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Stavanger, 29th January, 2015

Innovating 4 Change at DSM

Rob Kirschbaum, CEO SakuragiConsult(former VP Open Innovation DSM)

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Introduction to Royal DSM

Innovation- Open Innovation model- DSM Innovation Center- The “Balancing Act”

Breakthrough examples- Health- Sustainability

Take aways

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© 2014 DSM. All rights reserved

DSM at a glance*

Page 4

Sales~ €10 billion

EBITDA~ €1.3 billion

Globalpresence

~24,500employeesworldwide

Listed atEuronext NYSE

Share pricequintupled in25 years

• DSM is a global Life Sciences and Materials Sciences company active in health,nutrition and materials

• DSM delivers innovative solutions that nourish, protect and improve performance inglobal markets such as food and dietary supplements, personal care, feed, medicaldevices, automotive, paints, electrical and electronics, life protection, alternativeenergy and bio-based materials

• 5% of Turnover in R&D (~2500 Fte)

SustainabilityleaderTop rankingDow JonesSustainabilityIndex

* 2013 numbers total DSM

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DSM – understands change

Coal Mining CommodityChemicals

SpecialtyChemicals

Life Sciences &Materials Sciences

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Successful transformation track record

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Evolution

Life Science Products

Coal

Fertilizers

Petrochemicals

Performance Materials

Bioterials / Biologics

Chemical engineeringPolymer technology

Life SciencesMaterials Sciences

Mechanical engineering

Modern Biotechnology

Technological competences1902 1930 19701950 1990 2000 2010

Classical Biotechnology

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Significant transformation (Sales %)

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Chemical synthesis &biotechnology

Energy, chemistry &polymer technology

Biotechnology

Hoffman La Roche’sVitamins (1930s)

DSM (1902)

Gist-Brocades (1869)

VitaminsOmega’s

CarotenoidsPremixes for food & feed

EnzymesMinerals

Cultures & YeastsNutraceuticals

PharmaceuticalsCellulosic bioethanolBiomedical materials

Bio-plasticsHigh Performance PlasticsPolyamides and precursors

Resins for coatings andcomposites

Functional MaterialsSolar – advanced surfaces

Life Sciences

Materials Sciences

Building on an impressive history

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DSM’sorganization

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Supervisory Board

Managing Board

Functional Excellence

Shared Services

Associates

DSM SinochemPharmaDPx Pharma POET-DSM

Nutrition

DSM FoodSpecialties

DSM NutritionalProducts

Performance Materials

DSMDyneema

DSM Resins &Functional Materials

DSM EngineeringPlastics

Corporate Staffs

Polymer Intermediates

DSM FiberIntermediates

DSM InnovationCenter

DSM Bio-basedProducts & Services

DSMBiomedical

DSMAdvanced Surfaces

LIFE SCIENCES & MATERIAL SCIENCES

12%4%

7%2%

24%

3%6%8%

7%

9%

11%

7%

Attractivemarketsof DSM Food &

Beverages

PharmaE&E

Textiles

Automotive

Building &Construction

OtherInfantnutrition

DietarySupplements

AnimalFeed

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PersonalCare

2013 Sales by end-market

(Food)Packaging

DSM offers products & solutions to a wide range of markets

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• Our purpose is to create brighter lives forpeople today and generations to come

• We connect our unique competences in LifeSciences and Materials Sciences to createsolutions that nourish, protect and improveperformance

Mission

Deafbeel

Global societal trends drive DSM’s markets

Population growth

Wealth

Resources constraints

Sustainability

UrbanizationHealthcare costs Energy security

Food security

Ageing population

MaterialsNutritionHealth

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DSM in motion: driving focused growth

Challenge: >9 billion people in 2050!

