Podcast #172 AIoT Transformation

TRANSCRIPT

Ken: This is Ken Forster, executive director at Momenta. Welcome to our Digital Thread podcast produced by, for, and about digital industry leaders. In this series of conversations, we capture insights from the best and brightest minds in the digital industry, their executives, entrepreneurs, advisors, and other thought leaders. What they have in common is like our team at Momenta; they are deep industry operators. We hope you find these podcasts informative, and as always, we welcome your comments and suggestions.

Good day, and welcome to episode #172 of our Momenta Digital Thread podcast series. Today, I’m pleased to have Dr. Tanja Rueckert, Chief Digital Officer of the Bosch Group. Tanja has over 25 years of experience as an executive in the software and building technology industry, holding various executive positions in Germany and the United States. She was appointed as Chief Digital Officer in July 2021 after serving as CEO of Bosch’s Building Technologies Division. Prior, she headed the IoT and Digital Supply Chain Business Unit at SAP, crowning a 21-year tenure.. She holds a Ph.D. in Chemistry and sits on the steering committee for Carnegie-Bosch Institute and the University Council for the University of Applied Science in Karlsruhe, Germany, and the steering committee for Germany’s Platform of AI and Learning Systems. Tanja, welcome to our Digital Thread podcast today.

[00:01:47]

Tanja: Thank you, Ken. I’m honored to join you in the Momenta podcast.

[00:01:54]

Ken: You have an impressive background. This should be an interesting conversation. As always, I’d like to open with the question, ‘What would you consider to be your digital thread?’ In other words, the one or more thematic threads that define your digital industry journey.

[00:02:19]

Tanja: It’s such an interesting start, Ken. As a kid, I loved to listen to music. It was the charts you hear on the radio. And then there was a day, it was not working anymore as it should, which you can imagine was a big disaster. I decided to unscrew it and rewire it. You can transfer my behavior to my professional life as a Chief Digital Officer now of Bosch. As a foresighted leader in terrible and exciting times, you are way more often confronted with circumstances that are not yet where they should be. Some things were running smoothly, and my way still is to take a deep look into it, screw it open and rewire. It’s all about connecting the right dots; you can also transfer the story into bringing innovations and new technology to life, providing value to those who use it or culture. Unscrew silo thinking and rewire for collaboration and creating ecosystems. It’s also about being persistent until it works and gives you a good sound like the radio, which of course, closes the loop. It worked in the end. That’s my story from the beginning.

[00:03:36]

Ken: I love it. What a great start. My mom often reminds me that all the neighborhood kids and myself could take apart electronics or mechanics; I’m the only one who could assemble it and make it work.

[00:03:49]

Tanja: That’s a compliment.

[00:03:51]

Ken: It is, it is. We share some common DNA in that regard. Look, you’ve had a long track record of executive leadership at SAP, from SVP of Head of Production to EVP & COO of Development to President of IoT and Digital Supply Chain. This was a formative time for SAP as they expanded the very definition and reach of ERP. If you had to summarize this wonderful career and time into three insights, what would they be?

[00:04:21]

Tanja: Let me start with how leadership and the digital transformation have changed our world of work, our interactions, and this was tremendous. When you look at it, the competencies in the digital area are much more short-lived and fragmented. The perceptions of personality or characteristics of persons are different in intercultural and diverse contexts. Especially in software, but we work in global teams in all companies, so this is very important. Context changes lead to new demands on the leadership organization and processes. This was my first insight. The second insight is the journey of expanding and always building on a pillar of expertise and experience. I think you mentioned it; SAP started in ERP and then added the topic of a database, then cloud network solutions. In the end, it was to be discussed briefly, including machine data was IoT. It is always building on something with expertise and experience and extending it. And the last one is the power of open software architectures. I think it’s connecting different software goals. People love to talk about predictive maintenance, especially in the manufacturing space: OT and IT. It’s not only about machine health. It’s also in the inventory, optimizing logistics when sourcing, and you have to connect the business processes with the machine so the IT and the OT work.

[00:05:56]

Ken: If I think about those lessons learned, digital transformation, expanding on a platform of expertise and open software, maybe I could even say integrative because you talked about the IT/OT gap. What a great set of platforms to lead you to Bosch at the time. You made a significant career step joining Bosch in 2018 as CEO of Building Technologies. What inspired you to make the move?

