Podcast #176 Software Defined Business

TRANSCRIPT

Ken: Good day, and welcome to episode 176 of our Momenta Digital Thread podcast series. Today I'm pleased to host Dr. Andreas Nauerz, Managing Director, co-CEO, and CTO of Bosch IO, a global interdisciplinary expert organization driving Bosch's IoT and AIoT strategy. Andreas has held various leadership positions in software architecture and development and acted as the head of multiple research groups. He's a recognized software architect and one of the experts in cloud and serverless computing and AI, ML, and IoT. He has studied Computer Science and Law and holds a Ph.D. in the former. He joined Bosch Corporate Research in 2019 and went on to be Vice President, head of IoT platform responsible for the development of Bosch's IoT Suite, which forms the basis on which Bosch and its customer build IoT solutions incorporating Bosch's cross-domain industry know-how and connecting millions of sensors and devices. Andreas, welcome to our Digital Thread podcast.

[00:01:46]

Andreas: Good afternoon, Ken. Thanks a lot for having me today; I'm looking forward to our chat.

[00:01:51]

Ken: I am as well. It's been interesting because we've had a chance to interview some of your colleagues. All of it tells a very positive story for the transformation that Bosch itself is undertaking, and one might call it digital. But arguably, Bosch has always been digital. And so, I've particularly looked forward to this conversation. In some sense, we're interviewing the thought leader behind the thought leaders in essence, and so let's start a little bit to talk about your digital thread. In other words, the one or more thematic threads that define your digital industry journey. What would you consider to be those digital threads?

[00:02:27]

Andreas: I started my digital journey when I was six. At that time, my dad bought me a Commodore 64, C64- if you still remember what this is. This was the best present I'd have ever gotten. At that time, I did not know how much this would influence the rest of my life. I could hardly read and write when I got this machine. However, I started to typewrite program codes printed in paper magazines to see what would happen. I started to code in basic on a machine with 64 kilobytes of memory. Then you had to enumerate your coding lines and leave space between in case you wanted to adapt. I saved my programs to tape, which is one of the stories I still like very much. I did my very first download by recording program code, broadcast by a Dutch radio station in the middle of the night. From today's point of view and talking about downloads, it's a crazy story. But this is how it all started. I had been fascinated by technology at a very early age. When I was a teenager, I got a 386. I assembled my hardware and started coding different languages; Pascal, Delphi, C, whatsoever, and the destination remained. I founded my first small IT startup, which overrode- well, IT consulting and application programming services, with 17. It was quite successful. As the fascination never decreased, I studied Computer Science, did my Ph.D. in Computer Science, and started working for different US software companies.

I worked for IBM for a long time, and today I am with Bosch. For most of the time, I stayed on the software side of things, working in all the fields you already, touched on web and mobile technologies, cloud, and more particularly serverless computing and support. I think my key learning out of that is technology is super fascinating, but it's also exhausting because things do change so quickly and never standstill. I'm thankful for having been able or allowed to see all these developments I've just talked about. That helps me to have a deeper understanding of what is happening behind the scenes. Sometimes being a tech, can be seen as, due to the fact that things are changing so quickly, as a kind of resiliency training because it can become very complex, very complicated. It requires you to show persistence to get something to work the way you want it to work. If you want to survive in this tech world, you always must stay curious and be willing to learn. Because otherwise, you will very quickly lose track. And that's why I'm still coding, I'm the Co-CEO and CTO of this company, but at the weekend, you find me coding. This is not only true for the technology side of things. I think the same way technology has changed so have organizational structures over the last two years - - Everything continuously evolves or changes, making things even more fascinating but also more exhausting. This is causing you to learn how to lead people, deal with customers, and not only technology. And for me, once I know how things work, then it's usually time to move on. I think this is how it all started and why I'm where I am today.

