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September 19, 2017
A REVOLUTION IS COMING IN HOW BUSINESS MARKETERS CREATE VALUE ACROSS INDUSTRIES & MARKETS
Erich Joachimsthaler, Ph.D./Founder & CEO of VIVALDI/
TECHNOLOGY
An Explosion of Connected Possibilities
VIVALDI 2
YEARS OF 1960s – 1970s
Pipeline (Traditional Value Chain) Business
R&D Production Distribution Customer
Automation of individual activities in the value chain Standardization of processesCompetitive advantage: quality at scale
VIVALDI 3
Pipeline (Traditional Value Chain) Business
YEARS OF 1980s – 1990s
R&D Production Distribution Customer
Rise of the internet, ubiquitous connectivityCoordination and integration across individual activities and suppliers, channels, and customers Global supply chainDeliver value by means of production (lowest cost per unit)Competitive advantage: differentiation through featuresVIVALDI 4
Connectivity of EverythingTechnology evolution from cloud, social and mobile to Internet of Things, AI, quantum computing, etc.Deliver value by means of interaction (more value as the number of users and interactions go up)Competitive advantage: Not just the product but the platform
TODAY
Platform Business
Producer Customer
VIVALDI 5
JOHN DEERE’S 8R / 8RT 24-ROW EXACTEMERGE PLANTER
VIVALDI 8
• Top speed 10 miles/hour• 80 seeds per second• Tractor has 20 processors• Planter has 77 processors• 6 million lines of code• Sends data to the tractor cab to JDOC (AWS)• Connects tractor operator and remote farm manager• Connects machines with one another• Coordinates work in the field
GPS calculate machine’s position – 2.5 cm10 % cost savings by avoiding overlapping fields
1) MARKET – MYJOHNDEERE ENABLES A PLATFORM THAT CREATES VALUE FOR FARMERS
2) ENABLING TECHNOLOGY THAT GENERATES DATA AND ANALYTICS AND AN EXCHANGE
Deere Open Data PlatformIntelligent farming
VIVALDI 11
3) ECOSYSTEM – CUSTOMERS INTERACT WITH EACH OTHER AND THIRD-PARTIES
Seed densitydepth
fertilization
THIRD-PARTY DEVELOPERS LIKE FARMERS BUSINESS NETWORK ADD VALUE
Access the largest seed performance database in agriculture, powered by millions of acres of real yields — all farmer driven, totally independent, and unbiased
MyJohnDeere Operations Center users can link their MyJohnDeere accounts to FBN Analytics for hourly data transfer
So far, 39 agriculture tech startups have partnered with John Deere, adding dozens of additional valuable services to its ecosystem
John Deere Vision
From sellingand servicing big equipment
To a commitment to those linked to
the land
VIVALDI 15
4) GRAVITATIONAL PULL OF MAJOR STAKEHOLDERS
Attracts stakeholders- Farmers
- John Deere dealers- Software companies- Seed and fertilizer manufacturers- University researchers
WHAT MAKES A GREAT PLATFORM?
VIVALDI 16
• Creates value on the top of technology for all parties
• Facilitates interactions and collaboration between parties
• Open, third-party developers or ecosystem
• Draws in stakeholders (gravitational pull)
• INDEPENDENT PRODUCER - DISTRIBUTORDuisburg, Germany; 110 years old
• REVENUES 2016$6.7 billion globally (75% global; 40% in the US)
• EMPLOYEES 20178,700
• COMPETITORSReliance Steel & Alum ($8.6 bn), Ryerson ($3.2 bn), and Russell Metals (C$27.7 bn)
CUSTOMERSHigh fragmentation
• ARCELOR MITTAL$56.8 bn revenues
• THYSSENKRUPS$46.4 bn revenues
• TATA STEEL$18 bn revenues
• SALZGITTER$10 bn revenues
THE STEEL BUSINESS – WHAT ARE YOU SOLVING FOR?