[00:06:22]

Tanja: Great question. You can imagine after focusing several years, and actually, it was more than 20 years on the software part of IoT. The missing components were the things. You could say I’m coming from my ‘Internet of No Things’ to the real Internet of Things. That was one reason. Another, it’s this great opportunity at Bosch. I was inspired by the high-tech company. Bosch, ‘Invented for Life’ is a great mission, and the diversity of the business has a deep R&D knowledge and domain knowledge. Early on, Bosch already has seen the power of connectivity with IoT and artificial intelligence. What was also inspiring or interesting for me was a structure for foundation. Coming from a stock traded company and working for a company built on a foundation it’s more about allowing longer-term strategies. It’s also a great baseline to make the world a better place.

I started, as you mentioned, as the CEO of Bosch Building Technologies. It’s nice to get deeper into solution and service development topics, get first hardware technology expertise, and combine it versus software knowledge that I’m bringing. I think shaping solutions around the building of climate neutrality was highly interesting for me to join. And it’s also inspiring people who interviewed and hired me. People who know me know it. I have a strong focus on the people I work for, the leaders. I want to have someone I like and can learn from with great values and vision.

[00:08:07]

Ken: A great set of reasons to join. I like it. I always describe IT as ‘the internet of’ and OT as ‘of things.’ You seconded that too; the real opportunity is where they meet. You said it earlier, the IT/OT gap and where you see real-world things being activated, if you will, by the Internet of Things especially in the building space, and especially over the last couple years with, as you said, climate change and environmental concerns. You were appointed Chief Digital Officer of Bosch Group in July of 2021. Bosch is in the middle of one of the biggest transformations in the company’s history from a traditional hardware manufacturer to a leading AIoT, think AI or artificial intelligence plus IoT or Internet of Things company. What is your remit in driving this transformation?

[00:08:57]

Tanja: What you’ll always need is something that inspires everybody at a company. What inspires us at Bosch is our strategic imperative. It’s ‘Invented for Life.’ We want our solution to make people’s lives better. Connectivity plays an increasingly important role because our lives are taking place more and more in the digital world, but technology invented for life has also meant a connected life. And we are taking it a step further; we are bringing artificial intelligence or AI to the Internet of Things, and that means we create intelligent, connective, and sustainable solutions. It’s for people, and it’s tailored to their needs.

In my role as CDO, I’m responsible for the global teams in IoT software development, digital solutions, and digital trust across the Bosch groups. We have four business sectors: mobility solutions, industrial technology, consumer goods and energy, and building technology. Suppose you hear the different areas and think about our strategic imperative. In that case, you can imagine its power to leverage diverse teams. Different views create innovation; different views are sometimes maybe not so comfortable, but in the end, they create a much better result. For Bosch and me, this is a once-in-a-lifetime opportunity to shape such a considerable transformation focusing the value of the solutions we provide to our customers to the mindset of our associates, and very important today, we collaborate.

[00:10:39]

Ken: I’ve heard some of your peers describe it as moving from things or products and services to data management or data first strategies, and how important that is truly becoming. What would you say is your North Star for this transformation?

[00:10:57]

Tanja: It comes back to ‘Invented for Life.’ I already have my coordinates set for the North Star. We want to use the boundless opportunities. We have this technology and the powerful minds of all the smart people we know and work with. We also leverage our ecosystem to support our planet staying healthy and balanced for the next thousands of years and more to come. Why do I say this? We are working on the future of mobility so it does not burden the environment. We shape the future of smart living, using exactly and only the amount of energy and water we need, and foster sharing models using AI solutions. We are decreasing the huge footprint of industries worldwide by driving energy efficiency on a large scale into factories. These connected solutions use AI algorithms. It’s a lot of technology, but it’s always for a higher purpose. And at the end, it’s also increasing the chance for people to live safer, healthier, and more conveniently. I hope going forward when you think of ‘Invented for Life,’ and when you think about a new asset for your home, your workplace, or while you’re on the way on your bike or e-bike, or in your car, you’ll first think of Bosch, because we want to help you go to the North Star and have solutions only invented for life. And maybe in closing, one additional point is that Bosch is the coolest company to work for and an easy company to work with. I believe in the power of the ecosystem.

[00:12:44]

Ken: When I thought about ‘Invented for Life,’ I thought lifetime, which of course for electronics, for anybody with their iPhone, they have to replace once a year because the newest model comes out so that is already a benefit in and of itself. But I get what you’re saying in terms of invented for greater life, for more sustainable life. I like that tagline. It’s interesting because in several of our Chief Digital Officer conversations, as of late, we find that Chief Digital Officers are also taking on the ESG or environmental, social, and governance, many times even leadership functions while also supporting directly in that. It’s interesting to see technology as the catalyst for outcomes. The EU is now calling that Industry 5.0, the outcome economy. It’s interesting to hear you also talking about the same relevant to your role.