[00:06:17]

Ken: First of all, six years old- I think we can qualify you as a digital native at that point. You certainly are dating yourself. Age 17, did your first startup in IT. That's probably about the youngest I think I've had among just about anybody I've interviewed. You truly have a digital journey, if you will. I think this idea about resiliency is fascinating because you've been at the critical Venn of IT research and law and commercial leadership. And it's interesting if you think IT is exhausting, imagine trying to create the societal rules around the impact of that technology. It's almost like one circle begins another, which begins another. I'm curious what attracted you to this Venn between these three? What are some of the key insights you've seen during your almost two decades of leading such work?

[00:07:07]

Andreas: That's a good question and probably not very surprising; I am being asked that very often. People ask me, "Why have you studied law? Why have you studied computer science? Why have you studied both?" You've moved on from the technology side of things to the management side- why have you been doing that? And I think it all has to do with what I just said, I like to move on once I know how things work. I'm naturally a very curious person. I'm fascinated by technology, but I never want to stick to one field particularly. This means I'm always up for exploring something new. And once I know how it works, it gets kind of boring, and I need to move on. Whenever I'm starting something new, I always look for the purpose of what I'm doing. I want to make sure that whatever it is, it has some positive impact, especially for customers. And if you consider that- where else do you find more options to explore and work on new IT technologies than in a big IT company like IBM? That's why I joined them first and stayed with them for so many years, and I learned so many new things, and I'm still super thankful for all of that. I was allowed to work with super smart people and be part of great projects. For example, to drive the development of the serverless Compute Engine like IBM Cloud Functions from zero to GA. That was just awesome. I mean, it was super exhausting. We have been working like hell, and sometimes we were called the zombie team. But there was this team spirit because this project was so awesome. And even though it was exhausting, it was great. And still at IBM - I then moved. Yes, I changed. I moved from a more technical software leadership role to a more commercial, business and customer-facing role. Again, after having been in this technical world for many years, I wanted to gain a deeper understanding of the market the competition, intensify my work with customers and act more as a technology evangelist, and not coding all day long. Moving to an offering management role allowed me to do exactly this. Looking back this was one of the best career decisions I've ever made. I learned so much about dealing with customers and how to solve their problems by not only looking at things from a technical point of view but from a product market and business case perspective. Understanding the domain, their pain points, the demand that helps me a lot in fostering a client-centric mentality in my organization. Pushing corporate research. In 2019, that was just a wonderful experience in addition to what I had done before because this gave me the chance to learn about entirely new topics. Having moved to Bosch IO, this brought me back home. I'm back into a pure software unit that drives forward topics very close to my heart, but now with having taken over a C-level position. I have been given yet another chance to learn new things. Not so much technical things, but rather things that have to do with successfully running an organization and its employees and everything that it requires. What are the key insights you asked? I believe that that every change has something good and is an opportunity to learn and grow. Although it may also bring some uncertainty; I would recommend to everybody out there don't be a coward. Leave your comfort zone, and change whenever it's time to do so.

Another insight is that understanding technology is a good basis to build upon but never sufficient to succeed. And I see that at Bosch very often, we're a very tech-driven company. You need to understand the market and competition. You need to understand it to be able to work with and design solutions for customers that work. Even if you have a good understanding of technology, market, and competition, the problem is what you learned today may already be outdated tomorrow. The key is that you have to learn how to learn. And maybe another insight that sticks out is that it's key to assess the business potential of what you're doing before designing a technical solution. I see so many people doing it vice versa. We first invent the hammer, and then we look for the nail. I don't think this is the right way to do it. And then maybe a very German problem- when designing and developing the technical solution, I recommend not to strive for a 200% solution upfront. I recommend, start simple and iteratively adapt by mirroring each step you go with your customers.

And last but not least- now being in a leadership role, when leading teams, never forget that culture eats strategy for breakfast. This is a saying many know, and it's so true. So always provide your team with a purpose. Provide them with the environment they want, giving them psychological safety. Set clear use habits and rely on principles like human or positive leadership, act as a servant leader, give empowerment and trust. All these things matter and are important to run an organization the right way. And my last key learning is that one can survive at Bosch wearing a hoodie instead of a suit, if follow top management rules.

