INSIGHT: DuPont innovating a way out of the crisis

23 June 2009 17:52  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--If you need any evidence to show that innovation continues to be a driver in the chemicals business, even in the depths of recession, then look no further than DuPont.

The company says it introduced 500 new products in the first quarter, almost double the number introduced in the same period of 2008.

Among the launches, 250 were for the agriculture and nutrition business, which includes seed hybrids, and were ready for sale in the 2009 planting season. The product range extended from coatings to solar-cell encapsulents.

This recession, harsh and deep, has required creativity as never before.

Companies have had to be innovative in the way they manage business systems and costs. The threat, to some, has been to their very survival. Yet they also have had to be imaginative in the way they manage innovation.

“Tough times drive our scientists to be even more creative and they are delivering once again,” DuPont’s chief science and technology officer, Uma Chowdhry, said recently.

You only need to look at the almost daily output of new releases from the company to get the feeling that the research and development (R&D) pipeline is being pushed extra hard.

That push must deliver new growth.

DuPont expects to spend $1.4bn (€1bn) on R&D this year, with the highest proportion – approximately 50% – dedicated to agriculture and nutrition, which is currently its fastest-growing business segment.

The company has its eye on overarching market trends for products to aid increased food production, a decreasing dependence on fossil fuels and safety and protection.

Those trends fit neatly with its portfolio and research into new products for agriculture and electronics, high-strength safety materials and more basic chemicals and polymers. They prompt work in seeds and crop protection, biofuels, photovoltaics and energy efficiency, and personal and environmental protection.

“Innovation is a critical lever for DuPont in all parts of our business at all times, and it enables us to achieve our short-term and our long-term growth goals,” CEO Ellen Kullman said late last month at a Sanford Bernstein conference.

DuPont can use its intellectual property to establish strong and differentiated market positions that slow competitors’ interests, she said. It also helps the company drive prices with new offerings when the tendency is for prices to go down.

R&D cannot have been immune from the focus on cash and cost control that has been necessitated by the recession, and it has been pushed harder to deliver results. But an emphasis on execution and on product development has produced $10bn in sales of products introduced over the past five years.

This recession has highlighted the importance of innovation across the sector. Companies have been focused on the controls they have since the downturn first took hold. DuPont has laid off tens of thousands of contractors, trimmed costs, reduced its workforce and cut its output to cope with much decreased levels of demand.

“There is no playbook for what the world is experiencing right now,” Kullman said last week at a Wharton conference, but she noted that DuPont had innovated through economic downturns before – the company is 207 years old.

“None of that happened by accident. It took leaders who had a vision and were absolutely determined to not waste a good crisis,” she said.

“We must be prepared not for the world the way it was before the recession, but prepare to succeed in the very different world that we’ll encounter when the recovery eventually comes,” Kullman told her audience.

That involves an aggressive pursuit not simply of new goals for science and technology but new business models and other basic changes.

DuPont has not been alone in reassessing performance criteria across its businesses during the downturn. On the one hand, this can help lower the break-even point; on the other, it can help identify new avenues for change and growth.

DuPont’s mega trends help focus research effort and the innovations that ultimately will transform the company.

The innovation effort helps deliver the products that could lift the company out of the recession faster than others.

($1 = €0.72)

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By: Nigel Davis
+44 20 8652 3214

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