Startups and the steel industry – how industrial companies can profit from the innovative methods of startups. Alexander Franke, Managing Director of etventure business ignition GmbH, spoke about this topic at the 2016 Handelsblatt “Stahlmarkt” steel conference  in Düsseldorf. At the two-day industry convention on February 16 and 17, etventure was present on site as a sponsor and an exhibitor.

“If there’s one industry that requires massive transformation then it’s the steel industry.” With this statement, Alexander Franke made it clear just how necessary change is in this industry. Life is made difficult for the European steel industry because of overcapacities and poor levels of income – in part due to fierce competition from Russia and the Far East. The prospects are bleak. This makes it all the more important to recognize that digitization offers opportunities.

In this context, the term “Industry 4.0” has become a ubiquitous buzzword. Franke shares his thoughts about the term: “Buzzwords such as Industry 4.0 are all well and good, but every company needs to clarify what exactly the concept means for them and for their customers. From this, they can derive their field of action.” The fear associated with a huge task such as digital transformation can have a paralyzing effect. But according to Franke, even SMEs with a turnover of a few million euros can have a large impact.

When startup thinking meets the steel industry, two worlds collide. But it is just this kind of contrast that is useful when pressing ahead with digitization because startups have a completely new way of approaching problems. This approach is based on being radically user-focused. The product needs to meet the customer’s core requirements. With this in mind, innovation methods such as “design thinking” are used to develop new products and business models. “With this, speed is more important than control,” explains Alexander Franke. “Even prototypes and minimum viable products satisfy their first customers and can then be refined, in partnership with these customers.”

One example of this is provided by the partnership between etventure and the steel trader Klöckner & Co. etventure established an internal digital unit at Klöckner & Co and is supporting the steel corporation with the execution of numerous digital projects. By forming the digital unit kloeckner.i, the company created a “protected space” – separate from the organization – within which the development of digital business models could take place. The Klöckner example also shows how important it is that digital transformation is pushed forward by the company’s management board. For example, in Silicon Valley, CEO of Klöckner & Co Gisbert Rühl learnt about the working practices of startups. Since then, he has put his company on track to undergo a thorough digitization process. Having a partnership like this, whereby industry experts join forces with digital experts who have executional expertise, is a major success factor for the transformation process.

Gisbert Rühl was also one of the speakers at the 2016 steel conference and he gave a presentation about the steel company’s digitization strategy. He clarified that today’s steel business operates in exactly the same way it did in 1999. By 2019, however, 50 percent of all turnover will be achieved via digital channels. By developing an online contract platform that corporate clients, such as large plant manufacturers and finishers in Europe and the USA, can use to view and manage their ongoing orders and deliveries, the corporation has become the industry’s digital pioneer. Around 500 of Klöckner & Co’s B2B corporate clients are now using the digital platform and the steel trader’s contract platform turned over 80 million euros in 2015 alone. From as soon as 2017, it is expected that around ten percent of turnover will flow through these kinds of digital channels. Rühl also plans to open up the industry platform to competitors in the coming year. A company-wide survey also proves that Klöckner & Co has now fully internalized the necessity of digital transformation. According to Rühl, 80 percent of employees have understood the importance of digitization.

As well as being a sponsor at the event, etventure also had its own stand from which it introduced itself to the delegates.