[00:12:44]

Ken: I love that last one particularly, but all excellent advice there. It's interesting because if you think of technology, I've always considered it the catalyst for change. It's an opportunity to create change based on technical functionality or capability. But that doesn't take- that catalyst doesn't equal change. It requires a process you need to work through. A background in sales, understanding customer solutions, and law - again, the societal rules that go around are all required to effectively turn this sparker catalyst of technology into a solution run at scale. And so, it's interesting when it comes to the role of Chief Digital Officer. Particularly early on, and we saw the technology catalysts, I'll call it the CTOs. They decided that CDO sounded like a great title and took those on. And as time has gone forward and I am thinking more about the digital industry, we now see those who are change agents. Grounding in technology is critical, but the ability to take that technology and create sustainable and resilient change is an important attribute to have. What you talked about shows that balance of technology and impact, catalyst, and impact. Kudos, it sounds like you've learned a lot in a short time. Speaking of short time, I've noted how quickly you've risen to become Managing Director, Co-CEO, and CTO of Bosch- a nice long title. Tell us a bit about this division and particularly your remit in leading it?

[00:14:23]

Andreas: Sure. So, what is Bosch IO? Bosch IO is one of the software units of the Bosch group that sends an essential puzzle piece part of Bosch's entire digital transformation journey. And then we are about 800 people distributed across the globe, who bring together the expertise of engineers, developers, product specialists, and digital transformation experts. We have a broad range of people with different expertise. And we do both. That's important; we do both. We do the project and product development business. We offer our customers IT consultation service and help them successfully conduct their products or projects by co-developing. But we also have products and solutions that we develop, maintain, and operate in the interest of our customers. And both go hand in hand. If you want to have the right products for your customers, you need the proper input. And these project teams that do consultation and/or co-develop with our customers provide the underlying development teams exactly with the steering so that we can develop products and form a portfolio that matches our customers' needs. If you look at the products that we have, they fall into fields like e-commerce, user management, and IoT, of course. Concerning the latter, we offer a full-blown IoT stack that is heavily based on open source, by the way, and can run on totally different platforms, so it's vendor agnostic. And it allows to connect devices to the Internet to analyze data, retransmit, or continuously manage and update elements and stuff like that. What we currently see- especially for our consulting and project delivery business- there is a great demand for the competencies we have and what we offer.

In January, most of our employees were already booked for the rest of the year. This situation could be worse, but it shows how important the broad range of competencies is. Regarding your second question, my area of responsibility and what drives me every single day are 2, 3, 4 main fields where my tasks fall into. I think the first is strategy. One of the most important tasks currently on my plate is to shape together with a strong team, a clear vision, and a technology vision and define a clear technology roadmap, describing what we want to offer and what we do not want to offer. Because we are still a very young company- I'm not sure if you know that, but we were founded in 2020, so we are not that old. And we are still about to shape this coherent portfolio of things, allowing us to satisfy our customer's needs. But based on the inputs that we spok about, that comes from the consulting and project delivery units.

And what is key for us is to constantly exchange with our customers and partners to develop the right thing. Simply, to understand their pains and demands and create trust for a relationship. Because you know what? Business decisions are mainly made between people, and some people underestimate them. They are often about relationships and not necessarily about technical functions. If you have a trustful relationship with a customer, that can make a huge difference if you build that up over time. So that's about strategy. I think another set of tasks falls more in the field of efficiency. This is a painful task for me, but I need to do it so the others can focus on their tasks. But this includes removing obstacles, removing impediments for my people. That's one task that falls into the efficiency space. And since we need to move quickly, we are an IT company, that's super important. And increasing efficiency also requires changing a lot. We have been speaking about change. For example, to change, we collaborate and make decisions. This is currently a huge topic in our organization. Just one example, if you have a leadership team of 25 people, and everybody wants to be involved in everything, it's hard to move quickly, but we need to. We are currently experimenting with many things, splitting the leadership team into smaller speedboat teams to prepare tasks in parallel before being decided on them in the product group again and then to scale. We try to intensify using the power of the rest of the organization by including more of our talents and experts. So, these are the things that we try to do to become more efficient, and we have some additional things going on that we let run under the slogan, 'stop stupid stuff.'

