Lessons from Corporate Innovators

Corporate Innovation Reimagined: Karsten Rönner’s Vision of AI and Emerging Technologies at Bosch’s grow platform

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Episode description:

In this podcast episode, we welcome Karsten Rönner from Bosch’s grow platform, who shares his journey and insights into AI and emerging technologies. Discover how Karsten’s entrepreneurial background influences his leadership at Bosch, shaping the company’s innovative approach in adopting advanced generative AI.

The episode highlights how AI has revolutionized Bosch startups, showcasing its impact in the competitive tech market. Join us for a fascinating dive into the world of AI-driven innovation at Bosch.

Show links:
Bosch’s grow platform website: www.growplatform.com
Aquaeasy: ​​www.aquaeasy.life
Bosch Industrial Additive Manufacturing: www.bosch-industrial-am.com/de
LinkedIn: www.linkedin.com/in/karsten-rönner-8542a

Transcript:
[00:00:00] Sean Ammirati: Welcome to this week’s episode of Agile Giants. I am so excited to have Karsten Rönner join me. Karsten is an incredibly successful entrepreneur who has spent the last few years taking that experience and helping a global scale organization be more entrepreneurial. Karsten Rönner serves as the general manager and senior vice president of Bosch’s grow platform, spearheading the global identification, incubation, and scaling of Bosch’s internal startups.

[00:00:39] Sean Ammirati: Karsten offers some very unique insights in this conversation around AI and innovation, and I really think you’re going to enjoy this week’s conversation. Also, just one programming note before we get into the conversation. I’ve gotten really positive feedback on this season, and we’re going to take a quick break here to have a few more conversations recorded and then we’ll run them again. People have been asking for more conversations, actually like today’s conversation, where we really dig into the nuts and bolts of how companies apply this. And so we’re going to try to grab a few more conversations of this and sort of do a second part to this season. So please stay subscribed, comment, like, all those things so that it can be available for more people in your network.

[00:01:14] Sean Ammirati: But again, hope you enjoyed this week’s conversation with Karsten Rönner from Bosch. All right. Well, Karsten, thanks again for joining me. I got into this a little bit in the introduction, but could you talk a little bit about your entrepreneurial career before you got to Bosch, and then we’ll get to what you’re doing at Bosch. 

[00:01:39] Karsten Rönner: Thank you, and with pleasure. You know, I looked into it and then, it occurred to me, it started at school, actually. And this is the usual thing, like, oh, you know, when I was a child, but it’s actually true.

[00:01:52] Karsten Rönner: I was a teenager. We did a newspaper, a magazine at school and, we discovered we need money for it. What a surprise. So, my first title was editor in chief. Sounds great, right? I dropped that and I started to do the fundraising for the magazine. And we made so much money we could feed ourselves with cakes and have drinks while writing the newspaper. So that’s my first successful business. Then I went to university and for a long time I didn’t do anything. And then, when I was working for Infineon, a Siemens semiconductor in Japan, I had a business idea and, this was pretty, pretty good.

[00:02:39] Karsten Rönner: So I pitched at headquarters. They told me, if you want to do that, you have to go to Silicon Valley. We have already a team in a similar business setup and you have to join them and there you can do it. So my family and I, we packed up our lives in Japan, moved to San Jose and I started in San Jose this startup.

[00:03:01] Karsten Rönner: Super fun, super successful. We grew from some 15 people in the beginning of ‘99 to more than 300. And revenues grew accordingly. So it more or less had a constant revenue per head over time. So it was really, really great. And after that, then the startup bug really bit me because it was such a fantastic experience.

[00:03:36] Karsten Rönner: So I quit in Silicon Valley at Infineon and joined a German startup. So I joined that startup spin out of the rest of the university. And in that startup, I had my first really significant business turnaround because when I arrived, they had a business model of selling IP, this wouldn’t fly, but we have well funded.

[00:04:09] Karsten Rönner: So we looked into how can we use that IP in a real product. We found something very quickly and after one and a half years, we sold the startup to Philips semiconductor because we had developed a WiFi chip set, which was dual band. One of the first dual band WiFi chip sets 2.4 and 5 gigahertz. And we, because of the IP we had, we could do it very effectively and efficiently. 

[00:04:34] Karsten Rönner: So Philips liked that. We sold. Then everybody went into large companies. One of the co-founders went back to Bosch. We’ll get to that a little later. He became a CTO of Bosch, and the others then joined Philips. But not me, I felt like no, no, no, no. I’m not done yet with this entrepreneurial thing.

