Corporates around the world have spent billions implementing cutting-edge AI but according to studies only a small percent are reaping returns. An August report from MIT, for example, found that only about 5% of GenAI pilot programs achieve rapid revenue acceleration. The vast majority deliver little to no measurable impact on P&L.
Dorfner, a mid-sized company, which owns one of the most significant kaolin and silica sand deposits in Germany and traditionally leverages the mined minerals to sell functional fillers for paints, composite materials and construction materials, is proving to be an unlikely leader. Its journey offers valuable insights into how the technology can transform traditional industries by improving efficiency, making them more sustainable and reshaping future business models.
Thanks to AI, Dorfner has morphed from a company offering a sole product and raw material to one that additionally offers services that help its clients solve supply chain issues, cut costs and become greener. It is additionally functionalizing new categories of products, offering its tech tools and know-how to startups and aiding Germany’ old economy companies to use AI in new ways.
“Our use of AI not only optimizes internal operations, it redefines what is possible in resource usage, sustainability and business growth,” says Acting CEO Mirko Mondan, who is scheduled to participate in a fireside chat with The Innovator’s Editor-in-Chief at the DLD Future Hub: Impact AI conference in Munich on September 11.
The use of its AI platform has not only enabled Dorfner to expand into entirely new markets it has reduced the need to excavate virgin raw materials by 60%, making the company itself more sustainable, says Mondan, a serial entrepreneur who was recruited by the family as acting CEO with a mission to strengthen the core while finding new sources of business.
Mondan and his team has done that and more. Dorfner says it has measured significant improvements when comparing its traditional work to its AI-supported approach, reporting
-Time savings: Formulation time reduced by 66%
-Cost Efficiency: Laboratory material usage cut by 69%
-Quality Assurance: Consistent product quality reliably achieved
-Sustainability gains: Transport distances reduced by 43%
-Environmental Impact: Waste generation lowered by 69%
-Growth: Sales have increased by 30% over the last two years, the customer base has expanded beyond Europe and new revenue streams are being developed at a time when others in the industry are seeing revenues decline.
-Profitability: A 40% increase over the same two year period.
To ensure that Dorfner Group’s AI solution results in sustainable change and lasting impact it has aligned the initiative with the company’s long-term strategic plan, Dorfner 2035, which places AI at the heart of its transformation from a mineral processing company to what Mondan calls a “solution-oriented technology leader.”
“We are no longer just a mining company, we are becoming a technology provider of new offerings and sustainable solutions that drive progress across industries,” he says.
Confronting Critical Challenges
When Mondan joined Dorfner in 2020 the company faced two critical challenges: the need to extend the economic life and value of finite mineral resources and a growing demand for faster, more sustainable and higher-performing product formulations, particularly in industries like construction, chemicals and paints and coatings.
“We knew we could not rely on traditional methods alone to ensure long-term relevance and resilience,” says Mondan.” Our transformation journey began with that realization and the conviction that AI, when used the right way, could help us reinvent not just what we make, but how we think, work and grow.”
The first item on Mondan’s agenda was to forge an innovation strategy. The strategy he settled on is based on two pillars, sustaining innovations at the core and introducing radical innovations outside of current markets. (see The Innovator’s 2022 story about the start of Dorfner’s transformation journey.)
The true turning point came in November 2021 during an internal innovation workshop. In the face of increasing pressure from the COVID-19 crisis, sustainability demands and supply chain disruptions, it became clear that AI would be essential to maintaining future competitiveness, says Mondan. But it needed help to develop its strategy and implement the technology.
Getting Employees Onboard
During a ride in a dump truck at Dorfner’s mining facility, one of Mondan’s friends, who runs a family-owned business, shared his experience working with UnternehmerTUM, the Technical University of Munich’s Center for Innovation and Business Creation. UnternehmerTUM’s Business Creators program ticked all the right boxes, says Mondan, as it is specifically geared to helping SMES widen their traditional business models and help them use open innovation to think outside the box and move from the why to the how.
Dorfner did not just sign up a few key executives for UnternehmerTUM’s course. It chose people from across its business that Mondan thought could become good change agents and then instructed each one of them to go out and tell five people in the company what they learned along the journey. Master craftsmen and laboratory technicians were given the incentive and the opportunity to acquire new skills and broaden their horizons through targeted training, evolving into data analysts and playing a key role in the digital transformation, says Mondan. “During our AI journey we shared internally wins and visible benefits, such as reducing repetitive tasks and improving decision-making speed. As employees experienced these improvements firsthand confidence in the technology grew.” This approach not only helped overcome resistance but also fostered a stronger innovation culture, he says. What’s more “this cultural shift, supported by measurable outcomes like a 30% sales increase and higher customer satisfaction, gives us confidence in the long-term resilience of our AI transformation,” says Mondan.
“Thanks to a team effort we are succeeding in our goal of transforming the company and the mindsets and skillsets of the people so that we will have a base 50 years from now for the generations to come,” he says.
Building New Business Models and Process Innovations
To meet the planned growth path of the company, new sources of value had to be developed to extend the existing business and/or tap totally new sources of revenues. “We were thinking too narrowly,” says Mondan. “We needed to unlearn things and open our minds.” The company’s definition of innovation was rebuilt. Rather than just focusing on new products the company started building entirely new business models or process innovations.
While Dorfner was engaged in this process its big customers started approaching the company because hundreds of the raw chemicals needed to make their products were not available due to supply chain issues. Customers wanted to know if Dorfner could create alternative formulations.
