Bosch's Global Layoff of 5,500 Employees: Where is the Road for Enterprises Heading? Source

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On November 22, 2024, the German Metalworkers' Union (IG Metall) issued a statement announcing that automotive parts supplier Bosch would be cutting jobs related to autonomous driving and automotive steering products in Germany. A Bosch spokesperson confirmed that the company would be laying off 5,500 employees globally, with 3,800 of those positions being cut in Germany. The spokesperson stated, "The automotive industry is facing severe overcapacity, and competition and price pressures continue to intensify." As a globally renowned automotive parts supplier, Bosch's layoffs are not only a direct response to the current challenges in the automotive industry but also prompt us to ponder: How can enterprises navigate through the harsh winter of the industry? IPD (Integrated Product Development), as an efficient product development management model, might offer some insights.

1. Bosch's Layoffs: A Microcosm of the Automotive Industry's Dilemma

1.1  Overcapacity and the Smoke of Price Wars

The automotive market today resembles a "red ocean" of overcapacity. Numerous companies have flooded in, causing production capacity to surge by nearly 30% over the past five years, while market demand has only grown at an annual rate of around 5%.

In this scenario of more people than resources, competition among enterprises has become increasingly fierce, with price wars raging.

Take Ford Motor Company as an example. In an effort to seize market share, Ford adopted aggressive pricing strategies for several of its models over the past year. For instance, the Ford Focus had an official starting price of 136,800 yuan at the beginning of the year. The first price adjustment reduced the starting price to 120,800 yuan, a drop of about 11.7%. By mid-year, it was further reduced to 113,800 yuan, a cumulative drop of 16.8% compared to the beginning of the year. By the end of the year, some dealers offered the lowest transaction price close to 106,800 yuan, with an overall average drop of over 15%.

Even so, sales data shows that the Ford Focus sold only around 120,000 units last year, slightly lower than the previous year. Under the dual pressures of overcapacity and price wars, relying solely on price reductions is no longer effective in driving sales growth. Enterprises need to explore more innovative and differentiated competitive strategies to stand out in this "red ocean."

1.2  The Rocky Road of Electric Vehicle Transformation

During the July to September earnings call, Tesla CEO Elon Musk stated, "Despite the extremely challenging competitive environment, we have still achieved profitability." In contrast, Volkswagen's CFO Arno Antlitz lamented, "Our performance reflects the difficult market environment, and we must significantly reduce costs and improve efficiency."

As the electric vehicle (EV) transformation progresses, pioneers like Tesla and BYD are performing strongly, while latecomers among traditional automakers are facing declining performance. In the July to September 2024 earnings reports of the world's 11 major automakers, only Tesla and BYD saw an increase in final profits, while nine others, including Toyota and Volkswagen, experienced profit declines.

The "growing pains" of rising costs are becoming evident among latecomers. Carlos Tavares, CEO of Stellantis Europe, bluntly stated in an interview, "The long-term nature of the electrification transformation will be a huge trap."

Latecomers face numerous challenges. On one hand, traditional internal combustion engine (ICE) businesses are gradually shrinking under the dual pressures of market competition and tightening environmental regulations. On the other hand, the development of EV businesses is not yet mature, with massive R&D investments and insufficient economies of scale, leading to high costs.

Moreover, pioneers like Tesla and BYD have already captured a significant market share, established brand images, and built relatively comprehensive sales and service networks. For latecomers, breaking through these market barriers is extremely difficult, requiring not only substantial investments in R&D and market promotion but also a strong focus on product differentiation.

Additionally, limited battery range, insufficient charging infrastructure, long charging times, risks of lithium battery fires, and relatively high insurance costs are all factors that make consumers hesitant and reluctant to adopt EVs.

Whether it's the internal challenges faced by automakers during the transformation or the external obstacles from consumers, the road to electrification is fraught with challenges and difficulties.

1.3  The Winter of Autonomous Driving Departments

In 2022, autonomous driving company Argo AI suddenly announced its dissolution. This not only marked the failure of one company's autonomous driving transformation but also signaled the beginning of a larger-scale "great escape" in the autonomous driving industry.

