Mr. Jan Weber, CEO of Possehl Erzkontor GmbH & Mr. Oliver Noske, Chief Strategy Officer of pektogram
Possehl Erzkontor drives his transformation and invests in the company pektogram. pektogram is a new think tank located in Germany with the goal to provide fresh impetus, design business models and develop industry solutions for the raw material industry. The company is steered by strategy and innovation expert Oliver Noske, who was previously Consultant to the CEO of Possehl Erzkontor, Jan Weber. What is behind this strategic investment and pektogram？
Refwin: Possehl Erzkontor launched the strategy Road#2024PLUS in 2020. Can you comment on the reasons and the core content of the strategy?
Mr. Weber: Last year, shortly after I started at Possehl Erzkontor in Lübeck as CEO, together with some executives I thought about how the Possehl Erzkontor of the future would look. This was necessary because the trade is facing strong changes in terms of digitalization, sustainability and changes in outsourcing behaviour. The goal of our Road#2024PLUS strategy is to be the first choice for raw material solutions. We want to become an end-to-end partner for raw materials, because we are unlikely to be competitive in the future with the trading business alone. To emancipate ourselves from being just a service provider and become a partner, we need to diversify and verticalize - in other words, expand our services and product portfolio. This will enable us to create added value for our customers.
Refwin: In the past year, what actions or measures has Possehl Erzkontor taken to promote the effective implementation of this strategy?
Mr. Weber: Let me give you some examples of our verticalization and diversification. In terms of verticalization, we’ve already taken several steps to take on parts of the raw material value chain ourselves. With our investment in the Hamm mineral grinding plant (MMW) in Germany we’ve expanded our range of services. From sourcing, financing, trading and logistics to processing and distribution, we offer 360-degree solutions from a single source. In addition, MMW does processing and recycling of raw materials - a field in which we also want to grow and become more involved. Another example of how processing is becoming important for us: we are currently preparing the use of processing equipment in Latin America.
Furthermore, we’ve started to focus on warehousing and have built up initial capacities in the USA. This new service offers our customers additional benefits such as supply stability, risk minimization and liquidity. Other examples of verticalization are our new quality and laboratory service, and the analysis of waste streams (slag, slurry, excavated material, etc.) to develop secondary raw material concepts.
Diversification: Those who know us know that we have our roots in the refractory sector. Admittedly these are still our top-selling products. But that isn’t stopping us from developing other areas, such as chemicals and industrial products. In chemicals in particular, we’ve already doubled our product portfolio. In addition, we are increasingly entering into long-term, exclusive partnerships. For example, Possehl Erzkontor will be selling all soda ash products (soda ash, sodium bicarbonate, sodium metabisulfite) from leading Turkish glass manufacturer Sisecam in the Latin American markets from 2021. This is a step in the right direction. To this end, we are investing in new employees. And that in turn enables us to supply all regions with products, as well as to enter into new markets. We’re looking forward to preparing market and feasibility analyses for new raw materials.
Refwin: What changes do you expect these moves will bring?
Mr. Weber: As I said before, we believe in the need to change, because every business model has a limited lifespan. The pressure to reinvent ourselves is omnipresent today, and has increased in times of increasing digitalization and sustainability concerns. By offering new services and taking on parts of the value creation ourselves, or reinventing ourselves completely, we make ourselves more independent of outside influences that negatively impact raw materials trading. Our goal: By 2024, pure trading in raw materials should account for only 50 percent of our revenue. We want to make the rest in other areas.
Refwin: Possehl Erzkontor established a new corporate venture, pektogram, in June of 2021. Is this also part of the strategy? Why set up this company?
Mr. Weber: Right at the start of our Road#2024PLUS strategy and transformation process, we realized that we cannot carry out all developments, technical changes, and innovations within our own four walls. We therefore chose the concept of “ambidextrous transformation.” This model offers many benefits for companies that want to be innovation drivers themselves, or want to prepare for changes resulting from technological developments, for example.
Mr. Noske: Ambidextrous transformation means that companies change in parallel exploitative and explorative ways. Exploitation is about transforming the existing business for more resilience. This means exploiting existing resources with a focus on predictability and efficiency. Change strategies can be verticalization and diversification, for example.
Exploration is about exploring the new and unknown, such as innovations and technologies. Exploration therefore means that companies must take the time to question themselves holistically so that they can change in the next step. This would require de-focusing, but that is contrary to efficiency-driven day-to-day business and amounts to a conflict of goals.
pektogram handles the exploration, i.e. the development and testing of business model innovations and technology developments for companies in the raw materials industry. This way, companies can ultimately do the one (exploitation) without neglecting the other (exploration).
We see ourselves as "sparring partners," developing ideas and working with concepts from innovation research as well as lean startup methods. These methods make it possible to discover and promote hidden potential in partners. By means of its iterative approach (feedback loops), pektogram works on prototypes in an extremely partner-centered way. Once the solution is developed, we also assist in its implementation in the market.
Refwin: Can you talk about the positioning of pektogram and what role it expects to play in the future?
Mr. Noske: pektogram pursues the goal of becoming the central node for digital competence-driven change in the raw materials industry. We want to provide the industry with fresh impulses, design business models and develop industry solutions. Why is this so important?
The raw materials industry is part of many supply chains and the starting point of multiple value chains, so it’s the perfect lever for real change in areas such as digitalization and sustainability. However, in our view, there is still a lot to be done in terms of the structures and competencies required for this change. This starts with education and ends with the creation of new solutions. For example, more and more manufacturers are demanding sustainability ratings to ensure that they only work with audited and certified companies. This change cannot be stopped. It is only a matter of time before sustainability ratings become an essential criterion for a business relationship. For raw material suppliers and traders, this means creating KPIs for sustainability in the raw material industry and making them measurable. And this is exactly what pektogram wants to create the basics for. In the long term, a data-based decision to actively purchase “sustainable” raw materials should become possible - with the required transparency as well as necessary standards.
Refwin: You mentioned digitalization and new business models. Do you have any preliminary ideas?
Mr. Weber: Everyone knows that technology and digital platforms will also play a greater role in our traditional business, to simplify the processing of transactions and thus save time. We cannot ignore this development, and must prepare for it.
Noske: pektogram wants to develop a cognitive sparring partner for the raw materials industry that is able to coordinate all transactions around value creation and thereby making sustainability a central decision factor.
Many projects are on the way. Currently, we are developing a customer dashboard with our partner Erzkontor. In the first step, this makes easily accessible data transparent, and frees up working time on both the customer and Erzkontor sides. After all, every day customers call and ask for information that could be made available much more efficiently in a compressed form online 24/7. We are thus laying the groundwork for Possehl Erzkontor to become a small platform of its own. Once this has been achieved, we want to make the first products available for online sale on a pilot basis.
Refwin: Thank you for granting the interview with Refwin, and I hope Possehl Erzkontor and pektogram have a great future.
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