Based on research & interview with Lars Roessler, Venture and Accelerator Partner at BSH Home Appliances Group
Established in 1967, BSH is a leading home appliance provider in Europe with 11 brands and more than 58,000 employees. In 2019 alone, BSH reached 13.2 billion EUR turnover. BSH produces the entire range of modern home appliances at 40 factories worldwide. The product portfolio ranges from cookers, ovens and extractor hoods, dishwashers, washers and dryers, fridges and freezers to small appliances such as vacuum cleaners, coffee machines or food processors. How does such a massive corporate innovate? BSH’s innovations focus on simplifying consumers’ life.
“BSH Group aims to create innovations that offer tangible benefits for consumers”Lars Roessler, Venture Partner and Co-Founder at BSH Startup Kitchen
There are a few ways BSH Home Appliances Group is driving innovation:
- Applying agile work methods and projects setups to ensure consumer-centric product development – both on the level of physical appliances and digital features
- Testing user experience extensively so better product could be developed, through work in their UX Labs
- Ensure devices yield impressive results but minimum noise, through work in their acoustic lab
- Providing places for interdisciplinary teams to work together in BSH CO
- Develop Industry 4.0 capabilities and further improve product qualities and capabilities
- Individualised production, providing consumers with customisation options of BSH products
- Foster long-term collaboration and innovation with start-ups in the BSH Startup Kitchen
Innovating with Start-ups
There are 3 key challenges on why BSH is facing challenges in innovating:
- Additional competencies required that are outside of BSH’s core competencies. There are areas which don’t make sense due to time and effort required for BSH to build the capability themselves, such as data security.
- Large organisation size. With the large number of people working in the company that potentially wants to tap into start-up capabilities’, BSH needs to standardise the process and have a structured approach between the innovation team and the start-ups. This is aimed to increase the effectiveness of working together.
- Implementing new, digital business models that tap into new revenue streams and requirea different form of interaction with end-customers and partners
Facing these challenges, 27Pilots came into the picture and introduced the venture client model to BSH. In this model, BSH and 27Pilots jointly created BSH Startup Kitchen. BSH Startup Kitchen is a dedicated program, aspiring to capture technology trends in areas that may be highly relevant for the company. In their words:
“BSH Startup Kitchen is the Venture Client unit of BSH. This means BSH becomes a start-up’s client when the solution is not yet mature. We buy a first unit of a start-up’s product, service, or technology. Through this relationship, start-ups get a supplier status, supplier number, purchase order, and revenue. As a Venture Client we do not invest, i.e. we do not ask for shares or equity.”Lars Roessler, Co-Founder and Venture Partner at BSH Startup Kitchen
Here are a few key learnings from BSH’s journey that is relevant to most organisations!
Key Learning 1: Things are not perfect at the start, but be agile! Start small and expand later!
At the first stage, there were only ~ 3-4 people in the BSH Startup Kitchen team, made from BSH employee(s) & 27Pilots’ employee(s). With this small number, the team quickly completed 2 things:
- Setup the overall strategy
- Identified potential project sponsors within a specific division that’s supporting the Startup Kitchen establishment
After those are finished, the team could then reach out to the potential sponsors and gathered use cases that could be solved by partnering with start-ups. Only then could the team start sourcing start-ups, showcasing the start-ups to the sponsor, and started a pilot project with the start-ups. This approach was quick to deliver results. The BSH Startup Kitchen delivered 300% more (pilot) projects than initially targeted with a significant portion of them being scaled up or created an idea for another follow-on project. This quickly created showcases that could be demonstrated for other clients in the company.
When a few success stories have risen, it was a natural move to expand the Startup Kitchen team by a few people. Had the team planned to go all-in from the start with a larger team setup, clearly identified projects, and one “perfect” strategy, the effort would’ve been doomed from the start.
Key Learning 2: Start with projects where you can show impact fast. In this case, focus onprocess innovation. Not product or people.
Where could start-up add value in the PPT (People, Process, Technology)?
Technology innovation in products are great, but often, it just means added functionality. Naturally, development cycles on product level are – depending on the specific category – between 3-5 years on average. Hence, the introduction of new technologies focusin on product innovation have a naturally long time-to-market. Plus, companies need to be careful in adding functionality, especially on whether it’s needed by customers. Companies that approach this haphazardly might end up with a product with so many features that no customers wanted and led to the product being hard to sell because of its complexity.
On the other hand, Process innovation is easier to implement, given the right incentives for the decision-makers and adopters within the company. It also requires much less investment in capital expenditure than product innovation. This makes it much easier for companies to start innovating with the process. After the company has a few success stories with process innovation, only then the company should start looking at technology innovation with start-ups.
Key Learning 3: Evaluate success by the number of follow-on projects & scale-ups
Contrary to our intuition, the number of projects ran by the team is not a good indicator of success. It is only a good indicator of the amount of effort that the team put in.
Each project in the BSH Startup Kitchen is run only when the start-up and the product/service have been evaluated by experts trusted by the sponsor. Thus, it starts with a clear business case of why the product/service is important before the pilot project is run.
Creating a dedicated venture client unit has successfully helped BSH in innovating with start-ups. The venture client unit is start-ups’ client when the solution is not yet mature, pilot project manager and the one who scales the solution in the organisation should the pilot project be successful. In almost 2 years, BSH Startup Kitchen has successfully:
- Developed the start-up partnership strategy, engagement model, and processes
- Overachieved their targeted number of projects delivered & scaled up
- Created business synergies with start-ups for the next-gen home appliance product development
- Engaged various internal stakeholders and cultivated an innovative culture within the organisation
Authors – Team Circuit Connector
Passionate about FinTech topics with 5+ years of experiences in banking technology and FinTech business development
A marathoner and coffee lover
Hailing from Indonesia, Christian is an INSEAD MBA candidate with 5+ years of experiences in tech, start-up, and management consulting. He’s a passionate supporter of diversity & inclusion, and he loves learning, gaming, and reading. You’ll probably spot him in the wild at a coffee shop with a cup of joe in one hand, and either a laptop or book in the other. To connect with him, check his LinkedIn or his personal website!