06 June 2014 10:07 [Source: ICB]
Cabot Corporation is a global $3.5bn (€2.6bn) specialty chemicals and performance materials company, with core technical competencies in fine particles and surface modification. It holds No 1 or 2 leadership positions in many of the markets in which it operates, notably carbon reinforcement for rubber, activated carbon, inkjet colourants, caesium formate drilling fluids and fumed silica.
Cabot’s semiworks facility for aerogel production is on the former Hoechst site in Frankfurt, Germany
There are two other key factors, adds Prevost. “You need to be global – there are few businesses where you can be regional or local and be successful; and you need to have a sharp focus on the customer and on sustainability. You need to drive strategies in these fields.”
One of the company’s strengths, he explains, is that it strives to be a technology and innovation partner for its customers. He describes his philosophy on innovation as “outside in”. Through close contacts with customers, Cabot can see the problems companies face in the marketplace and then see what it has to offer in the way of solutions. “You need to have technical and commercial teams out there, understanding the needs of customers, to be successful.”
He also believes that innovation efforts have to encompass both incremental and step-change technologies – not just one or the other – and that you need to innovate in your mature businesses as well as in new start-up areas. And finally, he says: “we believe process and product innovation must go hand in hand.”
Prevost is keen to illustrate these points with several examples. In the area of innovation in mature businesses, he points to innovation in the fumed silica business that led to the development of fumed metal oxide dispersions for use in semiconductor chip polishing. This, he says, led to the creation of a whole new industry – chemical mechanical polishing – which was eventually spun off from Cabot as Cabot Microelectronics.
In the new innovation area, he cites the recent development of best-in-class conductive additives that enable significant expansion of capacity and durability of lead acid and lithium ion batteries. These products improve battery performance and will enable the expansion of portable electronic devices, electric vehicles and distributed storage.
The ICIS Innovation Awards for 2014, launched in April, are now well underway. Indeed, the first submissions are already coming in to the ICIS office.
The latest date for entries is
The Awards are again sponsored overall by Roland Berger Strategy Consultants, with category sponsorship by Roland Berger and U.S. Chemicals.
Full details of categories, judges and sponsors and the online entry form can be found at: www.icis.com/awards. You can also see the details of last year’s winners here.
ICIS editor John Baker and judge and sponsor Neil Checker of Roland Berger recently visited two of last year’s winners – Cabot Corp and Solvay – to discuss with senior executives at each company their philosophy and approaches to innovation.
The following five pages give an insight to their strategies and priorities as they strive to turn good ideas into profitable businesses as efficiently as possible.
By contrast, the development of new surface treatment techniques for carbon black and coloured pigments was a step-change innovation that created the whole area of pigment-based inkjet printing, says Prevost. Cabot is still the leading supplier of these types of pigment dispersions with a 40% market share.
Says Prevost: “Step-change innovation is important. You have to build on your capabilities and broaden them, and look at ideas as much from the outside as the inside. It does tend to be more from the inside with step-change improvement, but ideas need to be grounded in the real world.”
He cites the ICIS Innovation Award-winning aerogel development as yet another step-out innovation (see page 32), as well as the company’s current innovation efforts in graphene technologies. However, he adds: “you can’t afford to have too many [step-change] projects going on at one time – it does draw on resources and you have to realise it often takes longer than you think.” Nonetheless, “it also creates excitement and a real feel of innovation”.
Innovation in graphene is a key area for Cabot at the moment. It has partnerships with both industry and academia to advance its graphene capabilities. Prevost says Cabot looked at nano-carbon tubes some years ago, but did not think it could make a commercial go of them with a 10-year framework. It was also concerned about the uncertain health profile of these materials. However, it recently looked at graphene more closely and put its effort into developing technologies that will allow these novel materials to be used in industrial uses; it is not focusing on uses in electronics or thin films.
“We can now make small-scale quantities of graphene at our Billerica, Massachusetts, research facility, enough to be able to do significant applications development work, as well as support the launch of our new graphene products,” says Prevost.
The resulting mechanical, conductivity and thermal features are quite surprising, he adds, and there is plenty of potential. One area is high-performance conductive polymers, where the low loading of graphene does not impair the mechanical properties; another is in batteries, both lead and lithium ion, where enhanced performance “is attracting the interest of all the big battery makers – the door is wide open.”
