“External partnering is essential in innovation. It was important already in the past, and it has become even more important in recent years.”

Mario Pieper, Chief Digital Officer at BSH Hausgeräte GmbH

Digitization changes the business models in the home appliance industry.

Innoboard: There is no consistent definition for innovation. Every industry and every department perceive it differently. How would you define innovation with respect to your industry?

Mario Pieper: There is most likely not one single best definition of innovation. It is generally challenging to provide a perfect definition for such a complex topic. Moreover, there are many different types of innovation, which further complicate a focus on one single definition. Nonetheless, there are a few important features that typically characterize innovation. Above all, innovation is something new that has an impact. In this respect, impact means that it is not only a new idea, concept or technology without any market application. Instead, it is something new that actually has some use and is applied either internally or externally. Internally, innovations refer to new processes or new business models. Externally, innovations can be new products or services. Thus, we can talk about many different types of innovations. What they have in common is their impact in terms of internal or external changes.

What impact does the trend towards digitization have on your firm and your innovation activities? Do business model innovations receive increasing attention in this regard?

There are so many buzzwords in the business field, but digitization really stands out from most of them. The reason for this is the disruptive character that the digital transformation has. This digital disruption is already going on at present, and it will further intensify over the next years. A key factor for the disruptive and transformational nature of digitization is its impact on the business models of companies in many different fields. Thus, it is interesting that you directly ask about the relevance of business model innovation in the context of digital transformation.

You are right, business model innovations receive increasing attention – in our industry and also in many others. With regard to the home appliance industry, digitization changes the business models of established companies in various dimensions. For instance, the digital consumers of today and of the future expect connected products and digital services. These expectations are changing the design and features of our products, and they further call for new services and solutions. Jointly, these products and services require suitable new business models. Furthermore, consumers expect excellence at multiple touchpoints along the process of information, purchase, usage, and loyalty. In this regard, connected products and digital solutions bring home appliance manufacturers closer to the consumer.

Moreover, connectivity and digitization enable us to better understand the consumers and to tap into new business models. One example in this regard is our new solution ‘We Wash’, which is directed at coordinating the collaborative use of washing machines by multiple persons. This is a good example for the trend towards the sharing economy and how digital can help to ease the implementation such sharing models – for instance when multiple persons and households in one building share a washing machine. With a broader look into the future, we need to think beyond use cases for a single device to enable integrated applications with multiple devices in the smart home area or in even broader fields. Our products need to be ready now with regard to all necessary connectivity functions, but the applications will further develop in the future.

How important are contributions from the entire organization to strengthen a firm’s innovation capability, and how can an innovation DNA be developed in an organization?

Innovation usually cannot be effectively handled by a small team or department that is isolated from the remaining parts of a large organization. Instead, managers need to acknowledge that innovation can basically come from everywhere. It may come from internal sources, such as R&D and marketing staff, as well as external sources, such as partners and developers. Thus, there is not only one way towards successful innovation. Rather, firms need to listen to the consumer and his or her pain points. Moreover, companies need to watch out for technological trends across the globe. In addition, they need to engage with consumers, partners, and developers to stay ahead of influential developments in light of innovation and digitization. Our BSH Hackathon ‘Hack the House’ is one such example for successful open innovation – connecting our appliances to the community of external developers.

How important are collaborations with external partners – potentially from completely different industries – to succeed in innovation?

External partnering is essential in innovation. It was important already in the past, and it has become even more important in recent years. In response to digital transformation, we do not want to develop all relevant knowledge inhouse. Moreover, this would hardly be feasible. Accordingly, external partners are key to the future success of companies in the home appliance industry. Besides the growing complexity and variety of key technologies, an important underlying reason for this trend is the critical role of business ecosystems. We are currently moving away from a strategic focus on products to a strategic emphasis on platforms. An important example in this regard is ‘Home Connect’ – our connectivity platform for home appliances. With a growing emphasis on platforms, the importance of external partners in innovation will continue to grow. At the same time, you will always need to have the right internal experts in your firm and you further need to get all key players involved.

What procedures has BSH Hausgeräte GmbH established to successfully pursue really novel ideas, such as completely new products or new business models?

Innovation is exciting and challenging at the same time, and this is even more true for radically novel ideas and concepts. Consistent with our strategic approach to innovation management, we rely on various tools and mechanisms. For example, we invest more in R&D to sufficiently cover the breadth and depth of new technological developments. Moreover, we have streamlined our innovation process. As such, we now combine systematic innovation management with high levels of agility and flexibility. Moreover, we have strengthened the alignment and collaborations with our mother company Robert Bosch GmbH.

Especially in the field of connectivity, there are major benefits from aligning our activities and competencies. With regard to tools for external partnering in the context of digitization, we strongly rely on software development kits (SDKs) and application programming interfaces (APIs) to ease collaborations with external developers and other partners. Our BSH Hackathon is a further example of close collaborations between internal and external specialists. In addition, our BSH Venture Forum sets the stage for the next generation of home appliances. We help start-up companies get to the next level by pitching their concepts and business plans to BSH management. On this basis, we can team up with promising start-ups to develop innovative products, applications, services and business models.

What are your own personal goals with respect to innovation and digitization in the next two years or so?

Over the past years, BSH Hausgeräte GmbH has developed the platform ‘Home Connect’ together with external partners. This tool aims at becoming the central platform for connectivity in the home appliance industry. Therefore, one of my primary goals in the next years is to make the ‘Home Connect’ platform the leading digital ecosystem in the home appliance industry.

We have had a very good start, but there are also some challenges ahead. In more general terms, my role as the Chief Digital Officer involves the task of supporting all relevant players within BSH and at our partners in overcoming the challenges of digital transformation. It is important to note that these challenges do not only refer to technological changes. Rather, the more fundamental challenges with regard to transformation refer to changes in the strategy and mindset of our employees at all hierarchical levels. Everybody needs to accept changes in order to successfully cope with a major transformation. It really is a fascinating time in the home appliance industry at present.

About the interviewee:

After his studies of Business and Economics at Westfälische Wilhelms University of Münster, Mario Pieper started his career in 1999 at the strategy consultancy of Accenture. In 2002, he moved on to Deutsche Telekom AG. After different positions in strategic corporate development and the operational management of Telekom Germany, he was Co-Founder of a start-up in the Smart Home environment. Since 2014, Mario Pieper is the Chief Digital Officer (CDO) of BSH Hausgeräte GmbH.