For almost three years, Mario Pieper has been Chief Digital Officer of BSH, Europe’s largest and the world’s second largest manufacturer of home appliances. We asked how things are going with the connected kitchen and what challenges the manager and his employees are facing right now.
Mr. Pieper, you produce coffee machines, washing machines, and ovens that send you a chat message when your espresso, washing, or pizza is ready. Is that something we consumers really want and need?
There are a lot of consumers who appreciate these kinds of features. For the younger generation born after 1990, technologies that can think and communicate are becoming a fact of life. BSH is reacting to that. We want to be as close to the customer as possible, and digitalization is helping us do that. Communication with customers is changing dramatically. We’re not only trying to anticipate these changes, but also to implement them.
One of BSH’s key initiatives is called “Home Connect”. What are you implementing here?
BSH is a company that functions as an original equipment manufacturer in the traditional sense and today produces products that are primarily sold commercially. Incorporating software into the hardware of home appliances provides new ways of networking equipment. We are no longer talking about single, isolated devices, but ones that are connected with each other and that can send and receive data. For BSH, digitalization involves significant changes.
What kind of changes?
One example is our market research. Digitally networked home appliances can send data to BSH about the way they are used – provided of course that the customer has given explicit consent for that to happen. If, for example, we know how often a fridge door is opened and closed over a year, we can apply that knowledge when deciding the optimal composition of materials for making that door in the future. Do most users open their fridge doors just 2,000 times per year instead of the 7,000 times that we currently assume? If we knew that, we could perhaps manufacture them differently. Or let’s take this question: How often is a particular feature of an oven actually used? Is the feature really that popular with customers, or could we in some cases remove it altogether and produce the appliance in a more cost-effective and competitive way?
What matters for us is having the trust of our customers.
Are your colleagues from product development as excited as you are about this? Or do they often wave you aside with comments like: “Oh dear, yet another one of these innovative, digital-nerd ideas!”
It’s right there that I see an extremely important part of our work: not to come in from the outside with complicated and confusing ideas, but rather to put good, effective, and organic solutions into place as a team, together with colleagues from other departments. We aren’t an entity sitting on the edge of the organization; we are actually very closely involved in business operations. Our long-term goal is to spread digitalization across all areas at BSH and to help it become so firmly ingrained in those departments that, ultimately, my team’s work becomes unnecessary.
Let’s get back to the customer. Is there not deep skepticism towards home appliances that record user behavior? After all, there have been several recent incidents that have shown security vulnerabilities in these systems.
But not concerning BSH. We stand for quality and security. And I’m confident we can convince our customers of that. We make all processes regarding customer data or where the customer’s consent is required for certain digital services very transparent. And, by the way, that applies to all markets, not just Germany. What matters for us is having the trust of our customers.
The market for smart-home applications is pretty fragmented. How do you plan to make Home Connect into a large platform?
By being open to cooperation programs, approaching them proactively, and keeping technical hurdles to a minimum. Home Connect can be used not only with our own devices, features, services, and content, but also with those of partner companies, such as the Drop kitchen scale. Here, users can adjust our Bosch oven settings from within the scale’s Drop Recipes app.
Well, a cooperation program with Bosch is pretty self-evident seeing that BSH belongs to Bosch. But what’s the situation with other big players like Google or Amazon? Do you see them as partners or competitors?
Partners! And important partners at that. Take dishwasher tablets: Amazon, for example, automatically reorders and delivers new tablets with its Dash Replenishment Service whenever a customer’s supply is getting low. Google Nest is the most common smart-home solution in the USA in the premium-price segment. It fits perfectly with our brands. Imagine leaving the house and the thermostat turns itself off automatically. This would also be helpful information for our appliances: the customer is leaving the house – now check whether the stove and the coffee machine are turned off. It’s about good, useful solutions, not supposed killer applications.
More cooperation programs for ‘Home Connect’ are high on our agenda.
In what way do data regulations in Germany play a role when it comes to partnerships? Could you have made more progress if data regulations were different?
I would of course prefer globally harmonized regulations on data protection and security, but unfortunately you can’t just wave a magic wand and get everything you wish for.
Who wouldn’t you want to collaborate with?
The conditions of competition are, of course, always a sensitive issue. What can help us in existing markets and segments? And what could harm us? We examine that in detail before making a decision. Our
brand, for example, is very successful in the luxury kitchen segment. So you wouldn’t start a cooperation with a discount manufacturer in another sector, as this could damage the brand. Gaggenau
Cooperation programs are indispensable, but they also widen the circle of those who want a piece of the pie. Who owns the customer data in the end when everything is intertwined?
The basic principle is that each party owns and keeps the customer data from its existing customer relationships. As a company, you have to define certain control points and then maintain them. Security and the protection of customer data are also always a matter for the provider of a service. If the stove is damaged, you don’t contact the smart-home service provider; you contact the stove manufacturer. As a company cooperating with others, you have to lay down boundaries like these. For example, we would only ever pass on appliance information with reference to an “anonymous” object and never to a specific identifiable customer – unless this was something the customer wanted.
To conclude, let’s take a brief look at future prospects: What will be the greatest challenges for you and your employees in the next three years?
More cooperation programs for “Home Connect” are high on our agenda. In addition, we also have to continue the steady rollout of our digital applications, for example in digital marketing. We operate with 14 various brands and a three-figure number of products – that’s an unprecedented level of complexity. What’s more, we have to find digital heroes and talents and develop internal advanced training and continuing education programs. We are experiencing a profound shift in required skills and expertise – for instance, from hardware to software engineer, from key account manager to e-commerce specialist, or from agency helmsman to web analyst. New fields of activity are emerging, and by using ideas, information, and training courses, part of our job is to get people in every single department at BSH excited about that and to have them join us on this journey.
Image credits: istock/audioundwerbung