Taking on new challenges with ‘open innovation’
Companies are reaching through the value chain and across industry sectors to speed up the innovation of targeted solutions and establish competitive advantage. Dr Cynthia Challener reports
With numerous established and emerging markets depending on innovative chemicals to facilitate advances in technology, there is tremendous pressure for more rapid development and commercialisation of fine and speciality chemicals. In addition, many of the needed solutions will require interdisciplinary expertise, much of which will fall outside the main capabilities of the industry.
Major chemicals manufacturers are therefore establishing strategies and more formalised infrastructures to maximise access to and use of external ideas, technologies and skill sets. Many, including Wiltrud Treffenfeldt, R&D director for Europe, the Middle East and Africa (EMEA) region at Dow Chemical, believe that such 'open innovation' (OI) will soon become a prerequisite for success.
"Chemistry-based innovations are playing a vital role in solving the world's most urgent problems. The vast majority of these new chemistries are, by definition, speciality chemicals," she says. "Formalised collaborations between private industry, governments, academia and professional organisations serve to accelerate the innovation and commercialisation of the solutions needed."
External innovation partnerships are not entirely new, of course. The OI concept today, says Dr Svetlana Dimovski, manager of OI and science relations for BASF North America, is about transparency, collaboration efficiencies and being able to identify and formalise mutually promising partnerships more rapidly - "connecting the dots faster to facilitate the right partnerships, at the right time, for the right reason".
Evonik created its Corporate Innovation Strategy & Management group about 30 months ago when company leaders realised that its innovation efforts were not as effective as they would like, states Dr Georg Önbrink, head of innovation networks and communication. As part of its new approach, Evonik has local people in each key region - Europe, Asia, the US and India -dedicated to seeking out technology that can help solve challenges.
"We are largely working with industrial partners - from start-ups to SMEs to large, multinational companies; the key is whether the technology or capability offered by a potential partner addresses a need," he explains. Of particular interest are companies with complementary knowledge and competitiveness positioned throughout the value chain that fit with the main areas that Evonik is addressing: resource efficiency, health, nutrition and globalisation.
"If we determine that one of our chemical technologies can help make a product or provide a solution in an industry in which we do not have expertise, forming a partnership with a company that does have that expertise will help speed up development and commercialisation, and ensure that the product or solution does indeed meet the specific needs," Önbrink says.
BASF is also conscious of the power of innovation and creative problem-solving at any point in the value creation chain, according to Dimovski. "In the spirit of agility, we want to be able to connect, collaborate and innovate effectively with the talent outside of the company in order to find solutions that our colleagues and customers and the end consumer cares about," she says.
Open innovation meeting at BASF
That is where specialised facilitators can help, according to Dr Eloise Young, a programme manager with NineSigma, an OI service provider. Young believes that OI is also having a significant influence on how people think about innovation and the ways in which new products can be developed.
Many of the company's clients have robust R&D groups but are looking to expand into new directions. "They may need to access expertise outside of the core areas. Or they may need to determine if there is a fit for a new technology that they have developed in other areas outside of the intended, familiar application, or want to confirm that there will be a demand for a new product or technology in a market sector they don't know well."
To boost its OI activities, BASF is working on a proprietary OI framework that embraces its verbund concept. This approach, Dimovski says, is about creating an effective, highly integrated innovation capability that also includes the use of selected facilitating companies and intermediaries, such as TechComm, the Larta Institute and InnoCentive.
"BASF has clear growth targets, and we see these programmes as enabling us to reach these targets. At the same time, we also hope that they create an attractive route for commercialisation of our collaborators' products," she adds.
Eastman Chemical also recognises that such growth can originate from any source anywhere in the world. "We want to tap into all new ideas, technologies, processes and approaches that can potentially help the company grow though new product development and expansion into new markets," comments Dr Stewart Witzeman, director of the Eastman Research Division.
The company is thus open to working with universities, government laboratories, suppliers, customers and complementary companies, which have proven to be important partners for getting products containing Eastman chemical technology to market. Catalyst and process development firms are two common examples.