[00:04:56] Karsten Rönner: So, I joined a few friends in London and we set up an M&A advisory firm. Remember, this was 2003. Tech bubble had burst all the big IPO at those IPO advisors. They all went belly up because there were no IPOs anymore. And, we then started a boutique M&A advisory firm, which was cool because I worked with so many startups trying to sell them.

[00:05:29] Karsten Rönner: And what I discovered is holy cow. There was a reason why we were hired. They were all unsellable. But then we sold them, which meant we, while selling, we actually transformed them into something meaningful. So it was very hard work, learned a lot, and was a lot of fun. But then M& A Advisory is a rather repetitive work, right?

[00:05:54] Karsten Rönner: So I got bored. That’s me, when I do repetitive things over time, I get bored. And then, my old friends came back and said, “Hey Karsten, we have a fantastic idea. Here is the startup we want to do”. And I said, “Well, sounds good. Let’s do that”. So, I kept going for another one and a half years with M&A advisory, but on the side, we developed that startup.

[00:06:21] Karsten Rönner: Then I joined them shortly thereafter. We sold it to Intel and, then I did another one and another one. And so in total, I co-founded five and I was involved in a lot more. And then one day, that gentleman who had started this initial startup in Dresden, which I joined and who went back to Bosch and became CTO there, he called me and said, “Hey, Karsten, we need someone who knows how to do startups because we have such an incubator. And then I joined Bosch. So yeah, long story.

[00:07:02] Sean Ammirati: No, it’s perfect. I’ve always introduced you as five successful startups, but I think with the newspaper now we need to make that six because we gotta be intellectually honest here, but either way, five or six is a pretty remarkable track record.

[00:07:19] Sean Ammirati: I do want to get to what you’re doing at Bosch. But maybe before we get to that, just the skills that you picked up from this entrepreneurial journey, how do you think they’ve influenced the approach you’ve taken inside a company as big and substantive as Bosch is as an organization.

[00:07:42] Karsten Rönner: Building an internal startup is different from building an external startup, but only in so far that, the means and the fundamental approach are somewhat different. At the means in that you don’t need to go fundraising. You have access to a lot of IP, to development resources, to a legal text, whatever you want, right?

[00:08:09] Karsten Rönner: So this is super powerful and that relieves you of a lot work that you need to do when you have an external startup. But when you want to build a business, it’s the same, there is fundamentally no difference between building a business and an external startup and building business in an internal startup in an incubator.

[00:08:35] Karsten Rönner: So it was super valuable that I did all those startups and I’m very convinced that I’m still benefiting from it, although then there are lots of other things you need to learn when you run an incubator in a large company.

[00:08:53] Sean Ammirati: I think we would get into more of that now, but let’s start just not everybody who’s listening to this will be familiar with grow and the grow platform inside Bosch. So maybe just almost everybody will be familiar with Bosch, although maybe a minute on Bosch. And then a couple of minutes on the Grow platform would be helpful context setting for the conversation. 

[00:09:15] Karsten Rönner: With pleasure. Yeah. Bosch is the world’s largest supplier of car parts. We are the tier one supplier to almost all OEMs in the world. Bosch has more than 420,000 associates. Close to a billion US dollar in sales and present all over the world. So that’s kind of the context. And within this gigantic company, we are trying to create new businesses and obviously creating new businesses for such a giant means you want to create something really big. It has to become commensurate to the size of the company because otherwise it would be meaningless. Why would you do it if it wouldn’t have any impact? 

[00:09:55] Karsten Rönner: For grow platform, our charter is exactly what I just said. Build new businesses. But build it outside of the core business of Bosch. So look into areas where we can support the strategy of Bosch, where we can leverage. And what we call the DNA of Bosch. I mean, every company sort of has a character. Bosch’s character is its technology company. It is serving certain markets, industrial, automotive. Also in some way, the consumer markets through our Bosch Siemens household appliances business and our power tools business.

[00:10:48] Karsten Rönner: And so it’s a huge conglomerate, 60% of that is automotive. So that’s kind of the setup. And grow, we work a little bit like venture fund in that, we are continuously pulling in new startups and we are of course exiting, some of those that we have in our portfolio, the majority of exits so far have been positive in that they joined Bosch. In some cases, we have to shut down businesses as usual. That’s how it goes when you are trying to set up startups. And in general, I think the main difference between the VC fund and what we are doing really is that we are acting more like an accelerator.

[00:11:45] Karsten Rönner: So we have lots of resources that can support the startups in their growth. And there are two elements that we kind of need to cover. One is, since we are part of a large organization, there’s a lot of reporting requirements, legal requirements that you have. And we are shielding our startups from that by taking care of it.

