At least since the industrial revolution, the basic model of a market and how companies create value has been the same. Companies buy, make, and sell stuff. Value is created at every stage of the value chain and at the end of the pipeline a product or service that customers value pops out. That fundamental basic structure is now shaken up by technology. In place of the basic model are new models of value creation – some call them digital ecosystems, platform businesses, cloud-based business models, or Industry 4.0. Regardless, these technologies have one thing in common: they leverage a global digital infrastructure that enables connectivity and interaction between producers and customers, and a third-party ecosystem of partners. These new models have shocked the foundations of markets, industries, and businesses that serve customers. Dr. Joachimsthaler describes the nature of these shocks on industrial markets and businesses, and shows how companies and brands in traditional B2B markets can adopt some of the principles of these new models of value creation with the goal to achieve new competitive advantages. Dr. Joachimsthaler also outlines how the role of business marketers is changing in this new context.

1. September 19, 2017
A REVOLUTION IS COMING IN HOW BUSINESS MARKETERS
CREATE VALUE ACROSS INDUSTRIES & MARKETS
Erich Joachimsthaler, Ph.D.
/Founder & CEO of VIVALDI/

2. TECHNOLOGY
An Explosion of Connected Possibilities
VIVALDI 2

3. YEARS OF 1960s – 1970s
Pipeline (Traditional Value Chain) Business
R&D Production Distribution Customer
Automation of individual activities in the value chain
Standardization of processes
Competitive advantage: quality at scale
VIVALDI 3

4. Pipeline (Traditional Value Chain) Business
YEARS OF 1980s – 1990s
R&D Production Distribution Customer
Rise of the internet, ubiquitous connectivity
Coordination and integration across individual activities and suppliers, channels, and customers
Global supply chain
Deliver value by means of production (lowest cost per unit)
Competitive advantage: differentiation through features
VIVALDI 4

5. Connectivity of Everything
Technology 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

8. 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

9. GPS calculate machine’s position – 2.5 cm
10 % cost savings by avoiding overlapping fields
1) MARKET – MYJOHNDEERE ENABLES A PLATFORM THAT CREATES VALUE FOR FARMERS

10. 2) ENABLING TECHNOLOGY THAT GENERATES DATA AND ANALYTICS AND AN EXCHANGE

11. Deere Open Data Platform
Intelligent farming
VIVALDI 11
3) ECOSYSTEM – CUSTOMERS INTERACT WITH EACH OTHER AND THIRD-PARTIES

12. Seed density
depth
fertilization

14. 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

15. John Deere Vision
From selling
and 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

16. 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)

17. • INDEPENDENT PRODUCER - DISTRIBUTOR
Duisburg, Germany; 110 years old
• REVENUES 2016
$6.7 billion globally (75% global; 40% in the US)
• EMPLOYEES 2017
8,700
• COMPETITORS
Reliance Steel & Alum ($8.6 bn), Ryerson ($3.2 bn), and Russell Metals (C$27.7 bn)
CUSTOMERS
High fragmentation

18. • ARCELOR MITTAL
$56.8 bn revenues
• THYSSENKRUPS
$46.4 bn revenues
• TATA STEEL
$18 bn revenues
• SALZGITTER
$10 bn revenues

19. THE STEEL BUSINESS – WHAT ARE YOU SOLVING FOR?
Pipeline (Traditional Value Chain) Business
Production Distribution Customer
Lots of inventory everywhere
High inventory levels
Long delivery times
No effective information and data exchange
Poor pricing transparency
VIVALDI 19

21. STEEL MARKETING, SALES AND SERVICE
VIVALDI 21

22. PRICE TRANSPARENCY FROM NEW STARTUPS
VIVALDI 22

23. VERY UNATTRACTIVE INDUSTRY
VIVALDI 23

25. 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

26. HOW DO YOU HELP THIS CUSTOMER?
VIVALDI 26
Suppliers: poor utilization of production assets; Customers: poor pricing transparency; Distributors: inventory levels

27. Revenues
2016 - $600 million
2017 - $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 Factors
Needs to fit into the ERP of customers
Creating value for all parties involved

29. THE CONTRACT PORTAL ENABLES FRICTIONLESS CONTRACT MANAGEMENT
VIVALDI 29
Supplier
Launch:
Three Months from Start

30. 2) ENABLING TECHNOLOGIES AND PROCESSES
VIVALDI 30
Cloud IT INFRASTRUCTURE
Google Cloud, SAP Hybris
KLOECKNER CONNECT
Contract Portal, Online Shop, Ordering Tools
AUTOMATION, AI, SOFTWARE
Aera, Arago, Sage
CONSULTING WORK
Brand, Marketing, Digital Transformation, Technology

31. 3) THIRD-PARTY PLATFORMS ACCELERATE DEMAND GENERATION AND FULFILLMENT
VIVALDI 31
Integration
Production of Trumpf communicates fully digitally when Kloeckner needs to deliver
Open Platform
Expand to include competing sellers/distributors in 2017
Laser Technology
Steel Trading
CustomersLogistics Integration

32. 4) GRAVITATIONAL PULL OF MAJOR STAKEHOLDERS
VIVALDI
32
“We like to be the Amazon of
steel distribution.”
Gisbert Rühl, CEO
Competitors
Employees
Research Institutes
Reliance
Salzgitter
Tata Steel
ArcelorMittal
ThyssenKrups

33. VELOCITY AND SPEED OF VALUE CREATION
VIVALDI 33
ORGANIZATION
Kloeckner.i
Kloeckener.v
BRAND
Customer relationships
Deep industry knowhow
Reliability and trust
EXPONENTIAL TECHNOLOGIES
Big data analytics, data mining and machine learning
Kiana Systems (DFKI spinoff)

34. BEST RESULTS IN SIX YEARS
VIVALDI 34

35. PLATFORMS SCALE EXPONENTIALLY
VIVALDI 35
Platform Ecosystem
Traditional Pipeline
Number of Users and Interactions
Value

36. SOURCES OF THE NETWORKEFFECT
VIVALDI 36
CONNECTION
Networks become more useful as a user’s connections increase
CONTENT
Users discover and use data or information created by other users
CLOUD
Influential users advocate value of platform on the cloud

37. 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

38. 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?

39. Thank you
Erich Joachimsthaler
/Founder & CEO of VIVALDI/
ej@vivaldigroup.com
New York | Chicago | London | Zurich | Munich | Düsseldorf | Hamburg | Singapore
www.vivaldigroup.com
@ejoachimsthaler