The big pivot: Interview with Körber CEO Stephan Seifert

Sometimes, the best way to move forward is to change. Few know this better than Stephan Seifert, chairman of the group executive board of Körber. For almost a decade, Seifert has led Körber on a transformation that fundamentally reshaped the business. What started as a machinery-focused company turned into an international technology group offering an integrated hardware, software, and digital technology stack. In the process, the company divested 70 percent of its business, acquired and unified 43 brands, and built a new partnership ecosystem to achieve almost 100 percent growth in just five years.

McKinsey Partner Christian Jansen sat down with Seifert to discuss Körber’s portfolio, operating model, and technology stack transformation. In the conversation, Seifert shared his thoughts on Körber’s planning process, their strategies to accelerate growth, and how Körber runs M&A and partnerships. He also gave his perspective on the opportunities he sees going forward, including those related to physical AI.

An edited version of the conversation follows.

Christian Jansen: Can you describe the magnitude of the transformation that you underwent at Körber?

Stephan Seifert: More than ten years ago, after the financial crisis, we knew Körber needed to change. We started from the very beginning by distinguishing the long-term view and the short-term view. This is important because it is very easy to be distracted from the everyday business by where you want to go. And we tried to avoid having the everyday business hijack the long-term view.

We looked at our portfolio from a long-term perspective and spent quite some time analyzing megatrends and technology trends in the world. Out of this, we asked, “Which are the technologies that we want to own? Which are the technologies that we could access through a partnership?” And whenever we came to the conclusion that a business we owned was not the strongest driver for growth, we divested that business.

We divested 70 percent of our portfolio during our transformation. To make that more tangible, we started with €2.2 billion in sales. Over time, we divested €1.6 billion, leaving us with just €600 million of our core portfolio remaining. We then invested and acquired €1.1 billion in revenue, bringing us to €1.7 billion overall. And with this new core portfolio, we have grown almost 100 percent in the past five years to €3.1 billion.

At the same time, we changed our technology stack. Initially, we generated 100 percent of our sales from machinery and process equipment. Today, €800 million comes from pure software and digital solutions independent from machinery sales. Besides numbers, I think this has been one of the biggest game changers for us.

This was the result of many dedicated people. Over the past nine to ten years, my colleagues on the executive board, our leadership team, and all of our 13,000 people around the world made this transformation a success.

Christian Jansen: In your transformation, in contrast to many machinery players and investors in Europe, you did a lot of M&A. What made you choose this path?

Stephan Seifert: Being a machinery company, we were real experts on mechanical engineering and automation. At the same time, we realized that Industry 4.0 would require operating software and digital solutions.

There were two options: hire software and digital people or do bold acquisitions. We decided to go for bold acquisitions. Building software competence by yourself is a three-, five-, or seven-year exercise. We wanted to leapfrog this evolution by buying top-notch companies that already have strong reputations, markets, and teams with expertise in technology.

Christian Jansen: What were some of the key learnings from your M&A journey?

Stephan Seifert: I’m much smarter now than I was at the beginning of this journey; I learned a lot. I would say five points have been critical for Körber.

Number one, develop a mindset that you really want to go for disruptive and bold acquisitions. You need to know that any bold acquisition of a top-notch company will change your current organization. Be prepared for that.

Number two, define your M&A agenda clearly. What do you want to acquire in terms of technology? And where do you want to acquire in terms of regional access? Be clear about what will really make a difference, and stick to it.

Number three, get a great M&A team and expertise on capabilities. Everybody’s looking for the best targets and companies, so if there’s a structured process for acquiring these companies, it’s typically highly competitive. We have been successful from day one by having approximately 50 to 100 people on the DD [due diligence] team to go as fast as possible.

Number four, make sure that at the beginning of the process you have the funds available for this acquisition journey. If you need to look for funds during the process, it can become very difficult.

And number five, at the beginning, not everything will be a 100 percent M&A opportunity. There might be a partnership or a minority or majority shareholding situation to get access to a company and buy it later.

Christian Jansen: You built a strong relationship with your partner, KKR. Could you give us some background on that and any learnings that might be transferable to other companies in similar partnership situations?

Stephan Seifert: I have to say, we really went through a learning curve here, but today, it’s a well-exercised routine. What we learned was if you really want to play in the champions league in any vertical or technology layer, get the best partner in that industry to train you, work with you, and define a game plan. But also be clear about what you offer.

