Stephan Glander, CEO of Biesterfeld Group, joins Knowde and shares how digital transformation of knowledge management can grow market share and attract the best new talent. A rapid change to the workforce demographics is reshaping the expectations of the way we all do business. Sustaining a long term advantage hinges on sharing institutional knowledge digitally.
Read the Transcript.
Ali Amin-Javaheri: Hello and welcome everyone. I’m your host, Ali, CEO and Co-Founder of Knowde. Our objective with this series is to share the perspectives you need to navigate the changing digital landscape of our industry. We have yet another amazing guest with us today. His energy is infectious and I’m sure you’ll see it as we go through this conversation.
I’m thrilled to welcome Stephan Glander, CEO of Biesterfeld Group, one of the world’s leading distribution companies for plastics, rubber and specialty chemicals. Headquartered in beautiful Hamburg, Germany, and operating globally, Biesterfeld has a storied history dating back almost 120 years.
Prior to this, Stephan was the CEO of BYK Additives and Instruments. Thank you so much for making the time today. Please share some more words about yourself and Biesterfeld if you don’t mind.
Stephan Glander: Thank you, Ali. First of all, it’s a pleasure to be part of this and I’m really enjoying the collaboration with your amazing company. I entered the chemical industry as a chemist. I started my career at Bayer in the commodity area – the rubber business. I also worked in plastics conversion at Röchling, Quadrant, and later, Mitsubishi Chemical.
I always found the different markets and the different market dynamics really interesting and inspiring. It’s really intellectually challenging to understand what kind of languages are spoken in those market segments and what the dynamics are. And the combination of science and business of course, which is still very appealing and inspiring to me today.
Ali: You have a doctorate in chemistry and at that time I’m sure you could have done basically anything with that degree. Why did you go to Bayer?
Stephan: Back then it was pretty much standard for a German chemist to enter one of the “big two”– and Bayer was one of the two. That’s the short answer. I also found the people I met there really inspiring, which is very important in the first phase of your career to find the right boss.
Ali: Then you spent this entire time in the chemical space?
Stephan: I had a short stint in the startup world and the clean tech area. I guess I’ve seen quite a distribution from the commodity business to the very specialty business and also from a rather big company to a rather small company. I can also relate to what you have achieved in the startup world, which is certainly much more than I was able to achieve.
So it was not always in the chemical industry. I would also say that the plastics conversion sphere is slightly different.
Ali: Let’s talk distribution. This is a space in the market that’s near and dear to me and a super important part of the ecosystem. We spend a good amount of time with distributors all around the world and we’re certainly seeing them increase investments in all sorts of things, particularly in digital over the past couple of years.
Is there a particular digital initiative or capability within Biesterfeld that you’re really focused on building out?
Stephan: I think we have to invest in all kinds of digital capabilities. Traditionally we have not been able to make good use of the data we generate, so on a strategic level the most important part for us is knowledge management.
We want to be consultants to our customers. We really feel that we can play a specific role in the more specialty, specification-driven part of the business. There it will be really critical and change the dynamics in terms of market share.
Today, a lot of the knowledge is in the head of the sales reps or development engineers. The company that is able to digitalize that institutional knowledge – plus some external data – will win.
Ali: I literally couldn’t have said that better myself. For anybody in this part of the market, read that over again.
I think what you just said is one of the biggest unlocks for this market. There’s so many products across so many suppliers and there’s so much knowledge across so many documents and in people’s heads. If you want to be really responsive to customers, meet their expectations and recommend the right products, you have to digitize that knowledge.
That was so well said. I would imagine that is shaped by what you’ve been learning from your customers. From our perspective, their expectations have been changing. I was just reading the philosophy page on your website prior to us jumping on. I’m paraphrasing a little bit, but it said: “our focus is on simplifying the activities of our customers and bringing unique capabilities to make their activities easier” – which is essentially in line with what you’re just referring to.
How do you see the expectations of customers changing?
Stephan: To be honest I’m almost a bit surprised that the expectations do not change more quickly than they do. In many industries we serve, I feel the speed is rather slow – because I think the technology is already there to do many things we as consumers expect from a company that wants to do business with us.
I don’t see that across the board in all industries, but it’s clear that it’s going to come. In some industries, it already has. There are all these different markets – certainly the cosmetics business has different dynamics, drivers, and expectations in that respect versus an aerospace business or an automotive market.
