Agile transformation in a complex system landscape at Bosch Thermotechnology

Bosch, like many organizations, faces the challenge of developing new products with a shorter time-to-market. This required them to adopt an agile working method, in which system integration (including hardware, firmware, and software) and customer focus come together in an international delivery environment. The Residential Heating Controls (RHC) department has initiated this transformation with the help of Quint. What was the approach that Bosch took and what were the challenges they encountered?

The Residential Heating Controls (RHC) department of Bosch Thermotechnology (TT) develops and supplies control systems and electronics for heating and ventilation worldwide. “One of the challenges we face as a company is that, as a market leader, we are still too much organized into silos in certain areas,” says Rutger van Faassen, Transformation lead at Bosch. “We want to make a change towards a new, greener world in which gas, hydrogen, and physical heat pumps become increasingly more important. We look at our products and also their integration to, for example, the Internet of Things. How do we ensure an improved collaborative development towards a sustainable and digital world?”

Long lead times

“The goal behind the transformation is not to excel as an individual or a product, but as a collective in an organization of old silos. This initiative enables us to deliver complete services with improved value towards our customers,” says Rutger. The scope of the agile transformation involves four different locations in three countries, having a multidisciplinary team driving the transition. The transformation is grafted around the electronics that are the brains of central heating boilers. RHC faces a challenge with long lead times for development: software can be developed between a day or a week, whereas the actual hardware product can easily take three months to a year.

Dependencies and Objectives

Several years ago there were already several teams working with agile methods such as scrum and kanban, however, it was necessary to start working from a more collective approach. That is why we initiated a SAFe project in Deventer. During the first PI-planning, we aimed at understanding the structure of the teams and what they were going to work on in the coming period. “We started small, with thirty people. We have now evolved to over a hundred participants at 1 location in the Netherlands with participants contributing from other countries.” These sessions took place every ten weeks. “We also invited stakeholders from Germany to participate and experience the transformation when all silos, as small teams, are put together to vision and shape the future.” An indispensable element during the transformation was the Program Board which was visible to the whole organization. The Program Board displays all program dependencies and goals. The Project Board can be placed physically in a room but is also available in a digital version. Twice a week, product owners and scrum masters meet in a stand-up meeting around the Program Board to discuss the current status of the goals and risks.

Where do we want to go?

How do you accomplish such a transformation on a large scale? Rutger: “Together with Quint, we started a workshop to understand our current situation and what we want to accomplish: what is the vision, where do we want to go? We formed a core team of eighteen people, consisting of members of the board, line management, architects, and engineers.” The value streams and bottlenecks were discussed by this team. Added to that, a communication meeting with all employees was carried out every four to six weeks to report on the progress and approach of the transformation. One of the outcomes of the workshop was a transformation roadmap and implementation plan. The workshop focused on the transformation in four different dimensions: leadership and program, people and organization, value streams and product architecture, and execution and practices. “Based on those dimensions we started to work on our vision and strategy. In 2020 we started the transformation towards our new organization.”

Don’t start with the organization chart

“Bosch has a strong preference to follow a process in which we analyze the business needs first. Based on this analysis we can now rather easily start and scale new business teams. After that, we analyze if the capabilities of our architecture can match this and decide then which processes need to be developed and implemented for us to meet the customer’s needs. We will then fill in the organization charts. We follow the BAPO model (Business / Architecture / Processes / Organization). For an organization like Bosch it is a continuous challenge when we want to initiate a new change: how does this impact the people in our organization? will they all end up in a suitable position? Another challenge was that while Bosch had made a very successful transformation in Deventer, in other locations and countries this transformation would be more difficult as project management is still conducted in a traditional way.”

Transformation Guide

As with major transformations such as this, it is a journey that will take significant time and effort, and will never be ‘truly completed’. An initial evaluation reveals that our people now have access to better and more information and are proud to work in the new business teams. At the same time 20 percent rate the transformation unsatisfactory. “We are now analyzing how improvements can be made on transparency, communication, and expectation management of the transformation.”

A ‘transformation guide’ establishes the transformation framework and decision-making process to facilitate the cooperation between teams, and eventually make the teams as autonomous as possible.

What makes an agile transformation successful?

We can distinguish these five factors.

  1. Clear goals. It’s about the ‘why’ we are doing this in RHC. It is about a successful way of working in RHC, and not just working ‘agile’. Agile is not an objective by itself.
  2. People who are willing to adapt. We build multi-disciplinary business teams that are committed to the goal, solve problems and collaborate.
  3. Good use of resources. The preference is to automate everything and adopt data-driven decision-making by answering questions as: How far are we from meeting our goals? Do we have to adjust and how much to adjust? What about reliability and customer satisfaction?
  4. Accelerating leadership. We focus on value creation. Form a guiding coalition that has its roots embedded across the organization. Stimulate experiments.
  5. Lean thinking and agile working. with an obsessive focus on value streams, flow, and continuous improvement.

Openness and transparency are fundamental in all the above principles.