At Körber, the key benefit we bring to the table is strategic knowledge. We are a strategic investor. We are here for the long term. We know this market very well, and we know these customers very well. In our supply chain business, we provide hardware solutions, such as warehouses, and we have a software stack and digital solutions.

So we understood the needs of the market, but we were not yet ready for accelerated growth in the software layer. We also realized that Körber was not mature enough to lead top-notch software companies. If you look at the software industry, products are managed and developed at a totally different speed compared with machinery industries. We saw that we needed to do something different to achieve this accelerated growth trajectory.

We knew that if we wanted to become a global champion in supply chain software, in the end, the right partner was KKR. The combination of Körber’s strategic and market knowledge and our reputation of being here for the long term with KKR’s profound global software access in terms of talent, companies, and know-how is the key reason for us now being among the top three globally.

There were three learnings that helped in our partnership. First, look for the common denominator. It is very important that you are clear from the beginning about what your common long-term goal is. I recommend investing a lot of time in discussing this. Many years ago, we would have looked for the smallest common understanding with our partners and quickly gone forward, but then problems would come up as we went ahead.

Second, be prepared to adapt your own leadership or operating model in a partnership—because the partner comes with their own operating and leadership model. Try to get the best of both worlds. Figuring this out also builds a structure of healthy conflict for this partnership at the very beginning.

Third, make sure you get the right people for this partnership—people who share this common goal and people you trust to manage this new leadership and operating model.

Christian Jansen: How did you manage culture during your transformation?

Stephan Seifert: This is a simple word but a big question. I would define culture here from different viewpoints.

Number one: You need a culture of change—being ready to change, being ready to transform. If you don’t have this culture at least with the leadership team, it gets very difficult. We spent quite some time creating the awareness, understanding, and sense of urgency that we needed to change our portfolio, that we needed to advance our operating model, and that we needed to advance our technology stack.

Then, of course, for the whole organization, people need to find a common denominator where they can say, “I belong. This is my company. I can identify with it.” Even today, mechanical engineers, software engineers, and digital engineers don’t speak the same language. There’s a difference in the working culture. There is a difference in how things are approached. What we try to do is to raise awareness of how each of these three layers works independently and how we can integrate them.

In the transformation phase, we bought many companies with their own brand. Until 2020, Körber had 43 brands. To create a common sense of belonging and a common platform for identification, we transformed all 43 brands into one brand—the Körber brand. And for many, this was a fresh starting point that allowed for more openness.

This is the journey we’re still on. We are not yet done, but we have made a lot of progress.

Christian Jansen: Agentic AI, large language models, and gen AI are going to shape the next decade. What are your reflections on where the opportunities and challenges are for Körber in these areas?

Stephan Seifert: At the end of the day, we need to look at how these technologies can benefit our customers. The pharma industry, the supply chain industry, and our customers in technology all have a big picture of an automated factory. Our job is to identify which of these technologies are suitable to make this big picture happen.

We have defined 12 “AIR” technologies—automated, intelligent, and regenerative technologies. And we are now continuously integrating these 12 technologies in our engineering work and in our R&D road map.

I get very excited about the potential opportunities around physical AI. Physical AI will combine many different technologies that are available today but are not yet fully integrated with each other. On the other end, there are no physical goods without physical production. Hence, production equipment will always be the core of any production process.

At Körber, we are very well positioned because the core of what we have done over the last 80 years is machinery and process equipment. Now, we need to enrich it with these new technologies. It is also important that we globalize our R&D footprint and technical expertise because we need to be where the innovation and technology disruption are happening.

Christian Jansen: When we look forward, what will the next ten years bring, and where do you want to take Körber?

Stephan Seifert: Thanks for this question because it excites me a lot. We just kicked off our next ten years here at Körber. We are continuing on our path of transformation and renewal. We call our long-term view LIFE 2035. LIFE stands for four strong pillars: L for leadership, being the leading partner in our industries; I for innovation, our DNA at Körber; F for “findependence,” which means financial independence; and E for global empowerment.

We have a very ambitious goal. If we continue with the same focus and the same speed as we have had in the past ten years, we want to triple the company in the next ten years to a €10 billion company. We’re leaning on various drivers to make it happen. We’re entering growth markets, and we plan to invest double the money in R&D and innovation. And we will continue to acquire top-notch technology.