We call it that. It's where we refuel beatings, processes, and so forth and assess carefully if you bring value. And the last thing that drives me currently is people and culture. Honestly, resolving conflicts eats up a lot of my time. That's just a bitter truth. And sometimes it feels a little bit like being in kindergarten, wondering if all the people around are adults, but it doesn't help. You have to take all these issues or these problems seriously. And I think that in this context, it's key to foster the right culture, which we, to some extent, have formally defined in what we call the IO spirit. And I truly believe in what I mentioned before that it's crucial to set clear values and habits. Only then can you provide people with the already mentioned psychological safety and an atmosphere where they want to work. And that then allows them to work with passion and motivation, resulting in high performance.

[00:20:19]

Ken: We, of course, featured two of your colleagues from Bosch, as I said earlier in this podcast. Tanja Rueckert, your new Chief Digital Officer, and Dirk Slama, who leads the AIoT User Group, which Momenta is proud to call itself part of. Each of them described Bosch as being in the middle of one of the largest transformations in its history. So, while your division was founded in 2020, if I do my math correctly, your company is about 136 years old. Making this transition from traditional hardware or electrical manufacturer to a leading AIoT- AI plus IoT company, how does your work support this broader transformation that's taking place?

[00:21:06]

Andreas: As I said before, I think my entire organization is at the center of this transformation because we have those people with the right competencies required to master this transformation. We are even seen like that from the outside world due to being one of the most innovative units within the Bosch group. We can still attract new talents, even in a very competitive market. There's a lot of fighting for the best talents. So sometimes, to explain that a little bit metaphorically, I also see my unit as a smaller soccer club where we get the young talents and educate them. We train them and make them understand the rest of the big Bosch. And then we transfer them to other units, other soccer clubs that are part of Bosch. We are like the education unit because we are to the other worlds, maybe one of the sexiest units, and we can attract these new talents. We try to fetch them from the market and then transfer them from time to time to the rest. And help the rest of the organization also to master the transformation. That's about talents. But this broad set of competencies also allows us to address our customers' needs. And it's no matter if it's about consulting or jointly conducting projects, or about developing products they need. This is what we can do to help all our customers.

The key thing here is that this set of competencies allows us to act vendor and technology agnostic. And that we really can deliver solutions on different platforms. It can be our platform if it makes sense. It's our product. But it can also be something that we build on top of other platforms like AWS or Azure; that's fine. In the end, it's all about making our customers happy and less about selling a specific technology as if you would sell vacuum cleaners. And that's very important. That's what I meant before when I also touched on this. It's important to have a good, trustful relationship with your customer. You can only have that if the customer has this feeling of- okay, I can go to these guys, and they will provide me with an honest assessment. What is the best approach to tackle my problem? They will do this consulting; they might try a project with us. They have all the products. They may use them in this project, but if it doesn't fit, they will let me know and build something on top of AWS or Azure, for example. And I think the biggest strength is that- due to this broad range of competencies, it can help our customers quite holistically. Meaning we can do more than just provide technology consulting or stuff like that. You can help them with all relevant steps to digital transformation. For example, assessing business models or defining a go-to-market approach. We just recently launched what we call 'go-to-market as a service. So it's not about products only. It's not about the pure technology side of things. We are a partner for the rest of the Bosch units that can help tackle this transformation holistically.

[00:24:25]

Ken: There's a term that probably goes back to GE Digital in the day, talking about software-defined business, per say. And I subtitle this podcast software-defined business because this key enabling role, you're providing is powering a lot of that. What do you see as the largest challenges to moving Bosch and perhaps some of your other clients to be truly software-defined businesses or organizations?