Pipeline (Traditional Value Chain) Business
Production Distribution Customer
Lots of inventory everywhereHigh inventory levelsLong delivery timesNo effective information and data exchangePoor pricing transparencyVIVALDI 19
STEEL MARKETING, SALES AND SERVICE
VIVALDI 21
PRICE TRANSPARENCY FROM NEW STARTUPS
VIVALDI 22
VERY UNATTRACTIVE INDUSTRY
VIVALDI 23
When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett
HOW DO YOU HELP THIS CUSTOMER?
VIVALDI 26
Suppliers: poor utilization of production assets; Customers: poor pricing transparency; Distributors: inventory levels
Revenues2016 - $600 million2017 - $1 billion (to date)2019 - $4 - $5 billion (est.)
1) MARKET – CREATING A PLATFORM TO CONNECT WITH KLOECKNER’S 200,000 CUSTOMERS
INTERACTIONS
Producer Customer
VIVALDI 27
Key Success FactorsNeeds to fit into the ERP of customersCreating value for all parties involved
THE CONTRACT PORTAL ENABLES FRICTIONLESS CONTRACT MANAGEMENT
VIVALDI 29
Supplier
Launch: Three Months from Start
2) ENABLING TECHNOLOGIES AND PROCESSES
VIVALDI 30
Cloud IT INFRASTRUCTUREGoogle Cloud, SAP Hybris
KLOECKNER CONNECTContract Portal, Online Shop, Ordering Tools
AUTOMATION, AI, SOFTWAREAera, Arago, Sage
CONSULTING WORKBrand, Marketing, Digital Transformation, Technology
3) THIRD-PARTY PLATFORMS ACCELERATE DEMAND GENERATION AND FULFILLMENT
VIVALDI 31
IntegrationProduction of Trumpf communicates fully digitally when Kloeckner needs to deliver
Open PlatformExpand to include competing sellers/distributors in 2017
Laser Technology
Steel Trading
CustomersLogistics Integration
4) GRAVITATIONAL PULL OF MAJOR STAKEHOLDERS
VIVALDI 32
“We like to be the Amazon ofsteel distribution.”
Gisbert Rühl, CEO
Competitors
Employees
Research Institutes
RelianceSalzgitter
Tata SteelArcelorMittal
ThyssenKrups
VELOCITY AND SPEED OF VALUE CREATION
VIVALDI 33
ORGANIZATIONKloeckner.iKloeckener.v
BRANDCustomer relationshipsDeep industry knowhowReliability and trust
EXPONENTIAL TECHNOLOGIESBig data analytics, data mining and machine learningKiana Systems (DFKI spinoff)
BEST RESULTS IN SIX YEARS
VIVALDI 34
PLATFORMS SCALE EXPONENTIALLY
VIVALDI 35
Platform Ecosystem
Traditional Pipeline
Number of Users and Interactions
Valu
e
SOURCES OF THE NETWORK EFFECT
VIVALDI 36
CONNECTIONNetworks become more useful as a user’s connections increase
CONTENTUsers discover and use data or information created by other users
CLOUDInfluential users advocate value of platform on the cloud
Pipeline Platform
Features Goals
Differentiation Goal Achievement
Relevance to Needs Share of Requirements
Transaction Relationship
Linear Growth Exponential Growth
Supply-side Economies of Scale Demand-side Economies of Scale
Production Interactions
PIPELINES VERSUS PLATFORMS SUMMARY
VIVALDI
HOW TO GET STARTED
VIVALDI 38
• What is the vision or what are you solving for?• What existing assets and capabilities can we leverage? What parts of the business create
competitive advantage through network effects?• How can we enable deeper relationships with customers, and other stakeholders in the
ecosystem and create value for everyone?• How will we configure the platform? What implications does this have for the culture, business
model, processes, leadership, infrastructure, customer experience?• What new capabilities, skills and talent do we need to collaborate and compete effectively in a
platform world?• What new business models should we deploy to capture the value and profit opportunities from
platforms?
Thank you
Erich Joachimsthaler/Founder & CEO of VIVALDI/
New York | Chicago | London | Zurich | Munich | Düsseldorf | Hamburg | Singapore
www.vivaldigroup.com
@ejoachimsthaler