Selecting the right partner is a critical success factor in OI projects. At BASF, the evaluation process has several stages. It begins with a quick screening, scoping and triage, then continues with several rounds of interviews, internal reviews and in-depth dialogue against a comprehensive set of questions and criteria tailored to probe the novelty and fit of the approach, the scalability and the potential solution implementation issues and partnership fit.
"Now that external partnerships are more common, there is a need for a better way to manage them and work with others. Timing is often critical, and therefore it is necessary to be able to quickly evaluate potential opportunities," Dimovski says.
These goals of increasing both speed and quality of innovation are also fundamentally important at Unilever, one of the world's largest consumer products companies. For decades, Unilever has explored global partnerships to enhance innovation across product lines and business models and, in 2008, formalised this process through the development of a global OI group. The group addresses these expectations by focusing on the acceleration of core category projects, developing new business opportunities through strategic partnerships and enhancing thought leadership in OI.
Unilever's OI process is referred to as Want-Find-Get-Manage, according to Dr Gail Martino, OI manager for emerging and disruptive innovation. It strategically defines the technology problem to solve (Want), identifies possible solutions through scouting (Find), negotiates deals with an external technology owner (Get) and manages the project for success (Manage). Some of its 'Wants' are now available for the public to view via the recently launched OI website.
Unilever, one of the world's largest consumer products groups, is increasingly looking to collaborate on innovation
The most recent addition to this process was unveiled in March 2012 in the form of the online OI Portal, an online tool that enables new and existing partners to collaborate with Unilever through online submissions. This ability to achieve speed and scale of collaboration through OI has been critical in supporting Unilever's efforts to both grow the business and reduce environmental impact, as per its 2010 Sustainable Living Plan.
"OI has helped to establish a clear process for identifying specific issues, articulating the problem and then working to filter the submissions that we receive. To date, Unilever has received more than 650 submissions through the online platform alone and we hope that we can continue to reach new partners and more quickly develop new projects with existing partners," says Martino.
As Unilever expands OI capabilities specifically related to the chemicals industry, it hopes to identify many new solutions to existing needs. These include: new anti-viral agents for cleaning products that do not rely on bleaches, strong acids, or alcohols; lighter, more sustainable packaging; laundry ingredients that are effective at lower temperatures and use less water; and, technology to reduce the sodium content in food without affecting the taste.
Dow's OI efforts are organised under its External Technology Group within the global R&D organisation, which has dedicated specialists who initiate and foster strategic collaborations with universities, governments and professional organisations in the different geographies.
"The focus is on market needs and delivering game-changing solutions to the world's most pressing challenges. The OI models we use depend on what we are seeking," Treffenfeldt remarks. "They include bilateral research programmes and multi-partner collaborations, including the UN, national governments, universities, NGOs and private corporations, the services of companies like InnoCentive and participation in publicly-funded programmes."
Dow has many such speciality chemicals-related collaborations underway. For example, it collaborates with government and universities at its global water technology centre in Tarragona, Spain, and has partnerships in Saudi Arabia with King Abdullah's University of Science & Technology and the Saline Water Conversion Corporation in water and energy; a joint venture with Aksa Akrilik Kimya in Turkey in carbon fibre derivatives; and a long-term relationship with the Fraunhofer Institute, among many others.
In North America, Dow has helped design a new curriculum based on the principles of sustainability and green chemistry at the University of California, Berkeley, is funding R&D partnerships and projects at 11 US universities and is collaborating with the Nature Conservancy to incorporate nature into global business goals and decision-making.
The company's OI activities in Latin America and Asia include: a partnership with Mitsui in Brazil to produce biopolymers from sugarcane-derived ethanol; construction of a global joint innovation laboratory in Qingdao, China with Haier Group to accelerate innovative collaboration for consumer electronics and home appliances; and participation in the US-China Clean Energy Research Centre Consortium on Building Energy Efficiency.
With such a wide range of potential OI activities, it is important to consider each project individually, according to Witzeman of Eastman Chemical. "Each engagement has its own characteristic sensitivities and technology challenges. Partner selection is very important, as is establishing a clear understanding of IP allocation."