[00:24:53]

Andreas: That's a tough one and a tough one for Bosch to solve. Bosch is a very tech-savvy company. This is a lot of super valuable domain knowledge that falls into a broad range of different domains. But in my opinion, the key to success is to turn all that knowledge into new digital business solutions. In this sense, many challenges lying in front of us are more business than tech problems. And the first step is all about understanding the value of data and coming up with ideas to monetize. For example, suppose you have driving information that reveals road conditions. In that case, you could easily sell this information by offering a road signature service. Then you can access that service running in the cloud via some API whatsoever. But to do so, you first have to detect this potential before turning it into a technical solution. And many people that are currently part of Bosch have grown up in a different world where IT has not been playing this role. They are not automatically thinking like, "Oh here I have data, we can sell this data to a digital way by making this a service, by exposing an API, by monetizing this following a freemium premium whatsoever model." They are not so digitally native that they think like this. They are more like, "Okay, this is the tool that I have." And now I need help that somebody explains to me what else we could put on top of the two, maybe a digital service, to provide additional value. Which is what I've mentioned before is coming into play. We holistically do this consultation, so we even help them detect this potential. Then we go the full path from detecting potential to turning things into a technical solution. That's the one problem; you have to get this feeling of- well, can I sell something digital and stuff like that? Apart from that, there is still room for improvement in the art of software development itself. Let me give you some examples to better understand the potential for providing developers with the right equipment and tooling. We are getting better and better, and I don't think I would compare what I currently see at Bosch one-to-one to what I've seen at IBM, for example. There's still room to improve, and there's still potential for developing according to the latest and greatest software development principles. And even though some business units have for sure made more progress than others, there is room to improve.

Maybe the biggest challenge in this context- there is still potential to get rid of what I usually call hindering processes not fitting to a modern software development company and being relics of former times. And the task is to redefine such processes to allow for more efficient software development. The good news is that all these things are currently being tackled. For instance, we have found that- maybe you've heard of what Tanja mentioned- they found a grassroots initiative called the Developer Advocate Network, which brings together software people across the entire Bosch group to resolve these problems. And the last thing that I would say is that a big problem is more related to culture and our historical heritage. Given Bosch's history, some software developers still feel less valued than people in other engineering disciplines; others struggle with hierarchies. Some miss a proper HR mindset and a proper failure culture.

Others have the feeling that they are not allowed to work according to the more modern principles like pair programming; others have to feel they manage to understand the need to invest so much in things like automation and test coverage. And some feel like not being offered proper career paths when being a software engineer. The important part of the message here is that these things have been realized and addressed. And they already mentioned the Developer Advocate Network that represents the interests of all of our software developers across Bosch. For example, currently, with other stakeholders like HR, defining new career paths and options that you can pursue and new talent selection processes to make things way better. There are a couple of challenges falling into totally different areas, equipment, culture, and the ability to see the potential for digital business. We have realized that, and we have created initiatives to take our problems and lead the organization to success quickly.

[00:29:37]

Ken: Excellent. Perhaps two quick questions because I'm fascinated by your role relative to these digital industry applications. One is a perspective of cloud and Edge, given all of the interest in Edge. And Bosch arguably has its roots in Edge. Secondarily, because you mentioned it earlier, a perspective on the use of open-source. Because when I think of mission-critical applications, there seem to be differing schools of thought about the role of open source and, frankly, the role of cloud in those as well. I'd like to put you on the spot for those.

[00:30:13]