[00:13:37]

Tanja: In addition, Ken, if you think ‘Invented for Life,’ ‘for life’ also means the value is multiplied by the whole society. It’s not only a solution you have for one or two persons or one factory. Our goal is to have a broad impact.

[00:13:54]

Ken: And that’s the ecosystem aspect. You guys have done a great job with the AIoT user group and the playbook, which we were honored to be part of both endeavors. Let me ask, what will it mean for Bosch to be a leading AIoT company?

[00:14:11]

Tanja: Our goal is to deliver products and services that create enthusiasm and improve quality of life. We discussed before helping conserve natural resources. We always need to think, and every Bosch associate needs to think, from a customer value and user benefit before starting a new project. Put yourself in the shoes of our customers, of your customers. For example, a car company or someone driving, a manufacturing plant manager, a construction worker using the Bosch drills, and then we can use the technologies. You mentioned AIoT and the playbook. I think it’s fantastic to combine the connectivity, apply intelligence, use maybe even more technology as they play a crucial role. It’s important to think from the customer and the user benefit, and then use the data and evolve information from it as a key factor in our business success. This has and will have consequences for our mindset within the company. It will impact the skill of our workforce, the way we work, and the way we lead. This is what we are doing as part of the transformation in leading the company, as you said, in connectable hardware, software, and services.

[00:15:29]

Ken: It truly is a cultural transformation. Digitally catalyzed, perhaps, but a cultural transformation for your company and, clearly, for your channels, clients, and customers. The first movers in the digital industry like GE created central organizations, usually taking on the subtitle digital, take X Digital. Some of them, of course, were more successful than others. To whom do you look for inspiration on your journey? And how are you organizing to approach this opportunity?

[00:15:59]

Tanja: I add to your comment, Ken, on a central organization that my belief is if you want to impress someone in a short amount of time, then you create a large central digital or innovation organization. It always looks good at the beginning. If you plan to stay only for a short amount of time in a company that maybe is a way to go. Joking aside, if you want to scale digital business, you need to consider digitalizing your core business. It’s great to have some alternative and new business models as well. Still, it’s mainly digitalizing your core business. It needs a lot of non-exciting groundwork. You need your product content or digital which is a tremendous book. Still, it needs to be done before you can make digital offerings or talk about digital twins. What I mean is you need some central enablement there to foster speed and have free use of artifacts. The execution, especially around digitalizing core business, needs to be close to the expertise. This is a higher effort initially, but in my mind, far more sustainable.

Regarding your second point, looking for inspiration, I believe we can learn from each other as individuals, as companies, and exchange with academia or start-ups. It’s often about specific fields. Let’s take one; it’s a topic of simplicity in design. There are some players in the US we learn from. When I look at a trial setup, as the second topic, we learn from start-ups. Let’s think of software paradigms and apply them to transform the car into an internet node. I think your software players offer good insights. And on combining deep hardware expertise, the software, and maybe several sensors, other companies or individuals are turning to us at Bosch to learn from us. It’s something we all can learn from each other, and if we apply it right, we make the ecosystem smarter.

[00:18:09]

Ken: I would say that you are approaching this change transformation exercise with software architecture and perhaps even an agile development approach, which is your background in your DNA, and speaks very well to truly the digitalization of everything - rethinking what a car is, as an example, or any use case. You mentioned earlier the team aspect of it and the cultural aspect. How do you assess your teams’ and even business units’ readiness for digital change? And how are you building the leadership and infrastructure to support that transformation?

[00:18:54]

Tanja: It’s a very important but not an easy topic. In my mind, this is more of continuous evolution. If you ever believe you’re done and not thinking of adding further talent from another unit in your company or the outside or evaluated diversity in all directions, you’re stuck. Technologies, consumer expectations, and the new workforce priorities continuously change, and you need to re-evaluate your team constantly. When I started in my role, I very early in the process brought all leaders together to discuss our vision, common goals, assessment, where we are, and what is missing. When we look at what we need for having successful services or digital business, you need a 360-degree view. It’s not enough to have cloud infrastructure, AI models, or a data storage approach. We also discussed it in the AIoT playbook, and it’s to think about how you go to market. What does your customer need? What is their willingness to pay? What positive impact on the customer profit and loss can you have either with efficiency and bottom line or the top line? The digital change is underway; the team readiness is given. I believe we have to nourish it further. You need to have an open culture and exchange on failures and successes. We need to live empowerment and not say it only. Sometimes structures have evolved and need a reset. This is a normal procedure to keep in good shape and enable the greatest flexibility and faster decisions.