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Deafbeel

“We cannot besuccessful nor can wecall ourselves successfulin a society that fails”

Feike Sijbesma,CEO, Royal DSM

SustainableManufacturing/Raw Materials

Energy Security

Health Food & NutritionSecurity

People

Planet

ProfitScience & Innovation Themes a Sustainable Company

People+

Eco+

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Introduction to Royal DSM

Innovation- Open Innovation model- DSM Innovation Center- The “Balancing Act”

Breakthrough examples- Health- Sustainability

Take aways

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FOR INTERNAL USE ONLY

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Deafbeel

20%Innovation Sales 2015

@ ~5% higher Gross Margins

Top QuartileMcKinsey InnovationBenchmark 2012

€1BDisruptive Platforms, 2020

Building an intrinsically innovative company

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Deafbeel

Science @ work

R & D

Innovation

Competences

TechnologyPlatforms

KnowledgeIdeasIP

Market SolutionsBusinessModels

InventionsKnow-how

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Deafbeel

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Breakthroughs can be “Proudly Found Elsewhere”

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Why do we need Open Innovation?

99.9996% of world population outside DSM!

Networks needed!

DSM

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Contrasting principles of Innovation

•Closed Open

• All smart people work for us Most of the smart people do not work for us

• Invent, develop, produce yourself Add internal & external forces

• Discover and get to market as No1 We can profit from outside R&D

• Commercialize quickly Choose the best business model

• Create most and best idea’s to win Use internal and external idea’s to win

• Control your IP to defend positions Profit from other’s and combine with own IP

• The Lab is our World ! The World is our Lab !

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Prof. Henry Chesbrough: 2003 ~2012

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Open Innovation means Opening doors!

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Value Creation by Open Innovation

Fuzzystart

Welldefined

goal

Interaction /Synthesis

Intellectual Asset Management

LicensingIn Venturing

Spin in

JointBusiness

Developments

Acquisitions

LicensingOut

Spin out/off

Divestments

R&D services

Market Scouting / Business Intelligence

Competence Development, Technology Intelligence

Open innovation has become a competitive necessity!

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It works muchbetter whenOpen!

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Innovation is like a parachute……Innovation is like a parachute…It works much better when it’s open!

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DSM Innovation CenterDSM Innovation Center

EBA Biomedical

EBA AdvancedSurfaces

EBA Bio-basedProducts &Services

BusinessIncubator

New Business DevelopmentNew Business Development

CTO Office

Venturing

Excellence inInnovation

Licensing

Enablers / AcceleratorsEnablers / Accelerators

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Venturing: How to mitigate risks?

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DSM Venturing Mission

Competence center for external (VC) participationsaimed at boosting innovation & growth

Window to the world• Explore new emerging markets, technologies and products

to enhance product portfolio, technology toolbox and business model(s)

Strategic value• Add value internally and externally• Facilitate strategic co-operations with start-ups

Financial return• Portfolio approach• Returns needed to pay for cost and capital and be a sustainable activity

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Venturing integral part of innovation

Since 2001• Scouted and screened more than 5,000

companies, window on-the-world

Resulting in• ~50 direct investments; >20 active in

current portfolio• Partnerships and collaborations with >50

companies in various forms

Venture 2020 Strategy• (just) 4 focus areas• Industry savvy within Venturing• Strategic remains primary drive• Financial performance boundary

condition for sustainable venturing• Be present and active in innovation hubs

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Portfolio snapshot of direct investments – May 2014

Nutrition (Bio)medical OtherBioBased

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FOR INTERNAL USE ONLY

Corporate VenturingA win-win situation is the objective

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FOR INTERNAL USE ONLY

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1

2

3

4

5

6

7

8

9

Innovation Aspirations

Innovation Strategy

Idea Generation and Validation

Project Management

Commercialization and Launch

Portfolio Management

External Networks

Organization

Culture and Talent

2.0 2.5 3.0 3.5

Industryaverage

AverageDSM 2006

AverageDSM 2010

Monitoring Innovation Performance

Scale 1 - 4

ID 2012

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Product newto DSM

Market new to DSM“Adjacent Business”

New toThe World

Mature

Managing the Portfolio across Levels

Emerging

Growth

Decline

Mar

ket l

ife c

ycle

ImprovedProduct

Disruptiveness

1~1.

