Lesson
Number 60
 

Robert Bosch (1861-1942) – Industrialist and Pioneer of the Social Market Economy

 Manfred Hoefle

 

CONTENTS

A Human-Centered Approach
Building Trustworthy Relationships With Customers
Valuing Your Employees
Leading Responsibly
Committing To The Common Good
Commendable Entrepreneur During Difficult Times

 

Entrepreneur, technician, vocational instructor, philanthropist, reformer, pacifist, European – many epithets describe Robert Bosch. He grew up on the Swabian Alps and in Ulm in south- west Germany, as the eleventh child of an educationally starved but free-thinking innkeeper. After completing secondary school in Ulm and a mechanic apprenticeship he went on his 'journeyman years'. Robert first joined his brother's business, where he also learned commercial skills, did military service, and then learned at the best addresses in German industry – including the socially exemplary Sigmund Schuckert in Nuremberg. Schuckert himself had learned his trade at Siemens & Halske and in the USA.

In 1884, Robert Bosch also decided to travel to the USA, which was experiencing its own industrial dawn. There he had his first experience of trade union activity, noted the lack of social justice in industry, as a result, adopted the ideal of a classless civil society, but was also deeply impressed by the relentless work ethic of A. Edison, and became unemployed, through no fault of his own. He then moved to England where he worked for Siemens Brothers. Learning all the way, he transferred to Magdeburg, and then returned to Swabia in south-west Germany. In 1886, back home in Stuttgart, he started his own business, the Works for Precision Mechanics and Electrical Engineering. Bosch described those start-up years as an "evil stranglehold". Family and relatives helped him out of over-indebtedness. Gradually the business achieved success by making ignition systems for internal combustion engines. Within the next fifteen years the company had acquired an international reputation.

The aforesaid summarizes his emergence as a business entrepreneur. In the following, selected quotations from Robert Bosch help to exemplify his nature and achievements.

 

A HUMAN-CENTERED APPROACH

His father had taught him, "Behave with human decency, be a Mensch, and respect the dignity of others." Robert Bosch lived to that dictum for the rest of his life. As a teenager, he had already summed up his own ethos as follows: "Whatever you do, you must answer for it." He was careful to respect the dignity of his employees and to act honorably in social interactions. Bosch frowned upon any sign of arrogance and conceit. He did not seek honors, power or influence. Robert was charitable, but as a pragmatic business entrepreneur he was guided by what was effective and practical.

From the very start, Robert Bosch gave primacy to quality – and made painstaking efforts to deliver products that would withstand scrutiny of the highest technical standard.

 

BUILDING TRUSTWORTHY RELATIONSHIPS WITH CUSTOMERS

For Robert Bosch customer orientation meant, first and foremost, earning the trust of customers. He explained this as follows, "Concluding a contract without ulterior motives, fulfilling it punctually, is an act of supreme wisdom. I have always acted on this principle: It is better to lose money than to lose trustworthiness."

"The inviolability of my promises, trust in the quality of my goods and trust in my word, were always more important to me than any temporary financial gain."

This is a clear rejection of reactive management, of deals for the sake of deal-making, and of short-termism.

 

VALUING YOUR EMPLOYEES

Bosch is famous for his credo: "I don't pay good wages because I have a lot of money, I have a lot of money because I pay good wages." These words reflect his sense of justice and expediency. This insight may astonish some modern managers, namely, that well-trained and fairly paid employees are the real value creators. At that time, Bosch paid up to 60 percent above the average wage, invested heavily in vocational training, and in the further education of his workforce, especially apprentices. He introduced the eight-hour day and provided a pleasant working environment, such as bright rooms and good ventilation. Bosch also pioneered dual training (academic and practical), which is still a highly successful model, especially in south-west Germany.

Robert Bosch, the entrepreneur, attached great importance to a style of leadership which, then and now, is exceptional in its transparency, and receptive to contemporary developments: "... it was a constant maxim to cultivate committed employees, by letting everyone work as independently as possible, and delegating appropriate responsibility to them." As a result, a typical Bosch manager not only leads, but also co-develops and co-operates. And such responsibility extends to thrift, care and attention, and understanding that even the smallest things can matter.