[00:12:06] Karsten Rönner: So on their behalf, we’re taking care of everything that just needs to be done in a large company. And secondly, we are giving them a lot of to grow their business very quickly. On one hand, we’re a global organization. We have eight innovation hubs around the globe, literally everywhere from Japan all the way.

[00:12:31] Karsten Rönner: And that means our startups can very quickly scale. So wherever they want to go and they should go global very quickly because remember we want to build very big businesses.

[00:12:58] Karsten Rönner: And when you build big businesses, you have to make sure that you don’t leave too much room for the copycats. If you just grow in one market and you are not attacking all the others and others have time to build competitive businesses. So you want to go global very quickly, and we can do that because Bosch has a global footprint.

[00:13:17] Karsten Rönner: All of that, gives us a lot of strengths,, and we are working in a little bit like we’re trying to emulate institutions like Y Combinator where we very intensively work with the startups from the outset to give them all the support so that they can grow very fast.

[00:13:38] Sean Ammirati: Right. That was perfect. I think one thing though the Bosch sales, I think are more than a billion. Maybe I misheard you, but I think it sounded like you said, that’s what I thought it was a hundred billion, right? 

[00:13:52] Karsten Rönner: Yeah. And you know, I tend to be humble, but not that humble.

[00:13:56] Sean Ammirati: I was gonna say, I think there are plenty of grow businesses that I think may be doing a billion at some point. Yeah, a hundred, but it gives people a sense of the scale, right? Like if it’s a hundred billion in sales. When we say meaningful, these need to be meaningful, right? And you’ve reintegrated some back in some like every venture capital fund or entrepreneurial experience.

[00:14:19] Sean Ammirati: Some didn’t work out. Then some even have spun out and raise venture dollars as well. So you’ve got these kind of multiple success paths. What do you think are the unique opportunities and challenges? That you’re part of Bosch versus if, you know, you and I just raised a hundred million dollars and did grow outside of any organization, just you know, beta works or science or Y Combinator Studio, but what’s unique about doing this inside a place like Bosch.

[00:14:54] Karsten Rönner: Let me start with the opportunities. Opportunity, already outlined, that is where we have, it’s very not easy, but it’s comparatively easy to go global. It is comparatively easy to get access to development resources, the latest and greatest. We’ll get to AI-enabled because of Bosch. So there are lots of resources and not only in terms of financial resources but all other resources that’s great. Then of course, you have the challenge when you are part of such a huge conglomeration that has been described already in the 90s and that’s the innovator’s dilemma, right?

[00:15:38] Karsten Rönner: So the innovator’s dilemma, I really start to appreciate that after I had joined Bosch before I read the book in the 90s, and I thought I had an idea, but of course, when you are a manager in such an organization, 99% of the managers learn how to be efficient. Being efficient, you know, driving down costs, doing things better, and so on. This is at the heart of such a company, and this is why it’s a great company, and it’s very, very important that people are good at it. Now, if you want to create a startup, you have to be effective, and that’s an inherent conflict.

[00:16:36] Karsten Rönner: Being effective means you don’t look after the very last dollar you try to reach something, you try to create something, and that is sometimes seen as a crazy approach. what the heck are they doing? They are a small startup. They should they should look more after how much money they spend. They should try to break even earlier and that’s not just not working. If you want to create a business, we all know that the J curve is the J curve. And it’s a J curve, whether you’re in a large corporation or whether you’re externally, it doesn’t change. 

[00:16:55] Karsten Rönner: And these dynamics, these startups dynamics that we know because we’ve done startups and of course not well known inside Bosch. And I had to do a lot of teaching and Ithink I’m more successful because here’s number two, what I found what is really important. Initially my reaction, when I discovered how large this innovator’s dilemma is that I felt like, oh, why don’t we try to be more, you know, shield ourselves from the rest of the organization. That’s not smart. I found very quickly that’s not a smart approach. And smart approaches is to build respect, build an understanding for the very different skills that the entrepreneurs or the intrapreneurs, as we like to call them at Bosch, have versus the managers.

[00:17:52] Karsten Rönner: And both skill sets are super valuable and very hard to learn. And what you need to build is this understanding and the mutual respect for what you’re doing. So that ideally, you leverage these respective skills of the other party. And I think we’ve made very good progress and in that regards, it took a while, because it’s a huge learning process. So those are the key elements would say. 