Although the prospects of autonomous driving are enticing, the industry faces numerous challenges, including complex road condition recognition, reliability under extreme weather conditions, and the definition of ethical and legal responsibilities. Meanwhile, R&D costs continue to snowball, while the path to commercial profitability remains long and arduous. Many companies are gradually losing stamina in this seemingly endless marathon.

In the face of such immense pressure, strategic adjustments and adaptability are crucial for enterprises. As Peng Jun, CEO of Pony.ai, said, "Companies must further improve efficiency, maintain sufficient flexibility and agility, and be in the best possible state to respond to market changes." This is a profound insight into the severe situation. So, what should be done? Among the many response strategies, IPD might provide an answer.

IPD (Integrated Product Development) emphasizes market demand-oriented, cross-departmental collaboration, and systematic management from product concept design to final market launch. It focuses on the effective integration and optimal allocation of resources during the product development process, ensuring the correctness and feasibility of the product development direction through rigorous processes and clear stage reviews.

Can IPD help enterprises find their positioning in a complex market environment and intense competition, and rationally plan R&D investments and outputs? Can IPD provide direction for enterprises, allowing them to move forward steadily through the winter?

2. Can IPD Provide Direction for Enterprises?

"How to build a road that everyone agrees on, how to plan the road, how to build it, and how to operate it are essential core competencies for an automotive enterprise," said Li Xiang, CEO of Li Auto, at the China EV100 Forum.

He believes that the only way is to learn from the world's best practices—the IPD system. Outstanding companies like IBM and Huawei have achieved leapfrog development by building IPD systems, setting an example for many enterprises.

From a sharp increase in net losses to delivering a satisfactory performance report, and then proposing a strategic goal of selling 1.5 million units by 2025, Li Auto's success can be largely attributed to its introduction of the IPD system.

Next, let's take Li Auto as an example to decipher how IPD turns product success from accidental to inevitable.

2.1  Dual Optimization of Efficiency and Cost

One of the core principles of IPD is cross-functional team collaboration. This collaboration breaks down the barriers between traditional enterprise departments, opening new paths for improving product development efficiency and optimizing costs.

When implementing IPD, the formation of the Integrated Product Management Team (IPMT) and the Product Development Team (PDT) are key initiatives.

The IPMT, as the representative of the enterprise's decision-making layer, controls the product direction from a macro-strategic height. At the same time, they are responsible for allocating various resources to the PDT, including human resources, funds, equipment, etc., and strictly controlling investment costs to prevent budget overruns during project development.

The PDT is the specific executor of product development, with its members covering key departments such as R&D, manufacturing, quality, and procurement. During the product development process, members collaborate closely to achieve rapid information flow and sharing. At different stages of product development, PDT members use their respective professional knowledge and experience to collaboratively solve various problems, enabling rapid iteration from concept to release.

This cross-functional team collaboration model avoids the repeated modifications and project delays caused by poor communication and delayed information transfer between departments in traditional serial development models, effectively improving development efficiency while reducing costs through optimized resource utilization and waste reduction.

2.2  Optimizing Resource Allocation

Under the IPD framework, new product development is viewed as an investment decision. This concept emphasizes that before embarking on new product development, enterprises must use scientific and systematic investment portfolio analysis methods to comprehensively and deeply evaluate and weigh new product projects. Li Auto, through the IPD process, integrates the entire process from definition to sales of each vehicle into management, ensuring that product development aligns with market demand and business objectives, achieving optimal resource allocation.

Under the IPD framework, product development is no longer an isolated technical activity but a comprehensive business decision-making process involving multiple departments and stages. This process helps enterprises achieve optimal resource allocation, ensuring that each new product can bring the expected business value and returns.

By setting checkpoints during the development process and conducting stage reviews to decide the fate of new product development, enterprises can timely adjust strategies, reduce ineffective investments, and ensure that projects develop in the right direction.

