Heavy metal rocks digital

Established companies in traditional industries find their feet in the digital revolution

As the digital revolution continues to impact every industry, a 114-year old metal distributor from the heartlands of Germany is a surprising story for how, even the most traditional companies, can reshape their business for the digital age.

Klöckner & Co SE distribute steel from Germany using a tried and tested business model that has successfully shipped over 6 tonnes of steel to more than 100,000 customers in 13 countries, for over a century. So when CEO, Gisbert Rühl, raised the idea of radically transforming their business by creating a digital platform “it was difficult to explain” and the board were up in arms at the thought that

“all of a sudden they would be helping their fiercest competitors do business against them on a new digital platform that they had introduced.”

However, after some persuasion, the board backed Rühl’s proposal and he now predicts that their digital platform XOM will in the future

“facilitate over a billion dollars worth of business per annum.” And, if it is as successful as he predicts, it might soon attract a significantly higher valuation than the original Klöckner.

The success of the new digital platform has surprised even the man behind the overhaul, who doesn’t rule out that one day the “traditional business ends up being completely transformed into a platform business.”

Of course, the transition to a digital platform business model has not been all plain sailing. First, they needed to educate their suppliers about how to sell on the platform and how to price their products because pricing is automated and their customers were forced to raise their “digital skill levels” much like Klöckner employees did previously.

When he considers other traditional businesses taking first steps into digital-first business models his advice is to “start with the customer” by identifying their pain points. After that, they developed the first MVP (Minimal Viable Product) and fast-tracked development through the next stages.

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