[00:18:24] Sean Ammirati: That’s great. I mean, first of all, I’ve been around Bosch for a long time, but I’ve gotten to know you and I think you’re being humble there, you’ve done an incredible transformation, which is awesome. I also think though, this efficiency versus effectiveness point is one that for people who are listening to this, who have sold to large companies, but never been in a large company. I think no matter how much you think you understand the point, listen to that again, because you probably don’t enough. I mean, I was chuckling because the reference to innovator’s dilemma is exactly right. Like you can intellectually read that book and understand the points made in it. It’s very different when you actually live it.

[00:19:13] Sean Ammirati: My own journey was certainly six years of doing that through the Corporate Startup Lab. Like it is just different inside a company. So I thought that was brilliant. I’d encourage people to kind of re-listen to that again, especially if you don’t have a lot of corporate experience.

[00:19:28] Sean Ammirati: And then if you do, maybe you haven’t been as effective at the learning and development aspects of this as Karsten has. So before I do want to get to technology leadership, but Karsten, I do want to just take a moment. What do you think have been some of the ways that you’ve effectively kind of educated and driven this cultural change inside Bosch of this sort of becoming more okay with the J curve and the need to worry about, kind of thinking about things differently for this 1% versus the 99% of work going on inside Bosch.

[00:20:04] Karsten Rönner: Two elements in my view are crucial. The first is you have to build joint agreement on what constitutes success. So what is the ultimate metric on which you measure success? And, I could convince people that it is about having, growing, winning external customers, growing very fast, but with a business model that inherently highly profitable does not mean to be, you don’t burn money initially. Of course you do. It just means that as you, as you grow and as the scaling kicks in, then the marginal cost is going down very steeply. And so eventually, you’re going to be very profitable at this understanding, Educating people about this logic and this metric was the first, very important element. And it took a while.

[00:21:09] Karsten Rönner: Bbut I think they are all smart people, so they got that. Then came number two, and that was all in my hands or not in mine and in our team’s hands, in the hands of our startups, you have to have successes. If you don’t show success, you know, then people will not believe you, and of course that’s a fundamental proof that what you claim is true. And so we had fortunately had a few successes. So we are showing the metric at work. And that changed a lot of things. 

[00:21:48] Sean Ammirati: That’s great. I like both of those. Success is hard to argue with, right? So that’s just a great thing for all of us to remember. So you alluded to this earlier, but Bosch has a long history of technology leadership.

[00:22:03] Sean Ammirati: And we’re in a moment of as much technological change as we ever have been with. The rapid advancements in AI, especially generative AI. How is Bosch kind of looking to stay ahead of the curve, and sort of integrating those latest advancements into the work going on at Bosch? 

[00:22:24] Karsten Rönner: Bosch absolutely is a technology company and the interesting thing about AI and Bosch is. That we have been using AI for a very long time. We have been using it mostly internally and for production processes. There is a long history of applying AI in all ways. I mean, from machine learning to even generative AI and the early beginnings and so on. And Bosch is one of the pioneers, by the way, also, of course, in autonomous driving, which is a huge AI application.

[00:23:06] Karsten Rönner: So a lot of AI application has been around in Bosch. We applied it initially, mostly internally. Now we’re starting to also sell it externally and Bosch has set itself the goal that there is no product  that is not either designed using AI or using AI inside the product. And of course, both is permissible at the same time.

[00:23:33] Karsten Rönner: Sure. And this holds also for the startups we’re doing. So there is only one startup that at the moment is not yet using AI, but we are already designing into the manufacturing process the use of AI, because we all know this is where the competitive advantage comes from. So I would say from a AI usage in products point of view, we’re pretty good.

[00:24:02] Karsten Rönner: I observe that we have a huge opportunity in using AI also for creating startups much faster. And here is why. Let me put it very, very clearly, the most limiting factor for how quickly we can be successful is actually the education of the team. Because most of our teams come from internally from Bosch, they have not done a startup before.

[00:24:44] Karsten Rönner: So how quickly can they learn the skills how to run a startup and it is very different we said that right. Effectivity versus efficiency and so on. So how quickly can they learn? I am convinced that we can apply AI to a huge effect. I’m very, very convinced that we can help our entrepreneurs to grow much faster by using LLMs and maybe some other tools.

[00:25:17] Karsten Rönner: You and I are looking into it and I’m absolutely convinced that this will bring us to the next level of performance because that’s really where the rubber hits the road. How quickly can the team become effective in building that startup? They have to learn so much

[00:25:46] Karsten Rönner: There’s a lot of learning and knowledge involved in building a startup and these teams have to acquire that. And I’m very, very sure that AI can help them a lot to acquire that much faster and also to apply it much faster. So that’s where the biggest level of AI for grow sits.