5yr

EstablishedProducts andBusiness Lines

1.5

–3

yr3

-5

yr5

-9

yr

NewPlatforms

Break-Away

NewApplicationsandAdjacencies

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Portfolio management of innovations

Emer

ging

Mat

ure

Existing New

Renew & Growexisting position

Maintain &Strengthen

existing position

Expand toadjacentmarkets

Red BoxExplore & Build

Disruptiveness

Mar

ket

Mat

urit

y

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Breakthrough versus Incremental InnovationThe Balancing Act

Long term VisionEntrepreneurshipAgility

Medium term VisionOperational ExcellenceLower risk

Pilot plantsScaling-up

BreakthroughInnovation

Innovation Center Business Groups

Sustainable, Profitable Innovations

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Arnitel® Eco A high performance thermoplasticelastomer

Partially made from renewableresources, using rapeseed oil.

Adding new performances, like UVand heat resistanceEco+

A high performance thermoplasticelastomer

Partially made from renewableresources, using rapeseed oil.

Adding new performances, like UVand heat resistanceEco+

Panliners of Arnitel Eco,lowering the carbon footprintenabling higher temperatures

Panliners of Arnitel Eco,lowering the carbon footprintenabling higher temperatures

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The first natural, scientifically substantiatedsolution for healthy blood flow

EFSA (proprietary) health claim:

“Fruitflow® helps maintain normal plateletaggregation, which contributes to healthy blood flow”People+

The first natural, scientifically substantiatedsolution for healthy blood flow

EFSA (proprietary) health claim:

“Fruitflow® helps maintain normal plateletaggregation, which contributes to healthy blood flow”People+

FiSA 2012 : Fruitflow® one of themost innovative products of the yearFiSA 2012 : Fruitflow® one of themost innovative products of the year

Maxilact®

The freedom to enjoydairyPeople+

Lactose free is one of thefastest growing segments

in dairy, driven byincreasing awareness oflactose intolerance andhealth & wellness trend.

Maxilact® breaks downlactose in dairy products,making them suitable for

lactose intolerantconsumers.

DSM was the first companyto commercialize lactaseand has been innovating

ever since to meet today’sand tomorrow’s lactase

needs.

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Brewers Clarex ™Natural beer stabilization system for extended shelf life

‘With DSMs Brewers Clarex™CO2 emissions from brewing

1 hectoliter of beer are reducedbetween 5 and 8%’

‘Every December, in the UKa billion pints of beer

are being sold’

Eco+ example

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Reducing Methane Emission from Cattle

Identification and development of a feed additive(s)solution to:1. reduce methane by 25-30% in vivo2. with the potential for better performance

(increased milk yield, increased daily weight gain, etc.).Eco+

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BioBased: Beyone™ 1 for Wind Mills

Bright ScienceWindmill blades from Beyone™ 1 resinSuperior fatigue resistance using a styrene-free, cobalt-free resin with 40 % bio-content

Brighter LivingFast blade manufacturing:increased production output per moldReduced Eco-footprint vs. epoxyElimination of exposure during bladeproduction

TrendsSustainable energy generation

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Biobased: Waterborne Decorative Coatings

TrendsNeed for sustainable paintsReducing the carbon footprint

Bright ScienceBio-based waterborne alkyd emulsions,VOC free, high performance

Brighter LivingRenewable content between 40 – 70%Protecting indoor air quality andimproving working conditions

Application:

Primers and high gloss paintsfor professionals and DIY

© 2013 DSM. All rights reserved

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EcoPaXX®: Engine cover

Bright Science70% bio-based engineering plasticSuperb surface appearanceHigh thermal resistance up to 250C

Brighter LivingReduction of 40% of the CO2 emissionscompared to conventional polyamides

TrendsReducing carbon footprint

Mercedes A class: reduced CO2footprint with 40%

A new standard in hand protection

The world’s most cut resistant fiber

8x thinner than Nylon

2x thinner than aramid and any HPPE……

…. results in a new level ofprotection with no compromise incomfort or durability!!

