BUSINESS
PROFITING FROM INNOVATION R&D leaders say they still have plenty of tricks up their sleeves to develop new products MARC S. REISCH, C&EN NORTHEAST NEWS BUREAU
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vice president for R&D at Arkema, said chemical producers have virtually urilimited opportunities available to them. Hegedus, who chaired the conference along with consultantJoseph V. Porcelli, pointed out that "chemists have synthesized about 14 million compounds, yet only 100,000 are in com mercial use today." The chal lenge, he said, is to know which R&D projects have the best profit potential in an industry that also has to deal with issues such as glo balization, sustainability, and a changing workforce. People differ widely in Drake how they view innovation, said Air Products' Drake. But in his estima tion, innovation is inevitably tied to value creation realized through a new product, process, or service. To accomplish this, he said, Air Products "embeds" technology managers in the firm's business management teams to help reconcile business needs with the firm's technical capabilities. With annual R&D spending at about 2% of sales, Air Products recognizes that it must leverage its limited resources, Drake said. Sometimes that is done by transfer
KEPTICS TAKE A LOOK AT THE
chemical industry and see a collec tion ofmature businesses with few innovative products and processes to offer. Wall Street typically sees research as a costly item that absorbs money often better directed to shareholder dividends. Even some scientists seem to believe that the road to career success in the corporate world is not through research but through sales. In a rebuttal to those who think little new and worthwhile comes out of the chemical enterprise, nearly 70 R&D mavens gathered in Cincinnati earlier this month to discuss innovation as a corporate good. Innovation may mean many things to many people, but to those at a joint management conference of the American Institute of Chemical Engi neers and the American Chemical Society, it is most of all a source of value creation. "Innovation: The Engine for Growth" was the topic of the conference. Hewing to that theme, chief technology officers such as Thomas M. ConnellyJr. of DuPont, Gary S. Calabrese of Rohm and Haas, Miles P. Drake of Air Products & Chemicals, and Stanley A. Gembicki of UOP discussed ways to get the biggest bang for the corpo rate R&D buck. Representatives from consulting firm Booz Allen Hamilton did not attend, but findings in the firm's recent study on research spending by the world's top 1,000 corporate R&D spend ers in a variety of industries caught a lot of attention. The study concluded that "there is no statistical relationship between R&D spending lev els and nearly all measures of business success, including sales growth, gross profit, operating profit, enterprise profit, market capitalization, and total shareholder return." Many of the speakers took issue with Booz Allen's con clusions, particularly for the chemical industry. L. Louis Hegedus, senior
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ring technology developed in one area of the company to another. Or it may come through the use of joint ventures, partner ships, or research collaborations with uni versities to bring new technology in. "We can't invent everything," he said. To get a "portal" on emerging materials companies, Air Products looks to other outside partners. For instance, the firm is a limited partner in the N G E N Enabling Technologies Fund, which invests in ma terials-related start-up firms. Other fund investors include BASF, DSM, Unilever, Canon, Honda, and DuPont.
Hegedus
And like other technology officers at the meeting, Drake acknowledged using net work solution providers such as InnoCentive and NineSigma. The former can post a scientific problem on the Internet and offer a cash reward on behalf of a firm to anyone who comes up with a solution. The latter can assemble a network of potential corporate and academic collaborators to help a firm find a solution to a problem. "Is innovation a buzzword or a lifeline for the chemical industry?" asked Thomas 2 Weskamp, a Cologne, Ger| many-based consultant with < McKinsey & Co. The key 1 to innovation "is to translate < what you learn in the market 1 into a scientific and technoξ logical approach," he said. WHAT WORRIES Weskamp is
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Ι think the Greeks are running out of ideas."
the lack of enthusiasm he sees among chemical industry re searchers for careers in R&D. He has noticed, in Germany in particular, that many tech nically trained workers start in research hoping to move into sales as quickly as pos sible. They do some "amateur research" but see real career advancement on the sales side of the business. C&EN
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BUSINESS Part of the problem may be that "the technical guys are not running technology business anymore," saidJames A. Trainham, vice president of science and technology at PPG Industries. Instead, experts in finance are running these businesses, and for them, "innovation is something they find difficult to grasp." "Cutting costs and reducing capital in tensity isn't enough" to give a company a competitive edge, he said. A firm "really has to be innovative." Convincing upper
management to back technology advances is important if a firm is to expand its business and bring new products to market. But Trainham added that it "takes a tech nical person with marketing training—a different breed of cat—to bring new things to market." These are exactly the people many corporate cultures have a hard time accepting because they look at what might be and push others to see it their way. "We need to identify and nurture such creative people," he said, "but often they are the first
AFID Therapeutics Inc. Suite 1029, 3900 Collins Road, Lansing, Ml 48910, USA Critical substructures and scaffolds in 100, 200 and 500 mg quantities A c c e s s to t e c h n o l o g y f o r i n - h o u s e u s e or c u s t o m s y n t h e s i s a r r a n g e d Kilogram quantities of key chiral intermediates available Catalog, library and general drug discovery businesses especially welcome Specially protected versions of intermediates shown here can be prepared Go to http://afidtherapeutics.com/prod05.htm to see representative NMR spectra Phone. 517-336-4663, Fax 517-324-8912; E-mail
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