Dow Chemical pursuing entrepreneurship

05 March 2008 21:52  [Source: ICIS news]

NEW YORK (ICIS news)--US major Dow Chemical will increase its entrepreneurial actions as part of its “asset light” strategy, a company executive said Wednesday.

The company has started a $600m (€396m) venture fund that will concentrate on joint ventures (JVs) for new materials and alternative energy sources, and it has increased its research and development (R&D) budget by $100m.

The success the company has had with its previous JVs - most recently the 50:50 deal with Kuwait-based Petrochemical Industries Company, which when completed will give Dow about $9.5bn - has encouraged it to pursue an entrepreneurial track, officials explained.

“Dow is not considered the most entrepreneurial of companies, but we’re trying to change,” company executive Heinz Haller said on Wednesday at a luncheon at New York City’s Chemists’ Club.

Haller is executive vice president of Dow’s performance plastics and chemicals unit. He is also a member of the company’s executive leadership committee, which is responsible for corporate strategy and financial performance.

“One size does not fit all,” Haller added. “Our processes can no longer be geared toward big customers [only]. We must focus on niches.”

However, Dow intends to pay most attention to those investments that will support its standing businesses. “We’re trying to be more opportunistic,” said Haller. “We’ve looked at a lot of deals, and have turned down a lot as well.”

He said that the entrepreneurship programme was “a work in progress and will take several years.” Initially, the company will concentrate on research and development, and start-ups in North America and Europe, and increase its actions in Asia as the opportunity presents itself.

Large companies have plenty of resources, Haller commented, but they can be rigid, inflexible and bureaucratic - tendencies inimical to entrepreneurship. “If you want entrepreneurship in a large company, you must externalise it by investing in start-ups, spin-offs and by bringing in third-party investors.”

Dow has redefined entrepreneurship, said Haller, “on our own terms: Transforming ourselves on a continuous basis. We’ve restructured, downsisd and transformed to be leaner and less vulnerable to cyclical weaknesses.”

Dow reported revenues of $53.5bn in 2007, a 9% increase from 2006.

By: Ivan Lerner
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