Treffenfeldt - Open innovation will become a prerequisite for success
Generally, discussions begin with a sharing of non-confidential information, often with references to patents, published articles or other public domain information. If a partnership continues to progress, confidentiality, secrecy and, ultimately, joint development agreements, can be implemented. However, it is critical to keep the goals of the company in mind at all times.
"The biggest mistake that is often made is to be too naïve," Witzeman states. "When involved in OI activities, it is imperative to look out continually for the company's interests. A good partnership is about knowing the goals, working together toward them and being able to recognise when a programme isn't going to get you to them."
Treffenfeldt believes that, in more formalised OI activities, there is a more thorough, written understanding of each party's responsibilities concerning confidentiality and a clear, legal definition of each party's intellectual property rights. Unilever relies on a third party provider - yet2.com - to screen all online submissions, ensuring that IP is protected for both parties.
Eastman also works with OI facilitators, particularly NineSigma, when the type of need warrants a large, international search. "Posing the right question is much more difficult than it seems," he remarks. "To write a problem in terms of the fundamental needs without supposing a solution and in terms that can be understood by experts outside of the specific technology area takes a special skill set and experience."
NineSigma spends much time training clients on how to reduce their needs to the core technological problem. Young stresses that it is critical to identify all of the possible factors that will be used to determine the success of a project. "If all of the relevant information isn't considered upfront, it is possible to find a great technology that solves the problem but is unsuitable for other reasons," she observes.
Evonik has learned this fact through experience. "When we first started using third party OI companies, we did not initially have good results and it was our own fault, because we were asking the wrong questions," explains Önbrink. "Today we are having greater success and plan to use such facilitators more in the future. But we take the time to prepare and define our needs carefully.
Evonik is also using social media for OI activities, including the sharing of ideas and technologies across its six main business units (BUs). To do that, it is developing a platform to facilitate communication between the individual BUs. Specific challenges will be posted and will target employees with specific backgrounds, skills and knowledge, and anyone within the company that has a potential solution can respond.
Evonik and many other fine and speciality chemical producers are also pursuing another interesting interpretation of OI. Faced with volatile markets, the need to increase production flexibility and reduce the risks associated with investment in new processes and short windows of opportunity to introduce new products, these companies have joined together to develop dedicated, modular small-scale production facilities, an innovative process and production concept.
These facilities are flexible, efficient, modular multi-purpose plants that significantly reduce the investment cost and risk associated with conventional chemical plants, while also allowing a fast market introduction. In this case, the idea of OI involves the sharing of production space to help peer companies to succeed in areas where there is no direct competition, reducing the costs and risks for everyone involved.
Eastman Chemical has developed a number of products by collaboration
Even with such obvious advantages, there is still resistance to OI in many companies, partly through the 'not invented here' syndrome, partly through fear of job losses if technology and ideas are brought in from the outside. "One of the biggest hurdles for many companies is the fact that OI involves change, which can be difficult for many people to cope with," remarks Young.
Most believe that support from management, combined with training and the passage of time, will overcome these concerns. At Evonik, newer employees come in with an open mindset, comfortable with the idea of sharing information and working with people from many different disciplines. As a result, Önbrink sees OI becoming common practice.
Witzeman also believes that, as people who are involved in OI activities are successful within companies, other employees will begin to see their value. Currently Eastman is focused on finding the right partners to aid its growth goals and Witzeman fully expects to see the company participate in more partnerships. The company is already working on efforts to establish multi-year commitments with several research institutions in order to develop long-term relationships.
So far the company has had several successful experiences with the assistance of NineSigma and in partnerships with companies with complementary expertise. For example, it identified a process technology used in other industries that, if proven to work for its particular chemical processes, could be a very significant competitive advantage. The technology is currently undergoing evaluation.
Examples from Eastman's product development efforts include the Cerfis technology, which can continuously coat three or four faces of a milled, moulded or stamped piece, while enabling products to maintain consistency and dimensional stability. Another is Perennial Wood, a decking product based on a proprietary acetylation process technology that protects wood from moisture for 25 years. In these cases, the partnerships even included the stores where they are sold.