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Deafbeel

Introduction to Royal DSM

Innovation- Open Innovation model- DSM Innovation Center- The “Balancing Act”

Breakthrough examples- Health- Sustainability

Take aways

New exciting growth platforms established3 Emerging Business Areas up and running

DSM Bio-basedProducts & Services

DSM Biomedical

Advanced Enzymes andYeast platforms:

enablingAdvanced Bio Energy

and Bio-based chemicals

Innovative materials thatdeliver more advancedclinical procedures and

improved patientoutcomes

Aspiration by 2020: sales up to €1bn at high EBITDA margin

Slide 50

DSM Advanced Surfaces

Smart coatings and surfacetechnologies to boost

performance in the solarindustry

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DSM Biomedical

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DSM Biomedicalmaterials improveover 4.4 millionpeople’s lives,

every day.

FOR INTERNAL USE ONLY

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A new application for Dyneema® Purity:Fixation of transplanted ligaments in the knee

A continuous loop made fromDyneema® Purity is used tosecure the soft tissue transplant,providing strength and stiffness

The application of these verystrong yet soft fibers reducetrauma to the transplant

Product is ingredient-brandedwith the Dyneema® Purityingredient logo

Innovation in Biomedical Materials

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Materials evolution

Treatment moves from repair to healing

Stimulation ofBone growthCartilage repair

Orthopedic OrthopedicOrthopedic CMFCardio

Pacemaker leads Hip implants Bone cement

Ophthalmology Orthopedic

Back-of-the-eyemedication

Resorbable screwstendon repair

• Material stays in the body• Highly durable• Maintaining mechanical

properties over years

• Controlled drug release• Disappears after use

• Healing by stimulation andgrowth of patients’ own tissue

• Disappears over time

BIO-INTERACTIVEBIO-ACTIVEMedical coatings

and polymers

BIO-PASSIVEResorbable polymers

and Drug DeliveryTherapeutic materials,Regenerative medicine

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Open Innovation in biomedical materials

EBABiomedical

LicensingIn

VenturingSpin in

JointBusiness

Developments

Acquisitions,Alliances / JVs

LicensingOut

Spin out/off

Divestments

R&D services

JointR&D

Device design;Exclusive material developments

Scientific Advisory Board& other Consultants

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Public PrivatePartnerships

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BiomedicalMaterials

Medical DeviceDevelopment

Medical DeviceManufacturing/ Assembly

ImplantSurgery

PatientAfter-care

License agreements

Extended offering

Materials

Assembly

Jointdevelopment

Royalties

US$ 1.5bn US$ 150bn >US$ 150bn

Device SupplyAgreements

Component SupplyAgreement

Materials SupplyAgreement

Move Forward selectively in the Value Chain

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Biomaterials history at DSM

Medical CoatingsR&D efforts

started in DSMDesotech

First sales ofDyneema Purity®

fiber for kneeligament fixation

First salesMedical Coatings

Start of UH andDrug Delivery

activities

BMM PublicPrivate

Partnershipfunded by Dutch

government

Medivas technologyacquisition for Drug

Delivery

Bionate® II PCU

AntimicrobialCoatings

Next generation UHproduct

VitroStealth® non-biofouling coatings

Start of DSMDyneema’s MedicalR&D Efforts

Official launchof Dyneema

Purity®

orthopedicsutures

BiomedicalEBA launched

PTG Acquisition (est. 1989)

First cardiovascular andophthalmic drug deliverydevelopment agreements

First sales of DyneemaPurity® fiber in

cardiovascular and spinalapplications

ActamaxDSM-DuPont JV

HQ move toBerkeley, CA

DSM targetsEBA sales in2020 > €1bn

Expandedportfolio forophthalmic

applications

Kensey NashAcquisition

20122000 2002 2004 2006 2008 2010

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DSM Bio-based Products & Services

