Bosch Worldwide: Market Leadership in Action

The reality in most industries is that thinking hard and strategically about important customer issues – from the customer’s own perspective - is foreign to most suppliers. The farther upstream they operate, the more oblivious they tend to be. Still, there are exceptions. One of the most interesting is the German automotive manufacturer Robert Bosch.

Bosch specializes in esoteric automotive components, notably fuel-injection systems and sundry electronics. Its biggest direct Original Equipment customers, the big Western car and heavy truck makers, are mostly financial wrecks just now. Yet Bosch not only sets steep prices, it also holds commanding share in its parts markets. Adding insult to injury, Bosch treats customer demands with notorious arrogance. That’s “imboschable” is a favorite reference to the company. Yet why are auto and truck makers still giving most of their business to Bosch?

Bosch turns out to be a master at customer relationships built on real, tangible value. It does so not by quick executive visits or customer appreciation dinners, but by sitting down with large customers and tailoring every aspect of its approach to fit what sets a specific auto or heavy truck maker apart. It might organize its capabilities to optimize fuel efficiency for one, fine-tune engine performance for another, and help design and fabricate vehicles more efficiently for a third. In each case, Bosch is going well beyond product to a total service solution that depends on an intimate customer rapport, built through face-to-face summits between their own managers and customer executives.

By the usual measures, Bosch clearly dominates their categories. But smaller players should take heart – even upstarts and unknowns – can be market leaders just as easily as incumbents. Power isn’t a requirement. Money certainly is not. Well done, the impacts of top-to-top strategic planning initiatives with key customers are broad, deep, and lasting. Product manufacturers gain an inside track on competitors, target value adding areas that customers immediately relate to, and can often influence their customers’ business practices and structures to better match their competences. Best of all, it’s the only truly sustainable path to differentiation and improved margins.