In collaboration with the leading German business magazine WirtschaftsWoche, Munich Strategy and BLOOM have identified 50 digital pioneers in the German SME-sector, also known as the “Mittelstand”.
From a database containing 4,000 German companies with annual revenue between €5M and €1B, a selection of 400 candidates was made. Next to a score on revenue and EBIT growth, these candidate companies were assessed on six areas of their business: digital marketing, online presence, online sales, online customer service, physical product innovation and digital product innovation.
The study shows that traditional “Mittelstand” companies are mainly focused on digital initiatives in product innovation, while digital pioneers also show a strong digital performance in customer-facing parts of their business, such as marketing and sales. Digital pioneers identified in the study include XING, NFON, fensterversand.com, Canyon Bicycles and Westwing.
The study shows that traditional “Mittelstand” companies are mainly focused on digital initiatives in product innovation, while digital pioneers often combine product innovation with a strong digital performance in customer-facing parts of their business, such as marketing and sales.
Based on their strategy and use of digital innovation, the study highlights three segments of “Mittelstand” companies:
- Customer journey champions are able to achieve a superior customer experience by tracking and optimising each point of contact in the digital customer journey. Their business models might be relatively traditional, but the high degree of digitalisation, allows them to beat competitors with superior execution.
- Integrators achieve best-of-both-worlds results by linking the physical and digital world in their product offering, e.g. by leveraging sensors, connectivity, and machine learning. Their product innovation drives increased customer satisfaction and a competitive edge
- Disruptors are able to unlock completely new markets by innovating with digital business models in traditionally offline industries. Their novel approach allows these companies to drive sectors online.
The study highlights that digital companies are the winners of today and tomorrow. The top 50 digital pioneers show faster growth than the average “Mittelstand” company: revenue growth is five times as high, and EBIT growth twice as high.