[00:26:12] Sean Ammirati: Yeah, I agree. Even every week as we work on this project together, I get more excited about it. I actually spent more of my holiday than I should have writing Python code to continue to advance that. So, it’s all good. It’s all good.It’s early mornings and late at night, but I think we’ll have to, we’ve never done this before, but we’ll have to have you back in six months or when we start to have some stories to tell her on that.

[00:26:43] Sean Ammirati: But let’s not miss the first part of it too. Because not every company is as far along as you all are on integrating it into your products and services. Maybe just one or two examples of growth startups and how they’ve used AI in their products or services. 

[00:27:01] Karsten Rönner: Yeah, as I said, all of them basically 

[00:27:04] Sean Ammirati: I’m saying just pick one or two. 

[00:27:06] Karsten Rönner: Exactly. And it’s a huge range. So it starts with, we have a 3D plastic printing startup that is developing 3D printers in a completely different, different way. It’s all software defined and there is AI controlling the entire printing process and that enables us to do things that nobody else can do. For example, print whatever plastic there is in the world, which is unheard of.

[00:27:36] Karsten Rönner: To the other extreme, we have a spin off. So a startup that we generated, which we have spun off, looking for a VC financing called Aquaeasy, and they’ve started with analytical and machine learning and AI for water quality analytics, but meanwhile, they can read from the sound that the shrimps are making.

[00:28:10] Karsten Rönner: They can understand if they’re hungry, if they are sick, and they are shedding their outer skeleton from time to time. And when this happens, you should not feed them, so they understand this behavior. And the more data we accumulate and the more we learn, the better we learn how to interpret the acoustic signals, the more we learn about it.

[00:28:36] Karsten Rönner: And that helps us to increase the productivity of shrimp farming and also the risk of the shrimps getting sick tremendously. And it wasn’t like our goal we set out to do that. We discovered it while we were doing it. We discovered how much more we can learn.

[00:29:19] Karsten Rönner: So you really from this machine oriented application all the way to understanding the behavior of animals. We are applying AI in all sorts of way. 

[00:29:36] Sean Ammirati: Yeah. We’ll include links to these in the show notes. What are the names of those two startups? 

[00:29:42] Karsten Rönner: One is Bosch Industrial Additive Manufacturing. And you find them on our webpage by the way, growplatform. com. And the other is called AquaEasy.

[00:29:59] Sean Ammirati: Perfect. Perfect. Well, I could keep doing this forever, but let me just ask you maybe one more question here, which is, you started to talk a little bit about how generative AI is going to support innovation and some of the experiments we’re doing, you have a very good capability in addition to the other things that you and I have collaborated on too.

[00:30:24] Sean Ammirati: I think you also understand where these trends are going and move an organization towards that. So when you think about the future of AI-driven innovation, what do you think that looks like for organizations like Bosch?

[00:30:37] Karsten Rönner:  It’s on its way. It’s not like I have to look way into the future. I can really, I can see it. I can see it today. And you’re right. It’s not only about using LLMs to educate the entrepreneurs. It is also about using AI and LLMs and other artificial intelligence tools to create products faster, test them faster,, bring them, communicate better about the product with customers.

[00:31:11] Karsten Rönner: There is a lot more. I really believe that we cannot fully appreciate yet how much in just a few years our working life will change because of the application of AI, it will permeate all areas of what we are working on. And this is just the nature of it because the more we use it, the more intelligent it becomes, the more intelligent it becomes, the more we can use it. So it’s a self propelling upward spiral. And I’m really curious to where it will lead us.

[00:31:56] Sean Ammirati: There, there is a real data flywheel here for sure. Yeah. Karsten, I really do appreciate you taking time to connect with us today. We’ll make sure to include links to social media, but what’s the best way for people who want to learn more to, to stay aware of the projects that you’re working on the grow platform.

[00:32:24] Karsten Rönner: Yeah. The grow platform webpage, and we also have grow platform on LinkedIn, of course. I personally have my own LinkedIn account, easy to find. My name is pretty unique.

[00:32:53] Sean Ammirati: Okay, perfect. We’ll get all three of those URLs into the show notes then.

[00:32:56] Sean Ammirati: Well, Karsten, thanks again so much. I really appreciate you doing this and hope you have a great day. 

[00:33:00] Karsten Rönner: Thank you very much, Sean. My pleasure. Thank you.

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