04 October 2010 15:08 [Source: ICB]
LANXESS has created a new central innovation group as part of its effort to boost R&D, after a thorough review of strategy assisted by CRA International
A step-up in innovation effort and investment is underway at German rubber and specialty chemical producer LANXESS, after a wide strategic review of how and why it undertakes innovation. A new central innovation group has been created, reporting to the board and tasked with driving research and development (R&D) on a wider horizon and longer timeframe than before.
LANXESS management board member Werner Breuers points to a number of business challenges the company faces and explains how innovation will be a key component in addressing these.
First, he notes, markets are becoming more volatile and it is essential to have highly efficient plants and deep market insights. Second, oil and fossil fuels are becoming harder to extract and in the long term will be increasingly expensive, so there is a need to expand green chemistry and look for alternative, renewable feedstocks. And third, the competitive environment is changing, accelerated by the economic crisis, with emerging markets such as China, India and Brazil becoming more important, driving market trends and society's needs. These megatrends, as they are often called, include urbanization, energy efficiency, water supply and environmental protection.
NOT 'BUSINESS AS USUAL'
"We came to the conclusion we could not proceed with a 'business as usual' approach, relying on existing chemical processes and fossil fuels as feedstocks," says Breuers. "We also realized a lot of our R&D was very short-term and business-unit focused, so it did not tackle overlapping areas of innovation or the opportunities thrown up by these megatrends."
The LANXESS board therefore began a comprehensive review of its innovation capability and strategy in 2008, working with US consultancy Charles River Associates (CRA) as an external adviser and sounding board to challenge its thinking. LANXESS held a series of workshops and made an in-depth analysis of markets and competitors and its technology position.
"The more we evaluated the situation in the market and our technology, the more we were sure we needed an innovation hub to bring business units together, but also to look at totally new areas of innovation," says Breuers.
From now on, we have a focus on sustainable development"
Dr. Werner Breuers
Board director, LANXESS
The review has resulted in the creation of a central innovation group at LANXESS, 50 people strong, which works with the 13 manufacturing business units and their R&D departments to enhance the innovation effort. Its role is to serve as the central co-ordinator of the group's R&D activities and drive forward development of new products.
LANXESS and CRA have identified a number of megatrends that offer the greatest potential to LANXESS, mapped against the business areas in which it is already active, and its technology base. Also, longer-term innovation projects will be set up to focus on the following areas: water supply, agriculture/food, energy savings and reductions, white biotechnology, mobility and urbanization.
Some 300 ideas in 16 market areas emerged from the review. Sixty-five of these have been selected to be taken forward, covering both process and product innovation projects. The creation of the core innovation unit has had an energizing effect, says Breuers, and "ideas are just bubbling out."
Breuers points to a recent major move - the development of isobutene from renewable plant-based feedstocks rather than the conventional petrochemical route. In May, LANXESS made a $10m (€7m) investment in US-based Gevo, which is developing a fermentation system that uses microorganisms to produce isobutanol. LANXESS will dehydrate this chemically to isobutene, a major raw material for its rubber business, especially butyl rubber.
The collaboration "broadens our future supply options against the background of volatile raw material prices," says Breuers.
He also describes a recent innovation success in the mobility sector, where a glass-reinforced polyamide compound is now being used by German carmaker Audi in a large, structural metal/polymer composite structure for the front end of the Audi A8 model.
Last year, the company spent €101m ($140m) on R&D (up from €97m in 2008, despite the economic crisis) and employed about 500 people worldwide in its R&D labs, up from 440 in 2008. This year, spending is budgeted to increase by 10% to €110m, Breuers reveals.
LANXESS has also developed close partnerships with major research centers and universities in Europe, Asia and North America.
Breuers believes effective innovation will be increasingly important for LANXESS. "From now on, we have a focus on sustainable development, and see ourselves as a provider of solutions, not just products."
For further information on CRA International's experience in innovation management, please contact Neil Checker at email@example.com
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