From that perspective, I really believe we have to focus on areas where this change of expectations is leading in a sense that they’re really further advanced and further ahead. Of course, the areas which are a little bit closer to the consumer business tend to be leading in that respect. Our market knowledge plays a role and also the differentiation between a specialty-driven market versus a commodity-driven or essentials -driven market. I’m sure we will continue to see development at different rates depending on market dynamics, but it will go down the path of what the consumer-oriented market has seen already. We only need to look at what’s happening there to get an idea of what’s going to come. The question is only when.
Ali: Totally agree. Obviously, the dynamics depending on the market, geography and everything else are always a little bit different.
I was visiting a company yesterday and they told me the average age of the company in 2019 and the average age of the company today. It was a 12-year decrease, which is pretty phenomenal, right? Obviously a lot of things happened in those four years, but in a matter of those four years to change the average age of the company by 12 years is crazy. As I was walking around their office it was obvious the energy in the room was different because it was a lot younger.
I think the expectations are shifting so rapidly because of just that reason. Those are your customers, so it’s going to be interesting to see what happens next.
Stephan: I couldn’t agree more. I really believe that digital capabilities and sustainability in our markets are certainly key for employer branding and attracting the right talent for the future. We are on the brink of a major demographic shift in the industry. If we want to attract the really good, bright, young people only for that reason you just described, we need to be on a different digital competency level than most industry players are on today. There’s no doubt in my mind that this plays a more important role.
Ali: It’s going to be interesting. You just hit on the next hottest topic, which is all things sustainability. This company I referenced talked about digital and sustainability on their walls everywhere, and their young employees gravitate towards it. It’s a big deal.
I want to talk about something that I think is really important and I’m curious to get your opinion. Three years ago, the markets were really hot. Everyone was raising prices, demand was high and supply was where it was. I think that kept companies really busy. There was a lot of noise to deal with and it forced people to take initiatives like digital and postpone them a little bit.
Now in 2024 they’re thinking about postponing them for almost a different reason. Prices are going down and they think they need to get short-term centric and not think about things that are four or five years down the road. I think that mentality is really dangerous, especially coming from a senior executive that’s supposed to almost always be thinking further years down the road.
How do you balance those two things? The short-term expectations of shareholders, this quarter, EBITDA, etc. against the long-term things that you know are right to invest in now that don’t have immediate ROI, but are just the right thing to do.
Stephan: We have one big advantage at Biesterfeld, which is that we’ve been a family-owned company for 117 years. So I think I have an easier time convincing our shareholders to buy into longer-term strategic initiatives compared to some of my peers.
Personally, as a scientist who has approached the industry from R&D, I know you cannot switch these things on and off. You have to be consistent in your investments and in the personnel and experts who can really drive this agenda. It’s more of a marathon than a sprint.
I really believe there is no quick fix – no one or two-year investment and then you’re at the level. I really believe there has to be a continuous plan, which is actually part of the problem in distribution. This industry is quite opportunistic in nature and not super strategic. As management, that’s a big value we need to bring to this industry – to think about it in a more strategic sense and develop some kind of target we work towards. It’s not a question of how we do it. We have to do it. And in our case, it’s not so difficult to execute because our shareholders are very long-term oriented.
Ali: You are lucky from that perspective.
In closing, do you have any words of encouragement that you want to share with some of your employees at Biesterfeld, maybe those who are specifically working on digital initiatives?
Stephan: I believe that some of our experts in digital feel that they are not really part of the core of our business. What I want to tell them is that needs to change.
I really believe that all strategic business decisions have to include digitalization and sustainability in their business model and in their entrepreneurial decisions. I’m absolutely convinced that it will be key for us to show significant progress and it’s really essential for the future of Biesterfeld that we bring our digital competency to the next level. As I mentioned before, sustainability and digitalization are the two key drivers for attracting talent. I am convinced we will be able to create a dynamic here in that direction. It will become part of our core business considerations and we will build business models around digital competencies.
Ali: I can’t agree more. We’re certainly seeing a trend where digital now has a seat at the table with somebody like you. I don’t know where you are in building out your digital team, but I know that was something that was really important to you.
Stephan: We have just made some adjustments in terms of organizational structure to give this more importance and more traction not only within the organization, but also in the interactions with our customers. I believe that in conjunction with the family ownership and the size of our business, we have a good chance at making this the hottest, coolest place to work for digital experts, at least in the distributed chemicals distribution field.
Ali: I love it. It’s always great to see you. For those that haven’t met Stephan – I’m specifically talking to maybe some of the producers out there – I highly encourage it. I think he has a unique perspective. And like I said, his energy is infectious. Stephan, I appreciate the time.
I love these short conversations with folks like you that help move the industry forward and I know our audience loves listening to these, so thank you for taking a few minutes out of your day.
