architecture (technology and structure to build systems), which is the starting point for Processes (activities and way of working), which influence the Organization (department, teams and responsibilities).
In general, this model says that the last thing which needs to be considered is the organization setup and to start always with the business.
In this article we will focus on the Business and how we support the competence ramp up at Bosch.
The Architecture, Process and Organization elements will not be described in detail due to the limited space.
In order not to create confusion with what we mean by "Business", we will define this term as an automotive product like a Radar control unit, including all automotive relevant typically subprojects (System, Software, Application).
In our case, every subproject consists of a development team which includes different roles. In general, the V-cycle approach is used, which means that projects are based on customer requirements that need to be developed and/or managed. Other tasks would be the definition of the architecture and component design, implementation of the code and testing on all levels. In addition, each project has its own project leader who is responsible for the end-customer contact. In his team, typical automotive project roles are also included, e.g. Test Managers, Safety Managers, Cyber Security Managers and Process Quality Assurance.
To manage the high complexity of each business, we firstly evaluate each of it. The criteria which are being used for the evaluation are free to be chosen depending what resources are available or what actions needs to be taken.
In our case, we decided to use the following criteria in the evaluation (using a scale --/-/0/+/++):
Competences available at the partner organization
Competences available in the local established unit
Technical complexity
Number of roles in one project
Number of projects
Project stability: if projects are volatile (stops suddenly or do not starts as planned)
With this overview we create transparency and can easily derive first conclusions:
For Business 1 the competence ramp-up needs to be done with the partner organization as only at this location the competence is available and the business is complex.
The competence for Business 2 is available locally, therefore a good approach would be to build the competence in the local organization in an extra team. This business is technical very complex and implies a lot of different roles.
Business 3 is still in evaluation phase, not all information is available. Therefore, conclusions should be taken carefully.
Business 4 has a low project stability (the product is requested only by some of the customers or maybe the customers are car manufactures startups which can quickly go bankrupt and the project will have to be stopped). In this case, a dedicated team for Business 4 should be avoided and it is recommended to combine this team with another business team (e.g. Business 6 team).
The evaluation above seems very trivial. However, in general it is more complicated, as the competences are mostly very different, and it is not always easy to combine the teams.
Having the business evaluated, the next step would be to define a roadmap for business development. For this step, it is important to understand the 5 stages of a typical business lifecycle in automotive, which are listed in the figure
Each stage has specific characteristics, which we will describe shortly.
Stage 1 Planning: It does not contain an active project phase. In this stage the Business is evaluated and a roadmap for each step is defined.
Stage 2 Incubate: The target is to have a well running Extended Workbench. In this stage, there is a close collaboration between the startup and the partner organization, assuring a smooth competence transfer.
Stage 3 Grow: The first responsibility is reached in this stage; the startup organization has some of the roles or (SW) components in full responsibility. The project responsibility is still in the partner organization. Unfortunately, this or/and the Stage 2 are the target stages for many automotive outsourcing companies in Cluj-Napoca.
Stage 4 Establish: The Business is established in the new location, there is full responsibility for one of the projects (System, SW, Application). The responsibility contains making effort estimations for the project, defining the time plan and solution, and assuring that the implementation is done in accordance with the agreed quality standards. The complete business responsibility is still in the partner organization.
Each stage can have a start and end date.
The Business Lifecycle Management needs be reviewed regularly, and measures can be defined in order the keep the planned milestones.
The technology that is being used to develop the products will be carried out from the partner organization to the new organization. Increasing the competences and having a strong innovation mindset, the technology can be updated in the future. At this point, it is not in focus for the startup.
The process and way of working are important to define the final organization setup. The interfaces between the team members (how many, how often they inter-react) should be considered in defining the final setup.
As the goal of this article is to describe the startup approach and not the final setup, we will not focus on this topic.
We already gave some examples of the startup organization in the section "Business Evaluation".
For the target and final organization setup, all upfront defined BAPO elements, such as Business, Architecture and Process should be considered. Based on these aspects, the organization could be a standard matrix organization or one of the agile organization setups (e.g. Scaled agile framework like SAFe or the Spotify model).
The models presented above give only a glimpse of the provocations that we faced when ramping up a new organization. The right approach is to structure and understand the business fully. Subsequently, the needed decisions for organizational development can be derived.
We are confident, that considering the BAPO model as starting base is the right step to develop a new business. We know that every startup in automotive has his challenges; we used our challenge to learn how to start a new business, to reflect on our organization setup and to set the foundation of a new Bosch success story in Cluj-Napoca.
[1] https://janbosch.com/blog/index.php/2017/11/25/structure-eats-strategy/?sfw=pass1618852892
by Ovidiu Mățan
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