Andreas: Let me comment on cloud and edge computing first. And I think there is no doubt that they have become the key technologies to try digital industry applications. As we all know, Cloud computing democratized access to computing, allowing everybody to start small and scale-out later. We choose initial investment costs. The key driver here is this unbelievable cross of cloud service ecosystems that now is available - not only compute and storage. This was the beginning that now provides access to AI, machine learning, blockchain, random computing. It allows for developing more sophisticated solutions than ever before, just because you can build on so many things already out there. And the global availability of data centers. Data centers are being created every single day out there, allowing to roll out solutions worldwide in a very easy way. Just as a word of warning, it's all great, but I need to make people aware that there are some things to take care of. The biggest players are still US companies. AWS, Microsoft, Google. And yeah, this gives some people ideas, and especially in Europe. Maybe even more in Germany, which is also why initiatives like Gaia X started because Europe tries to answer this. But it's not only the governments. Companies also understand the potential risks a bit better, and most of these risks center around lock-in risks and the risk of unwanted access to business-critical and sensitive data. And that's why we see these trends in private, hybrid cloud deployments rather than just using public ones. We see many companies going for a multi-cloud approach which, in my opinion, needs to be sought through very well because even this can mitigate some of these risks. It also can drive complexity and cost quite quickly. Even so, there is some tooling. Although cloud computing is used more intensively; we currently also see the Edge computing as being a rising star. And that's because we see this data explosion caused by more connected devices that sometimes limit the applicability of the cloud technologies to do the transfer cost due to the need for super-low latencies or whatsoever. Sometimes, you also want to process your data at the Edge for protection reasons. Meaning you want to avoid your valuable data leaving your own house, so to say. And sometimes, you need to process data where you don't even have Internet, and then you need Edge computing.

Both go hand-in-hand, and we currently see this explosion of services on the cloud side of things- allowing you to quickly develop new solutions coming with this price that you have to pay off the risks that I've mentioned; locked-in and unwanted inspection of data. You have to be a little bit careful, but there are mitigation options you can look at. And we see at the same time that the Edge is becoming more important. Open source, but I think it's no secret. You've already mentioned it. I'm a big fan of open source. And not only open source, but even inner source, which is about applying the idea of open source within companies. And I became a fan of open source, not just yesterday, but years ago. As already mentioned in the beginning, when I was still at IBM, we developed one of the first open source serverless compute engines on the market. Apache OpenWhisk later became an integral part of IBM's serverless compute offering. The advantages of open source, in my opinion, are still the same as they have been when I was driving Apache OpenWhisk. You now have more workforce and tens more momentum that you can bring behind the entire project. It usually leads to higher quality because more people are looking at the code, reviewing the code you're writing- you mitigate lock-in risks as the source code is freely available.

Looking at what I said in the context of cloud computing, open source can also be one vehicle to mitigate that risk a little bit. It can mitigate locked interest because more than just one contributor guarantees business continuity. If you rely on just one vendor, what if this vendor vanishes? But if there are ten people behind, then it's pretty cool. And for exactly these reasons, by the way, we developed most parts of the Bosch IoT Suite, one of the most important products that we have, also as open-source to a huge extent. We are proud members of the Eclipse community. Even though I'm a big fan of open-source, I strongly recommend developing something open source only if there are good reasons, not just because it's cool. And the reasons can be the ones that I've mentioned. You need to find a way to put more workforce behind. People ask how you mitigate- or customers ask how you want to mitigate lock-in risk or guarantee business continuity. Then the answer can be open-source. But think this through because I'm saying that you have to invest in coming to a working open source strategy. It's more than just pushing code to a repository, it's about partner and stakeholder management to create what I call a vibrant community, and this is work. By the way, the inner resource is even more difficult because you must fight against this typical intracompany not invented here syndrome, if you know what I mean. And probably motivate people to be willing to contribute in real, so there it gets even more complicated.

[00:35:46]

Ken: Andreas, this has been an insightful discussion. I appreciated the deep dives at the end on cloud and edge and this idea of open source and inner source. Thank you for sharing this time and insights with us today.

[00:36:00]

Andreas: You're very much welcome. It was a pleasure talking to you, and thanks a lot for the invitation again.

[00:36:05]

Ken: Yes. The pleasure is mutual. This has been Dr. Andreas Nauerz, Managing Director, Co-CEO, and CTO of Bosch IO, a global interdisciplinary expert organization driving Bosch's AIoT strategy. I might also add he is Bosch's resident hoodie now, so we're proud to have one of the change-makers there in the C-suite of suits. Thank you for listening, and please join us next week for the next episode of our Digital Thread podcast series.

[The End]