Cabot spends some $75m per year on research and development, around 2% of its turnover. With its focus on new product introductions, it is aiming to double the impact from new products over the next
Prevost is not overly concerned about the absolute spending on innovation. It is not a figure that is decided by the board, he says, but one that is arrived at by a bottom-up
process, reviewing activity on a project-by-project basis and seeing how they are meeting their milestones.
Of more concern is the speed of innovation. Cabot uses a rigorous project management approach with a stage-gate process. This, he notes, “allows us to improve the quality, speed and profitability of our new product and process projects, while reducing the risks of failure after launch.” In addition, it manages the timing of investments with market demand for its new materials introduction. “We develop new materials and pilot capability as we identify markets. And then wait to make big capital expenditures until there is market growth to substantiate the investment.”
As CEO, Prevost is very closely involved with the innovation effort and looks at the progress and pipeline every quarter. “It’s a very important part of a chemical company and an important part of leadership as well. The CEO needs to be genuinely interested and actively engaged. But having some distance allows him to periodically challenge the researchers on their thinking, overall direction and ultimately delivery.”
Prevost concludes by making a point on the sustainability aspect of innovation. “I feel strongly about the notion of sustainability. As a strategy and philosophy, we need to be cognisant of what technology is going to do. Will it create progress in some ways? Will it have long-lasting impact? We need to create sustainable results at the company and also the customer level.”
Cabot aerogel team in Frankfurt, winner of last year’s ICIS Innovation Awards
These are not empty words, he stresses. They represent a value Cabot holds dear. “It is right that employees feel their work is meaningful to society and meets regulations and even goes beyond the licence to operate. We do a lot that is difficult to explain, but we should not duck the challenge… a lot of what we do makes life more comfortable and efficient.”
“In summary, our success in innovation is driven by our customer focus,” Prevost says. “We take an outside view of the world and when we have an idea that we believe will create value, we are highly disciplined with our stage-gate process. Also importantly, we take a broad view on innovation. We look to create step-change technologies as well as incremental changes. And of course, we do all of this with an underlying emphasis on sustainability. Our passion to innovate and our deep sense of responsibility makes us who we are.”
AEROGEL INNOVATION PARTNERS FOR GROWTH
Cabot’s development of aerogel particles for use in building and construction, glazing and industrial uses to improve thermal insulation is a typical example of Cabot’s approach to innovation.
The innovative new business – for which Cabot won the ICIS Innovation Awards in 2013 – sits in Cabot’s Advanced Technologies segment, alongside inkjet colourants, novel elastomer composites and the caesium formate products for oil and gas drilling and well completions. At present, while the market for the product develops, the material is being made in a semiworks facility in Frankfurt, Germany, on the former Hoechst chemical site.
Miltiadis Vlachos, managing director of Cabot Aerogel and general manager of the Frankfurt production facility, says aerogel is “an exciting material that offers outstanding insulation performance. It is unique within the Cabot production network, distinguished by the innovative and patented technology and our global leadership in granular aerogel expertise and know-how.”
The Frankfurt plant meets Cabot’s production and development needs, and product is sold to the market through several key partnerships in distinct market areas. The facility is also used to test new technologies and scale-up efforts. The continuous process converts aqueous silica solution into a siloxane-treated silica gel, which can then be dried to create the microscopic porous aerogel granules without losing volume.
Cabot sees applications for aerogel particles in several sectors, notably building and construction, but also in coatings, specialty chemicals, and subsea pipelines, for example. The small, porous granules of treated silica are water repellent. The pores are also small enough to prevent thermal convection, reducing heat transfer significantly when mixed into plasters and coatings or used in polycarbonate glazing.
Cabot is currently working with a number of partners, including Sto of Germany (interior systems), Denmark’s Rockwool (mineral wool insulation), Swiss company Fixit (plaster), and Birdair-Taiyo and Tnemec in the US. These partnerships, says Vlachos, “are part of the adoption curve, helping us provide the right solutions for the market of our customers. They have been key to becoming more successful.”
He sees plenty of potential in the market. “We have validated a set of applications now and the challenge is to grow profitably. The cost-performance profile is the key – and we have proven the performance now. At the current scale, aerogel is finding use in specialised niche markets. The bigger challenge is to continue to make inroads into broader markets and hence benefit from a production scale-up.”
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