Chemistry clearly plays an important role in many consumer and industrial applications. It is thus not surprising that NineSigma often sees solutions to many of its challenges based on chemistry. "OI can be a tremendous benefit for fine and speciality chemical companies, particularly SMEs that have trouble making downstream connections, because many different types of problems require a chemical solution and OI services provide a mechanism for connecting those companies with potential customers," Young believes.
Some examples of where NineSigma has helped a speciality chemicals firm connect its technology with a new end-use application include: a global manufacturing company looking for a temperature control technology for food contact packaging establishing a relationship with a start-up specialising in phase change materials; a global consumer products firm seeking a technology for removing fluoride ions from drinking water, which is currently evaluating technology from two different inorganic chemicals companies; and, a Fortune 100 company looking for a coating to prevent ice accumulation on high voltage aluminium transmission lines that has requested samples from five companies, including three in speciality coatings.
OI can also extend wider than just companies, of course. The European Technology Platform for Sustainable Chemistry or SusChem, an industry-academia forum, plans to evolve into a Europe-wide network that captures the full benefit of Europe's strengths in the chemical sector, notably its excellent research landscape and the close proximity of all members in the value chain.
The innovation partnering team at BASF
"The focus in the past has been on research, not necessarily conversion of novel ideas into commercial products, which requires innovation. Therefore, we are shifting our focus to OI as a way to leverage these positive features of Europe's technology landscape and carry ideas all the way to the marketplace," explains Dr Gernot Klotz, executive director for research and innovation at CEFIC.
The emphasis will be on public-private partnerships that address critical issues, such as resource efficiency, water as a resource, raw materials issues and smart cities. For example, the Sustainable Process Industry through Resource Efficiency (SPIRE) programme involves members of eight core industries working to develop enabling technologies along the value chain that are required to reach long-term sustainability, rejuvenate Europe's manufacturing base and improve Europe's global competitiveness, ecology and employment.
"In these various areas, we have the chemistry expertise to develop solutions in Europe, but often not the critical mass and speed. Therefore, we need to work together with partners across the value chain to get better results faster," Klotz says.
SusChem also seeks to encourage more cross-border cooperation between companies and to ensure that the right technologies are being targeted. "Investment in R&D programmes for technologies that will go into products that will not be produced in Europe doesn't make sense. So R&D priorities should focus on the next-generation technology that would enable production to be brought back to the EU," Klotz asserts.
The EU recent identified the top six key enabling technologies for the region, including nanotechnology, advanced materials, industrial biotechnology, advanced manufacturing technologies, micro-/nanoelectronics and photonics. "The first four depend on the chemicals sector to help find solutions. The chemicals industry in Europe has a real opportunity for growth, if it can be innovative and address these needs. OI will be necessary to make that happen," Klotz says.
The list of companies actively pursuing OI strategies is quite long. In addition to those mentioned above, Procter & Gamble, DuPont, DSM, Georgia Pacific Chemicals, Abbot Laboratories and Eli Lilly, plus many smaller, less-known enterprises, are engaged in them. Many believe that OI is fundamental to the future success of the industry.
Innovation is increasingly happening at the borderline between different fields of study and across technologies, according to Önbrink of Evonik. Therefore, it is critical to access these other capabilities that fall outside each company's core areas of expertise.
"OI is necessary to shorten the product development cycle and get products to market faster. The efficiency of product development must also be improved, so that a higher percentage of ideas are converted into successful products. Neither goal is possible without bringing together varying expertise, capabilities and experience," he says.
Concludes Dimovski: "I believe that the sustainability of our society, our resources and our planet is everyone's job. OI, in this context, is a way of connecting and aligning our creative juices together on an important mission ( making this world a better place to be for everyone."
BASF North America
Dr Svetlana Dimovski
Manager of OI and Science Relations
Tel: +1 973 245 6553
Dr Gernot Klotz
Executive Director for Research and Innovation
Tel: +32 2 676 7328
Dr Stewart Witzeman
Director, Eastman Research Division
Dr Georg Önbrink
Innovation Networks & Communication
Tel: +49 201 177-4323
Dr Eloise Young
Tel: +1 216.295.7858
Dr Gail Martino
Manager, Emerging and Disruptive Innovation
From Online Issue: October 2012