INVESTMENT IN LONG-TERM INNOVATIONS

It’s very hard to generate really good ideas. Of course I could assign my employees the task of inventing a beaming device like the one used in the Star Trek TV series. There would certainly be a need for it, and a market too. But we don’t have the technological know-how to make this idea a reality. In the past, researchers would often think up technological innovations without clearly knowing how they could be developed into salable products. Innovation takes place only at the point where two factors come together: an approach to a solution and a demand resulting in a market. That’s what we focus on here. Hierarchies don’t play a very big role at Creavis. We encourage all of our employees to develop their own ideas. But proposals can basically come from anywhere: from our employees, from the Executive Board or from our customers. Our Portfolio Development unit then has the task of assessing these proposals. That also enables us to react quickly to new ideas that are brought to us from outside the company. That’s a key factor for making sure that open innovation— that is, innovation in close cooperative networks with partners who contribute complementary expertise—works in practice. Keeping such networks operational is an important part of our strategic mission.

This concept dates back to the Degussa company. Back then, the idea was to work cooperatively on topics that were relevant to several operating units and had a long-term outlook. However, in the beginning there were no direct connections with the operating units. That’s why it was decided to bring employees from these units together with Creavis for a period of three to four years in a Project House so that they could work together very closely for a limited period of time. This model brings together experience and know-how from various units within the Project Houses. Initially an important objective was to exploit the synergies between the various business units. Today the focus is more on developing expertise—for example, in the Medical Devices Project House. One of the projects we conducted there developed biodegradable materials for implants that are used to replace bones. There were already some points of contact with other parts of the company, but there weren’t any real activities. We built up a new research team and the entire infrastructure, invested several million euros in apparatus and lab equipment, and worked on concrete projects. In the end, we transferred the entire Project House to the Health Care business line as a competence center.

We have an “open innovation” approach, and within this framework we check with increasing detail whether the assumptions that underlie each project are actually correct. Does the technical approach to a solution fulfill the criteria that have been set for it? Is the solution really as sustainable as we presume it is? In the beginning, openness and flexibility are important. The further the project progresses, the more concrete are the questions we ask. All of the aspects that are relevant to a project’s success should already be thought of in the earliest phases possible. The managers at Creavis support the project managers by acting as consultants and helping them to realize their projects. But it can also happen that after a few months or even years the manager, together with the team, comes to the conclusion that the project should be discontinued because its further development would no longer be justified in economic terms.

I believe that the chemical industry as a whole is quite open. There has always been close communication between companies and universities. Basic research has generated lots of momentum for the industry. But there has been a fundamental transformation in the past two or three decades. Research is reaching its limits. In the past, pioneering discoveries such as polyethylene formed the basis for establishing entire industrial segments. Today innovation is much more strongly driven by the application. As a result, in the area of development we need a much better understanding of applications, and that means we have no other choice than using the open innovation approach. Let’s take 3D printing as an example. We want our materials to work for a variety of technologies, so we have to collaborate closely with the manufacturers of 3D printers. In addition to cooperation with our customers, interaction with startups is also gaining in importance. But we have to keep in mind that many innovations coming from universities are more likely to end up in startups than in major companies.

That’s a good question, and there’s no simple answer for it. One important aspect is the fact that it has become harder to access the know-how of universities. That’s because the universities themselves are utilizing their patents. In many cases, they prefer to support a doctoral candidate who wants to open his or her own business through a spinoff, rather than backing a major industrial company. But we also have to be realistic and admit that there are lots of interesting ideas that might justify founding a new company but are not relevant for a major industrial group. When we enter new territory, we have to be on the lookout for bigger potential than most startups are interested in.

The biggest opportunities for us are in the areas where the knowledge is complementary. That’s why we’re interested not only in chemical startups but also, and perhaps even more, in young IT companies whose technologies can be combined with our products. This can generate benefits for both sides. Besides, we also work with other big companies, such as our major customers, with whom we jointly develop products.

We’re keeping a close eye on this development, and we’re involved in professional networks so that we can work together with partners in areas where it makes sense to do so. We closely coordinate these activities with Evonik’s corporate venture arm, which maintains connections in the venture capital scene and invests in startups.

We’ve learned that it’s important to maintain the right balance between closeness to, and distance from, the company —and to have great operational freedom as well as a high level of strategic coordination. We’re doing that much better now than we did in the beginning. Many companies from other sectors have come to us in order to learn from our experiences, because digitalization is forcing them to reorient themselves to an unprecedented extent, and because they don’t possess the innovation culture that we’ve always had in the chemical industry.

Through Creavis, the company is investing in long-term innovation. And it wants to receive something in exchange for its investment. That’s why for the past five years we have sat down together with the business line that is profiting from one of our innovations and used the discounted cash flow method to determine the value of each newly developed product. The business lines are very critical in this regard. At the end of the year, the value of all the transferred projects has to be commensurate with Creavis’ expenditures. That’s the benchmark for our success.

For a researcher, it’s normal to have some things that don’t work out as expected. I’ve spent years working in laboratories myself. About 99 percent of the trials don’t deliver the result that was hoped for. That’s normal. Researchers traditionally don’t talk about a failure—instead, they think about the next trial. The wonderful thing about this approach is that in the end you’ve got a lasting success—and the many bitter setbacks you had on the way there are quickly forgotten.

Creavis’ biggest success might be the fact that today we have a corporate growth field called Membranes. The second big success story is the area of biotechnology, which we have expanded through our development work. And the most recent example of a successful product launch is REHANCE ONE, a natural ingredient for cosmetics that recently received an award at a major professional trade fair. The foundation stone for this development was laid at Creavis. The crucial ingredients of successes like these are the combination of various kinds of expertise at Creavis, our willingness to take risks, and our long-term orientation.

Photos: Bastian Werner (3), Christian Schlüter, Karsten Bootmann, Stefan Wildhirt/Evonik