 

LEADING RESPONSIBLY

"Proper and decent management is the most profitable in the long run — and the business world will respect you for it, more than you believe." This Bosch attitude is unchanged to this day. Robert Bosch's grandson Christoph, an ecologist and farmer, sums up the culture of Bosch as, "succeeding in business in a fair and decent manner." Back in 1917, following dynamic growth and changed family circumstances, Robert decided to offer top executives a shareholding in the business. For this purpose, a joint-stock company was set up, which after Robert's death became the Robert Bosch Foundation. The charitable nature of the Robert Bosch Foundation implies an implicit duty of sustained self-renewal. Autonomy was always more important than growth. To this day, the continuity of the corporate management at Bosch Group is unique. In the near hundred years after Robert Bosch, there have been only six Chairmen of the Board of Management. And the managerial actions of the Bosch Group are the diametrical opposite of short-termism.

"If a business enterprise wishes to remain competitive and progressive, there is nothing worse than not having a competitor." A statement like that can only come from a real entrepreneur, because management theory generally recommends that attempts are made to limit any competition – to achieve higher sales margins. But competition, according to Robert Bosch, spurs you on to be better than competitors; it is like an enduring sporting event.

 

COMMITTING TO THE COMMON GOOD

Robert Bosch's first biographer, Theodor Heuss, later President of the Federal Republic of Germany, called Robert Bosch a "civilization optimist", who believed in the ultimate beneficence of technology, the onward progress of society, and the high merit of a proper upbringing and formative education, "... and the special necessity and desirability of a formative education for human empathy, respect for the law, and the value of others. The guidelines on management of the assets of the Bosch Foundation state that, "To be promoted are health, learning, formative education, furtherance of the gifted, reconciliation of peoples and nations, and similar." He left open the methods, in the knowledge that circumstances would change over time.

Robert Bosch was a democrat – no ifs and no buts. His vision of a successful and thriving society founded on the foresight that: "Our salvation lies in a social democracy ...... our aim must be at least to narrow the social divide, even if we cannot close it completely." In essence, these words are a declaration of the social market economy, which became the socio-political model of the young Federal Republic of Germany. In his youth he called himself a "socialist", and as an industrialist he was known as "Bosch the Red", probably rightly so, when you consider these words of his: "We must ... root out the poisonous fangs of capitalism, and try to create the best possible lot for everyone, to make life honestly worth living for everyone who wants to work".

By means of exceptional initiatives, he reaffirmed his own human-centric and philanthropic attitude: Bosch Hilfe (life insurance), social insurance for children of employees, a pension plan for all employees, and war pensions for employees and relatives. He was a great supporter of the Verein zur Förderung der deutschen Volksbildung (Association for the Promotion of German People's Education), the Deutsche Werkbund (German Association of Craftsmen), and substantial grants by the foundation to the Stuttgart University of Applied Sciences. He had a model hospital built, he set up the Boschhof: a model farm. Party politically, Robert Bosch remained neutral, but he was also a major donor for causes that he approved of, for example the German League for the League of Nations and the Pan-European Union of Richard Nikolaus Coudenhove-Kalergi with its declared goal of a united Europe. Especially dear to his heart was friendly relations between Germany and France. He loathed the two wars between the two countries; his thought them an abhorrence. Until the end of his life he kept at great distance from the Nazi regime; although the company could not escape the war economy with all its human suffering.

 

COMMENDABLE ENTREPRENEUR DURING DIFFICULT TIMES

Robert Bosch built a world business with the ethos of a charity foundation and a family enterprise. From the start he regarded the endeavor as a collaborative work: "I never made an invention in the common sense of the word. ... Whatever the outcome it is the work of many." For Robert Bosch self-reliance and independence were the guarantors of entrepreneurial freedom. Social and ecological responsibility were a natural duty and obligation, both then and for the Bosch Group today.

Manfred Hoefle,  May 2020

 

PDF Download: Lesson no. 60 - Robert Bosch

 

LITERATURE:

  • Heuss, Theodor: Robert Bosch – His Life and Achievements, Henry Holt & Company, New York, 1994. (Robert Bosch – Leben und Leistung, Stuttgart 1946 (erw. Neuauflage 2002)
  • Theiner, Peter: Robert Bosch An Entrepreneur in an Age of Extremes, C.H. Beck, Munich, 2019. (Robert Bosch - Unternehmer im Zeitalter der Extreme, München, 2017);
  • Bähr, Johannes; Erker, Paul: Bosch: History of a Global Enterprise, C.H. Beck, Munich, 2015. (Bosch – Geschichte eines Weltunternehmens, München, 2013)