This market and investment return-oriented product development model is key for companies like Li Auto to maintain competitiveness in a fiercely competitive market.

2.3  Precise Market Navigation

IPD emphasizes user demand orientation, using market management models to accurately grasp market trends, enabling products to precisely meet consumer needs and avoid blind investments and resource waste.

Correctly defining the product concept is the key first step in the IPD process. During the product concept design phase, Li Auto conducted in-depth market research, discovering that family users are concerned about vehicle seating space for family trips comfort, intelligent interaction systems for driving operations and entertainment functions, and range, especially for city periphery and long-distance travel scenarios.

Based on these market demands, Li Auto precisely positioned the Li ONE as a mid-to-large-sized intelligent luxury extended-range SUV for family users. Compared to pure electric vehicles, extended-range electric vehicles combine the advantages of fuel engines and electric drives, effectively addressing range anxiety and creating differentiated competitive advantages.

By correctly defining the product concept and accurately grasping market demand as the primary step in the entire product development process, the Li ONE attracted significant attention from family users upon its launch, securing a favorable position in the competitive new energy vehicle market from the outset.

Subsequent models like the Li L series were also continuously optimized based on tracking market changes and analyzing competitor new model features, such as further improving second-row seating comfort to meet family users demand for upgraded travel quality.

3. The "Golden Key" to Successful IPD Implementation

3.1  Tailored Approach, Step-by-Step Advancement

"Use your brain, open your eyes, and take it yourself." IPD is a systematic project. When introducing it, enterprises should not blindly copy but should deeply analyze their own scale, business fields, organizational structure, corporate culture, and the market competition situation they are in. They should consider organically integrating with the company's existing systems and plan management reforms from the company level.

Given the long implementation cycle of IPD, enterprises must conduct sufficiently detailed research before deciding to introduce IPD, fully understanding the company's actual situation, and proposing feasible solutions and specific implementation steps.

IPD implementation should be piloted in stages and steps. Projects can be divided into multiple sub-projects, allowing for scientific management of each project. At the same time, stage results can provide positive feedback, boosting team confidence and motivating better IPD implementation.

3.2  Leadership from the Top, Followed by All

IPD implementation is a management transformation that will completely change traditional enterprise management models and R&D concepts. Since it is a transformation, it will involve every aspect of the enterprise and affect the specific interests of various departments and employees. Therefore, it requires strong support from top leadership.

The core management layer must truly participate and decisively and correctly make decisions at critical nodes and major issues during the IPD implementation process. It is essential to avoid merely paying lip service.

Only when the core management layer truly regards IPD as an important strategic initiative for enterprise development, actively participates in it, makes decisive decisions at critical nodes and major issues, and sets an example for all employees through actual actions, can they drive all employees to actively follow, forming a powerful transformation synergy to promote IPD take root and thrive within the enterprise.

3.3  Knowledge Empowerment, Talent-Driven

Since IPD is still a new concept for many traditional enterprises in China, many people have not deeply understood the full process of IPD. Systematic learning is needed to establish an enterprise-wide communication environment to help everyone gradually understand, accept, learn, and use IPD.

First, invite industry experts to conduct IPD theory and practice lectures, organize centralized learning and assessments for employees. At the same time, build an internal learning platform and upload rich IPD learning materials for employees to self-study.

In terms of talent development, build a multi-level talent system: For grassroots employees, conduct basic skill training and on-the-job training activities; For middle management, select them to attend professional institutions for advanced studies in project management, team collaboration, and other courses; For top talent, encourage participation in international frontier IPD strategic discussions activities. At the same time, actively introduce external excellent talent, especially versatile talent with rich IPD implementation experience, to enrich the enterprise talent pool and provide intellectual support for successful IPD implementation.

"There is only one kind of heroism in the world: to love life after recognizing the truth of life." Enterprises should also be like this. After recognizing the difficulties of the industry winter, they should actively explore strategies to break the deadlock, forge ahead in the winter, look forward to the return of spring and blooming flowers that day.