Science for presidents

To innovate in times of crisis

Great Companies chase frontier science and major challenges of the planet to innovate

It is not easy to hit with the recipe of innovation, and much less in times of crisis like the current ones. But to maintain the flag of R&D high for the ones living on millionaire sales, it is mainly an obligation, if one wants to preserve a privileged position for the future, to not depend on the bad numbers of a few exercises. It is with high investment percentages in the generating of knowledge and its transformation in product, technology or services; that the great companies are facing bad times. Something like harvesting today for collecting tomorrow.

Xavier Pujol Gebellí | Ludwigshafen | 4 February 2010

BASF, the German chemical giant is one of the 'big ones' decidedly opting for this way. Founded in 1865, reinvented after its total destruction because of the bombing of allied forces during the Second World War through the concept of integrated management, the company, with its enormous work force with more than 30,000 employees in Ludwigshafen –between Manheim and Heidelberg- now faces the challenge of renewing its portfolio incorporating the novelty concept of “open innovation”.

How to generate innovation in times like the current ones? Andreas Kreimeyer, executive director of BASF explains it in numbers: 1,380 million Euros injected in 2010 in the R&D area, adding to practically identical numbers in 2009 and 2008, which means near to 4,000 million Euros in research and technology transfer in only three exercises. According to the company's plans, each one of the exercises should report a return of investment of between 6,000 and 8,000 million Euros in a term of five years.

“Only with a continuous flux of innovations can we apply competitive advantages in a consistent way and maintain an organic growth”, Kreimeyer declared yesterday in a press conference at the BASF's headquarters in Germany. In his opinion, fully shared by other companies of great size with independency in the business sector, to give continuity to investment strategies in science and technology "is positive in the good moments (economic) as well as in times of crisis".

Global tendencies

The key is how to generate innovation, in what and how to employ the money, for it to give the desired fruits. Henry Chesbrough coined the term "open innovation" in 2006. The famed director of the area that carries the same name in the Haas School of Business of the University of California in Berkley, formalized in a book that is turning into one of the bibles of innovation, the collaborative mechanisms favouring the knowledge generation and its flux amongst different actors, internal or external in any organization.

In a way, Chesbrough's work establishes mimicry of practical guide to organize the creative and organizational flux aiming to promote innovation. Synthetically it gives a formal character to what companies or institutions traditionally have been doing when signing collaboration agreements with consultants, researchers or service suppliers based in knowledge, elevating it to the category of strategic decision.

The orientation to market to innovate isgiving way to the analysis of the great challenges of the planetOnce the method is seen, in this case the collaboration with internal and external agents as strategy, it has to be decided on what and for what to collaborate with. And it is here where again a coincidence which isn't casual appears in the administration boards of the great companies. The exclusive orientation to market as an engine of innovation is giving way to the analysis of the great challenges of the planet, from the ones of strict social character to the energetic or food or health needs. It is in these surroundings, which the experts call “megatrends”, where the great companies hope to find innovative products or services. It is there, where some investments ultimately pretend to join products and needs in a globalized world; either in “big pharma”, biotechnology, chemistry, energy or automotive.

The “global megatrends”, in the case of BASF, are summarized in form of key questions. For example, how many cars and of which type will circulate in the future cities; how many people can the current model of agriculture feed; how much energy do we need to maintain our current level of wellbeing and at what cost. To these questions, an essential issue has to be added: What can a chemical company contribute with to obtain a response that puts together knowledge, business and development and is able to transform into innovations, which can even aspire to be disruptive?

The German chemical giant can contribute in "knowledge and investment effort" in biotechnology, nanotechnology, management and energetic efficiency and new materials, Kreymeyer assures. All of them are areas that are part of the priority investor chapter of the VII Framework Program of the European Union and are inscribed in the great lines of basic and applied research of the major poles of global knowledge, including the ones of the two American coasts, the Europeans or the ones circumscribed to the emerging Asian economies. Therefore, a key element in the business world is added, the opportunity factor. BUILDING BRIDGESBASF is the largest chemical company of the world. In the whole world it counts with 97,000 employees with whom at the end of 2008 it reached an invoicing of 62,000 million Euros. Referring to this company is equivalent to talking about the great ones of computing or the pharmaceutical sector.

Approximately a third of its 30,000 employees in the headquarters of Ludwigshafen are dedicated to R&D tasks. Specifically 9,300 people amongst engineers, researchers and developers. With them a catalogue of research projects composed of 3,300 titles, larger or smaller, has been defined with the aim of transforming into a business opportunity. The company's management believes that the only way of addressing the challenges and its transformation, what we would conventionally understand as knowledge and technology transfer as a vehicle to reach the market, is only possible through mechanisms that assure the internal information flux and establishing synergies with knowledge centres throughout the world.

The prestige and solidity of the German multinational has allowed it to reach new collaboration models with centres of the reputation of the University of Harvard or the University of Heidelberg under the formulas of "industrial campus" type. In them and much other collaboration, products associated to electronic chemistry are developed as well as bio-films, new polymers for construction, automotive, aeronautical or pharma and biotechnology, pilot plants to capture CO2, or elements to facilitate the mobility and communication, plastics for agricultural use or new developments of nutritional interest.

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