Klöckner & Co: Steeling for a Digital World

Scott Duke Kominers; Carin-Isabel  Knoop

Case | HBS Case Collection | February 2020

Klöckner & Co: Steeling for a Digital World

by Scott Duke Kominers and Carin-Isabel Knoop

Abstract

Hoping to get ahead of potential digital disruption at Klöckner & Co.—one of the world’s largest steel and metal distributors—CEO Gisbert Rühl set up both kloeckner.i (KCI), an internal transformation arm, and XOM Materials (XOM), an independent industry platform. KCI and XOM sought to digitize the $350 billion materials supply and service chain, and promote greater price transparency and efficiency. However, the materials market traditionally resisted digitalization, making the process longer, harder, and more expensive than expected. As 2020 opened, Rühl and his teams wondered how they could dramatically increase uptake.

Keywords: digital transformation; Corporate Entrepreneurship; Market Design; Market Platforms; Multi-Sided Platforms; Markets; Industry Structures; Supply and Industry; Technology Platform; Technology Adoption; Transformation; Steel Industry; Information Technology Industry; Europe; Germany;

Language: English

Format: Print

20 pages

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Citation:

Kominers, Scott Duke, and Carin-Isabel Knoop. "Klöckner & Co: Steeling for a Digital World." Harvard Business School Case 820-035, February 2020.

This paper develops a class of equilibrium-independent predictions of competitive equilibrium with indivisibilities. Specifically, we prove an analogue of the “Lone Wolf Theorem” of classical matching theory, showing that when utility is perfectly transferable, any agent who does not participate in trade in one competitive equilibrium must receive her autarky payoff in every competitive equilibrium. Our results extend to approximate equilibria and to settings in which utility is only approximately transferable.

Hatfield and Kominers (2012) introduced a model of matching in networks with bilateral contracts and showed that stable outcomes exist in supply chains when firms' preferences over contracts are fully substitutable. Hatfield and Kominers (2012) also asserted that in their setting, full substitutability is equivalent to the assumption that all indirect utility representations of each firm's preferences are quasisubmodular; we show here that this claimed equivalence result does not hold in general. We show instead that full substitutability is equivalent to weak quasisubmodularity of all indirect utility representations.

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Klöckner & Co: Steeling for a Digital World

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