It was an “aha” moment for Dorfner. Like many traditional companies much of its industry knowledge was stored either in the heads of their long-term employees or in spread sheets. During the workshop the idea that surfaced that its data about chemical formulations could be gathered and organized in a database and AI applied to that data to help with reformulations that would serve as alternatives or be more sustainable.
It took about six months for the company to get the right data sets in place.
“When our data was in Excel spreadsheets no one was using it,” he says. “Now we make use of our treasure. We took data from the last 25 years and made it digital. Over the next few years 30% of our people will retire so this is a way of ensuring we don’t lose the solid base from our past.”
The company thought it would have to build its own AI software platform, but in 2022 it found a Silicon Valley company that had already built an AI platform for the materials and chemicals industry.
In March 2023 Dorfner introduced the AI solution to the public and began engaging customers directly. “The initial feedback was overwhelmingly positive,” says Mondan, “validating not only the technology but also the strategic direction we have taken. It confirmed we were on the right path, not just technically but commercially.”
When a request for a filler formulation is received Dorfner uses AI to run a simulation. By bringing it into a platform and applying AI we can now offer a new formulation service to all our clients around the globe,” says Mondan. If a client uses a small fraction of a material in its formulations and that material is no longer available Dorfner can run a simulation, come up with the five best hits, test them in its lab and propose a solution within a matter of days, he says. “We are experts in functional fillers. AI helps speed up our R &D and promises to give us category leadership.”
The new strategy is also expected to allow Dorfner and its clients’ products to become greener. “We are currently shipping materials all over the globe,” says Mondan. “My dream is to tell customers that we can sell them a new formula for the functional filler field and point out the three local materials they can use. This way we stay in the game by offering the best formula, with the best quality, at the lowest cost, with the lowest environmental footprint.”
Painting: A Difference Future
Dorfner, which uses the minerals it mines to produce a critical component in paints, is starting by offering its clients AI-based recipes for functional fillers in paints that are cheaper and more sustainable.
Unlike conventional tools that generate only basic color recipes Dorfner’s AI predicts the complete set of final coating properties, with an average accuracy rate of 90%, says Mondan. It evaluates over ten key physiochemical parameters, using a networked optimization model that reflects real-world application demands.
“Our system can simulate over 100,000 formulations in just three hours, automatically identifying the top 500 candidates,” he says. These are presented through an intuitive visual interface and then narrowed down to the two or three most promising options using targeted filters. This allows experts to make high-impact decisions faster and with greater confidence. Waiting times for specific standards have been reduced from 30 days to just three hours, dramatically accelerating the development process.
“The effect on our operations has been game-changing,” says Mondan. “Our formulation process is now faster, smarter and significantly more efficient. Lab work has been streamlined. What used to require 70% of an employee’s time now takes far less, with more focus shifting to strategic development and innovation. Only the most relevant formulations reach physical testing, leading to faster time to market and resource savings.
“By reducing the carbon footprint of our products, encouraging the use of regional raw materials, and promoting the responsible use of finite resources it enables smarter, greener product development,” he says.
Dorfner is sharing its expertise and technology with German startup
MissPompadour, to help it formulate its own decorative paint for do-it-yourself projects. Dorfner’s AI-driven formulations bring down the cost of decorative paint, makes it more sustainable and helps the startup develop new trendy colors in record time, “helping them to outpace their competitors by being on the edge of what people want now,” says Mondan.
“Our industry – paint- is super old and super slow,” says MissPompadour Co-founder Erik Reintjes, the startup’s chief marketing officer. It typically takes three to five years to develop a new paint and six months to test it. Thanks to Dorfner’s AI platform MissPompadour was able to produce its entire product line in three months. Since it owns it recipes, it can adapt them to the requirements of other countries and produce them locally in record time, he says. “Germany’s biggest paint companies – billion euro companies – are not this fast.”
Expanding Into New Business Lines
In addition to helping MissPompadour derive new paints, and optimizing the price, performance and sustainability of its own existing formulas, Dorfner’s AI platform “gives the company the competence to use data to derive new use cases,” says Tim Lüken, who left his position as a managing partner at UnternehmerTUM’s Business Creator program to work full-time for Dorfner, a testament, he says, to his believe in the company’s potential.
The use of AI-driven formulation technology and the exploration of new raw materials such as calcinates, meta kaolins secondary raw materials, recycling materials and waste streams, has helped the company has significantly reduced its environmental footprint while growing the business, says Lüken. One of the most significant outcomes has been the radical reduction in the need to excavate virgin raw materials compared to previous years.
The use of new novel raw materials is also opening new opportunities. “By sharing our solution across industries and business units, such as sanitary and kitchen sinks, we are scaling the impact of this innovation,” he says.
Dorfner is additionally using AI to offer services further far afield from its traditional business. It is, for example, developing a mobile phone app that analyzes the level of particle matter released by wood fireplace flames and an additive to reduce it. Through its new venture builder arm Sio2 Ventures Dorfner is supplying BMW and German SMEs with a solution that uses AI-powered visual image recognition to screen workers and give the company feedback on ergonomics to reduce workplace injuries.
And Dorfner doesn’t plan to stop there. “Our AI journey is far from over,” he says. “We are actively exploring new opportunities, tackling emerging challenges and harnessing the momentum of rapid technological advances. Our next frontier is designing smarter, more adaptive decision environments, intelligent systems that not only guide better decisions but also improve innovation and unlock the full potential of AI-driven operations.
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