How to digitize the ‘old economy’ – etventure in Der Spiegel and Die Zeit
05. October 2016
Since October 2015, etventure has been helping the SMS group, a machine and plant manufacturer based in North Rhine-Westphalia, with digitization. Last week, the weekly newspaper Die Zeit and the news magazine Der Spiegel published detailed articles about the approach that etventure takes and what it means to take a traditional company such as SMS into the digital era. In Der Spiegel alone, there was a four-page article dedicated to this topic and the magazine spent six months observing etventure and the SMS group.
Digital transformation as a tender seedling
The steel industry is on the verge of upheaval. While the steel industry, and therefore the business activity of the plant manufacturer SMS, has mainly been fueled by the high demand from the Far East in recent years and decades, revenue figures are now in a state of constant decline. The traditional steel industry needs to look for new revenue models and it must equip itself for the future by going digital. “If we don’t address digitization now, it is likely that a logistics or software provider like Amazon or Google will soon arrive and will insert itself between us and our clients,” says SMS boss Burkhard Dahmen, as cited in the article by Ann-Kathrin Nezik, editor of Der Spiegel. This is why the SMS group has secured support from etventure.
etventure’s approach differs from that of traditional consultancies. This is due to its radical focus on users and on execution, as well as its use of innovation methods such as Lean Startup and Design Thinking. The client is always the starting point. “Previously, the SMS engineers approached the development of new machines like this: They thought about what their clients might need,” Nezik explains. “They worked on the machines until they were perfect and then showed them to the clients. In the worst case scenario, it wasn’t useful to the clients at all.” By contrast, etventure goes to the client straight away and asks where the company’s ‘pain points’ are.
Nezik writes that SMS “sees the transformation as being like a seedling that is thriving in a greenhouse inside the company until, at some point, it can grow rampant throughout the entire company.” etventure refers to this as a ‘protected space’ that is outside the confines of the main organization. Within this space, new digital business models are very rapidly developed as MVPs (minimum viable products). For this very reason, the SMS group founded its own business unit, SMS digital.
The first of this partnership’s ‘seedlings’ that is visible to the outside world is a platform for identifying replacement parts. After only six weeks of development time, the first prototype was presented and tested at the ‘wire & Tube’ trade fair in April. Since then, the MVP has been improved and developed constantly, on the basis of client feedback.
“At etventure, they believe that the only companies that will survive in the digital era are those that react quickly enough. They believe in imperfection and in trying things out and discarding them again. They think in terms of weeks,” writes Nezik.
For engineers in traditional industries, who have been primed to focus on perfection, this approach and way of thinking is often a very significant challenge.
You can read the whole article here.
Pain points and digital tools
The editor of German newspaper Die Zeit, Moritz Depenbrock, also wrote about etventure, the SMS group and the digital transformation of the ‘old economy’ in his article ‘Who will get us out of here?’ The article is in the paper’s most recent issue and, in addition to featuring etventure, it also takes a look at the digital initiatives of traditional consultancies such as McKinsey, BCG and Deloitte. He also describes the joint projects between etventure and SMS, starting at the beginning and following the development of the first digital business models – right through to the point at which the digital unit was founded.
Not all consultancy is the same. Moritz Depenbrock does write about how McKinsey and the other companies have created their own ‘digital laboratories’ and consultancy divisions. Nevertheless, the question regarding the specific successes and outcomes from these initiatives was left unanswered. While traditional consultancies continue to focus on purely strategic consultancy, etventure is developing tangible digital business models and working together with clients – such as SMS – to execute these models. Thus, the only tangible example of digital transformation that the article presented was the partnership between etventure and the SMS group.
Follow this link to view the online article.