strategy development of r&i · pdf filementor’s edge ravi kikan, ... (m&a)...
TRANSCRIPT
Outline
• Innovation in perspective
• Chemical industry life cycle
• Evolution of R&I over the industry life cycle
– Consequences for innovation management
• Outlook
• Conclusion: a personal perspective
2"Dr."Volker"Trautz"
Examples of significant innovation (>$10B) Innovation When
Aminoacids 1805 Lead-Acid Battery 1854 Azo-Dyes (e.g. Indigo) 1861 Liquid Crystals 1888 Haber-Bosch process 1910 Nylon (polyamide) 1935 Teflon (PTFE) 1938 Polypropylene 1953 Carbon Fiber 1958 Spandex (Polyesther) 1959 Time-released medication 1960’s
4"Dr."Volker"Trautz"
The majority of innovations in the past 150 years needed >20 years for significant business
5"
""
1800" Today"1850" 1900" 1950"
Daniell"Element"
Teflon"
OLED"
Fischer<Tropsch"
Polymers"
Lotus"effect"
TNT"
Viagra"Pill"
Fracking"
Natural""rubber"
Haber<Bosch"
Aspirin"FerIlizer"Electrolysis"
Air"separaIon"
<"5"years"""" 5<10"years"""" 10<20"years"""" >"20"years""""Source:"Evonik"Industries"
5"Dr."Volker"Trautz"
How can you describe innovation in one word?
1. Creativity
2. Change
3. Transformational
4. Different
5. New
“A true innovation can never be described in one word, because it is best described by the moment of silence created when all the people who said it will never work realize they are dead wrong”
Mentor’s Edge Ravi Kikan, India
6"Dr."Volker"Trautz"
Transformational innovation needs patience and stamina!
7"
Product-line extensions into new markets Success rate: 30-40% Time to commercialization: 2-7 years (average 5)
New Product launches into new markets Success rate: 15-20% Time to commercialization: 8-19 years (average 14)
Product-line extensions into existing markets Success rate: 40-50% Time to commercialization: 2-5 years (average 4)
New Product launches in existing markets Success rate: 30-40% Time to commercialization: 6-15 years (average 11)
Low
High Low"
Deg
ree
of m
arke
t fam
iliar
ity
Degree of technology familiarity Source:"McKinsey"on"Chemicals,"2013"Dr."Volker"Trautz"
Evolution of R&I over the life cycle of the chemical industry
1850" 1900" 1950" 2000"
1"
2"
3"
3. Creation of individual segments Focus, new champions 2. Race to diversity to grow and dominate 1. Creation of champions
8"Dr."Volker"Trautz"
1. Creation of champions
1850" 1900" 1950" 2000"
1"
Characteristics R&I: • Strong centralized R&I / critical mass • Strong links between universities and
industrial R&I • Positive attitude towards innovation • Company leaders often former scientists • Business generally less risk
averse
9"Dr."Volker"Trautz"
Companies diversified and starting to focus on their strengths Characteristics for R&I: • Central R&I location, but separate specialized labs • Increased competition forces cost awareness • New raw materials (coal oil) • Increasing industry globalization leads to
more global R&I activity • New tools allow faster and more effective
R&I
1920" 1950"
2"
2. Race to diversify, grow and dominate
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3. Segmentation and focus, new champions
1950" 2000"
3"
Industry characteristics • Globalization • Focus on competitive strengths, segments for
competitive edge • Transformational portfolio changes (M&A) • Increased importance of financial
community • New champions from new regions • Sustainability more and more important
11"Dr."Volker"Trautz"
Consequences of 3rd phase for R&I
1950" 2000"
3"
Different industry segments need different R&I approach: • Petrochemicals / base chemicals
– Focus on cost and efficiency – Economy of scale – Process and catalysts continuous improvement
• Fine / Specialty chemicals – Focus on few segments of strength – Life science – Industrial bio-tech – Services
12"Dr."Volker"Trautz"
Consequences of 3rd phase for R&I (Cont’d)
1950" 2000"
3"
Company focus needs different R&I approach • Globalization of R&I • Society looks very critical at Industry (e.g. genetic
modification in Europe) • Sustainability • Renewable raw materials • From chemical to biochemical syntheses
(e.g. Vitamin C) • New tools save cost and create new opportunities
– micro plants – computer simulation – screening
13"Dr."Volker"Trautz"
Typical innovation spending by segment
0%#
2%#
4%#
6%#
8%#
10%#
12%#
Pharma# Fine#/#Specialty#chemicals#
Polymers# Petrochemicals#/#Base#chemicals#
Typical#R
&I#inten
sity#
7A12%#
7A12%#
3A8%#
1A4%#0.5A2%#
14"Dr."Volker"Trautz"
R&D intensity, % of sales (2013) 14.1%%
0.0%$
2.0%$
4.0%$
6.0%$
8.0%$
10.0%$
Merck$Group$
Syngenta$
Givaudan$
DuPont$
DSM$
Bayer$
Teljin$
WackerCC
hemie$
Mitsubish
i$Chemica
l$
Persian$Gu
lf$Petrochem$Ind$Co$
ShinCEtsu$
Clariant$
PPG$Industrie
s$Lonza$
Evonik$
Dow$Chemica
l$Toray$
AkzoNo
bel$
BASF$
Solvay$
Arkema$
Ashland$
LANX
ESS$
Mitsui$Chemica
ls$
Eastman$Chemica
l$Air$Liquide$
Tosoh$
Mom
enTve$Specialty$Chemica
ls$Borealis$ ICL$
Air$P
roducts$
Celanese$
Huntsm
an$
NOVA
$Chemica
ls$
Hanw
ha$Chemica
l$Praxair$
Linde$Group$
SherwinCW
illiams$
K+S$
LyondellBasell$
Braskem$
Lo[e
$Chemica
l$
Yara$InternaTonal$
Sumito
mo$Chem
ical$
R&D$Intensity
,$%$
15"Dr."Volker"Trautz"
Gross expenditures on R&D (2014)
Asia%Americas% Europe% ROW%
39.1%%33.9%%
21.7%%
5.3%%
US 465 China 284 Japan 165 Germany 92 South Korea 63 India 44 Russia 40 Brazil 33
Leading countries Total US$ 1,62 trillion
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Sustainability creates added value
Balance between all aspects of sustainability
Society(
Ecology( Economy(
17"Dr."Volker"Trautz"
Outlook
• Strong influence of ambition of individual companies • Need to balance short term financial objectives versus longer
term strategic vision • Trends:
– Open innovation – New and more extensive collaboration models – Partnerships
• From petro-based to bio-based • Increasing role of Venture Capital investment
18"Dr."Volker"Trautz"