Answer:
He gained that nickname because of this strong style of management, that combined keeping a tight grip on internal affairs in the country, maintaining a strong position in foreign policy, and making use of military force when necessary.
This is why he managed not only to unify Germany, but to expand the German colonial empire (even when he was a not particularly keen on colonialism), and defeat France in the Franco-Prussian War. He also installed the first modern welfare state of any country.