Eco+

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Hydrocarbons are running out and/or become muchmore expensive

Source: http://www.trendlines.ca/scenarios.htmPeak Oil: 94-mbd in 2022The year flow breaches below today's 86-mbd: 2040The year we virtually run out (excl BTL): 2257 (less than 5mbd)

Page

1000 30002000

Foss

il re

sour

ce u

se

Living off the land Living off the landA briefFossilmomentin history

From the Fossil Age to the Bio-Age

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Drivers promoting a Bio-economy are changing

Induce Innovations

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Biomass “cracking” enables the Bio-economy

Lignin

Hemicellulose

CelluloseProtein

Fatty acid(veg. oil)

Starch

Fuel, Chemicals & Food

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Biomass as a source of fermentable sugars

Plant cells

Cellulose Hemi-cellulose

Lignin

Glucose

XyloseArabinoseGlucoseGalactoseMannose

Biomass

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Inspired by Nature – Xylose Isomerase

• C5 Yeast• Conversion of Xylose and Arabinose• Increased yield of EtOH

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From biomass to cellulosic bio-ethanol

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Enabling Advanced Biofuels

POET & DSM: two innovative leaders – oneshared vision

• Making cellulosic ethanol competitiveto grain ethanol

• Building Project LIBERTY ($250 Mlninvestment) in Emmetsburg, Iowa

• Grand Opening 3 September 2014

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DSM-POET Biomass storage yard

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69Emmetsburg, September 3rd, 2014

• Cellulosic bio-ethanol

• Renewable diesel

• Bio-Succinic

+

Current major Biomass Ventures

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Renewability is Not Enough as a Value Proposition

DSM Advanced Surfaces

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KhepriCoat® Anti-reflective coating

KhepriCoat® AR coating has best in classtransmission gain and outstanding outdoordurability.DSM is a committed partner, offeringdevelopment support and a filled pipelineof future offerings

KhepriCoat® AR coating has best in classtransmission gain and outstanding outdoordurability.DSM is a committed partner, offeringdevelopment support and a filled pipelineof future offerings

Light trapping : Next step in efficiency gain

DSM acquired SolarExcel and its proprietary light trapping technology

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DSM and the sun, an era of progress

1902 1970 2000 2010 2020

1 nano second

1~3 year

~70 Million year

~300 Million year

Coal fromcarbon layers;solar energycaptured 300million yearsago

Hydrocarbons asderivate of naturaloil; solar energycaptured 10-70million year beforeusing

Bio fuels capturedfrom biomass wheresolar energy wasstored forapproximately 1 year

Solar PV, immediateuse of solar energy

What worked for us ….

• Sustainability and Innovation go hand-in hand

• Create enough breakthrough options in the pipeline

• Nominate and empower “Intrapreneurs”

• Protect Radical Innovation Platforms

• Strategic consistency; Stay the Course!

• Accept the Balancing Act (Business & People)

• Patience is needed for Culture changes

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Product newto DSM

Market new to DSM“Adjacent Business”

New toThe World

Mature

Emerging

Growth

Decline

Mar

ket l

ife c

ycle

ImprovedProduct

Disruptiveness

1~1.

5yr

EstablishedProducts andBusiness Lines

1.5

–3

yr3

-5

yr5

-9

yr

NewPlatforms

Break-Away

NewApplications andAdjacencies

Organizing Incremental vs. Radical Innovation

Deafbeel

Key Take Aways

• Venturing improves the power to select options

• Open Innovation : A tool to rejuvenate your business

• Partnerships mitigate innovation risks

• Partner with an open mind; dare to share!

• Construct Alliances based on complementarity

• Focus on the Grand Challenges

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linkedin.com/company/DSM

twitter.com/DSM

facebook.com/DSMcompany

flickr.com/DSMcompany

youtube.com/DSMcompany

Questions ?