Now maybe at the end, what are some of my favorite qualities of team members driving transformation? And I think it’s five: One is forward-thinking and risk-taking. The second is high passion and dedication. The third is customer value centricity. Fourth is trustworthy and reliable. And the last one is embracing diversity and collaboration.

[00:21:07]

Ken: What a great list, and I wish I wrote them down fast enough to remind the audience what they were again. I will listen on the recording, and a good definition of ideal - both team members, but really, change agents in that regard. You mentioned earlier academia and start-ups. And I’m curious, how do you leverage the innovation ecosystem inside Bosch as I know it’s strong, and outside your organization? Think, outside-in style innovation.

[00:21:37]

Tanja: I think it’s a game-changer. Let me start by saying no one, and I mean it, no one can do it alone. Besides the customer focus we discussed before, I strongly believe that the culture and mindset of having it so that others can also do fantastic innovations is the key to success: sharing, collaboration, and continuous learning. If we foster a culture, and that’s what we are doing at Bosch, of sharing and bringing our best people together from different companies to work on projects, they will contribute. Everybody will contribute their expertise, skills, and knowledge, and they can learn from each other. By collaborating in flexible networks across business units or countries, I’m convinced we will create better solutions for our customers and improve the use of resources and the expertise they have. An external ecosystem, like you mentioned, with strategic partners in start-ups. I think we always should have a certain motto, and I think one is a partnership that’s a willingness to share risk and success. And the winners of the digital transformation are the ones that believe together as partners whether internally, or sometimes bringing the teams together externally, as it can provide a greater added value. And, in the end, you will be more successful.

[00:23:10]

Ken: Earlier, you mentioned one of the reasons for coming to Bosch was the organization’s diversity. You’ve outlined some of the business units. I imagine that is a great playing field for your position applying applicable principles across each business unit and each team. You’ve got a great playground and a great AIoT playbook. It’s exciting in terms of that.

[00:23:38]

Tanja: As you’re saying, examples from mobility as the automotive industry are different, but you see similarities to the consumer goods. You call it a playground; we call it business, but it’s really broad.

[00:23:53]

Ken: It is, and coming back to this idea of the software architect perspective, you can look at the common elements versus the differences in them. And that usually comes from people who have been truly in enterprise software. You always look for the common building blocks, and then you build the differentiation on them versus starting with everything’s different. It has to be custom.

[00:24:17]

Tanja: And it repeats itself. There are always patterns you see or waves that repeat themselves.

[00:24:23]

Ken: I’m glad you said pattern because that is probably the most common thing I have seen in all of the Chief Digital Officers we’ve talked with and worked with. They are pattern matchers by definition. They learn across different units, different technologies, different disciplines. They’re able to easily lift and shift patterns and apply them back and forth. Clearly, you exemplify that as well. In closing, I always like to ask, how do you find your inspiration, Tanja?

[00:24:53]

Tanja: I get inspiration from open exchange. People leaders are tackling similar challenges as we do at Bosch. It’s in companies driving technical and cultural transformation and learning from the experience of other industries. As we just mentioned, highly valuable patterns repeat. It’s good to know, and this podcast, like all of yours with Momenta, reveals great insights into the entire movement we are currently in. As a last comment, for personal re-energizing and inspiration to people in diversity, it’s often my family or close friends I look to.

[00:25:37]

Ken: Well said. Tanja, thank you for sharing this time and these wonderful insights with us today.

[00:25:42]

Tanja: It’s my pleasure. It’s driving ideas while we’re discussing.

[00:25:49]

Ken: Absolutely. And you mentioned you’re an avid listener of podcasts while you’re out running, so I’m sure there’ll be a lot of avid listeners listening to yours as well.

This has been Dr. Tanja Rueckert, Chief Digital Officer for the Bosch group. Thank you for listening, and please join us next week for the next episode of our Digital Thread podcast series. Thank you and have a great day.

You’ve been listening to the Momenta Digital Thread podcast series. We hope you’ve enjoyed the discussion. And as always, we welcome your comments and suggestions. Please check our website at momenta.one for archived versions of podcasts as well as resources to help with your digital industry journey. Thank you for listening.

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