Breakthrough technologies and Open Innovation Valérie André, BASF Future Business GmbH Michael Koch, Science Relations and Innovation Management BASF SE Ludwigshafen, Germany 1
Contents Introduction BASF Open Innovation History at BASF Definition of Open Innovation Partnership as a fundamental part of Open Innovation Challenges of Open Innovation Summary and conclusion 2
Expenditures in research and development Research is key to the future. New technologies and products help us to find solutions for global challenges. Corporate Research Chemicals 2010 R&D expenditures circa 1.49 bn world leader in the chemical industry Since 2005 up to and including 2010: ca. 40% increase in R&D expenditures Annual sales from product innovations*: 2010: over 6 billion Plastics Performance Products Functional Solutions 19% 12% 10% 9% ca. 1.49 bn 22% 1% 1% 2015 (target): 6-8 billion Agricultural Solutions 26% Oil & Gas Other * new or improved products or applications, max. 5 years on market 3
Central R&D Organization Thanks to our close cooperation with numerous partners from science and business worldwide, we have created an international and interdisciplinary Know-how Verbund. Universities Chemicals Research & Engineering Research Institute Currently, ca. 9,600 R&D employees Ca. 3,000 R&D projects and topics High-Tech Joint Ventures Specialty Chemicals Research BASF Research Verbund Plant Biotechnology Research Polymer Research Industry Partners R&D Verbund with ca. 1,900 collaborations 4
Innovation in five growth clusters Energy Management Plant Biotechnology White Biotechnology Nanotechnology Raw Material Change OLED Fuel cell Organic photovoltaic Lithium-ion batteries Thermoelectrics More efficient agricultural practices Healthier food Plants as renewable raw materials Biopolymers Chemicals through biocatalysis and fermentation Performance biologicals Printed electronics Nano materials Paintings and coatings Medical technical devices Research on the safety of nanomaterials From oil to gas Coal and renewable raw materials 5
Growth Cluster Raw Material Change GOAL The goal of the raw material change growth cluster is to enable BASF to replace or supplement oil, the conventional chemical raw material, with alternatives STRATEGY To develop new technologies for entry into the existing value-adding chains Oil Natural gas Coal Biomass Carbon dioxide 6
Growth Cluster Plant Biotechnology We help farmers to cover the growing demand for better agricultural productivity and healthier food for human and animal nutrition. Example: Crops with higher yields and higher resistance, e.g., drought-tolerant corn 6 10% higher yields under conventional cultivation conditions per product generation First positive field trials product submitted for registration 7
Growth Cluster White Biotechnology White biotechnology enables the efficient and resource conserving production of (bio)chemical products and the development of completely new bio-based products. Example Fermentative production of vitamin B2 and enzymes for animal nutrition Enzymatic production of chiral intermediates for the production of medicines and crop protectants 8
Contents Introduction BASF Open Innovation History at BASF Definition of Open Innovation Partnership as a fundamental part of Open Innovation Challenges of Open Innovation Summary and conclusion 9
Open Innovation has already been practiced at BASF since the beginning F. Engelhorn Theodore Coupier de Creil ~ 1867: F. Engelhorn obtains via licensing contracts from French chemist Theodore Coupier a better process for the production of fuchsine (without having to use arsenic) and later aniline, toluidine and induline. Source: Die BASF - Eine Unternehmensgeschichte, W. Abelshauser Verlag, C. H. Beck, 2002 10
Break-through innovations by cooperation between science and industry Ammonia (1913) Indigo (1897) Polystyrene (1930) Strobilurins (1996) Vitamine A (1963) Timm Anke, Wolfgang Steglich (University) Hubert Sauter (BASF) Georg Wittig (University) Horst Pommer (BASF) Hermann Staudinger (University) Carl Wolff (BASF) Fritz Haber (University) Carl Bosch, Alwin Mittasch (BASF) Adolf von Baeyer, Karl Heumann (University) Heinrich Caro (BASF) 11
Successful University collaboration and breakthrough technology: Strobilurins 1977 Timm Anke, University Kaiserslautern Discovery of Strobilurin A Strobilurin A from Strobilurus tenacellus Wolfgang Steglich, University Bonn Structure of Strobilurin 1983 BASF team develops Strobilurins as Fungicides 1995 Kresoxim-methyl Kresoxim-methyl 2001 F 500 Sales Potential: 500 Mio. 2008 Strobilurin Market: 2600 Mio USD 12
Contents Introduction BASF Open Innovation History at BASF Definition of Open Innovation Partnership as a fundamental part of Open Innovation Challenges of Open Innovation Summary and conclusion 13
Definition of OI for BASF today What it is (left) and what it is not (right) OPEN INNOVATION Acquisition Acquisition of whole companies or part Outside-in of business to improve market access Outside IP / competency via portfolio extension becomes BASF business / know-how Inside-out BASF IP / competency commercialized outside BASF Coupled Cooperation, Alliances, Joint Ventures, Cross-Industry Innovation Divestiture Selling of a whole business (incl. IP) or business parts to re-center on core competencies BASF internal Collaboration or IP Transfer not perceived as OPEN INNOVATION 14
The Open Innovation landscape has become very large and complex Strategic R&D Network Corporate Idea Portal Proprietary OI Platform Intermediaries / Broker Co-Location Strategic Partnership Cooperation along Value Chain Joint Venture Public Funded Projects Collab. Business Model Expert Networks Licensing Venture Capital R&D Collaboration / Joint Development Customer Innovation WS BASF internal (1) One Partner * Collab. Platform Cross-Industry WS coord. by BASF Scouting (2) Several Partner * (3) Crowd * * Partners: Universities, Institutes, Customers, Suppliers, Competitors, Start-ups, etc. 15
When is it necessary to look for an external partner? Three main categories of activities leading to different options Core business Core competencies Existing markets Core business New technologies Existing markets Non core business New technologies New markets One partner Several partners Crowd/Consortium Increasing complexity 16
Opportunities offered by Open Innovation Open Innovation can help accelerate time to market, especially in new business fields facilitate transition from products to systems / solutions establish access to broad know-how & talents across industries and along value chain 17
Open Innovation as key success factor for Identification of new market trends Idea creation Speed up for bringing innovations to market Including additional competencies Identification of lead users along the value chains Improving market success Realizing innovative products & business models with external partners by using internal & external sources along the whole value chain Source: Osram 18
Contents Introduction BASF Open Innovation History at BASF Definition of Open Innovation Partnership as a fundamental part of Open Innovation Examples of Open Innovation Summary and conclusion 19
How to identify the right partner? Personal network Experts network Crowd/Internet /Conference/Chance Partner finds us Strengths Easy and quick High level of trust Know the topics best High quality evaluation delivered Range of possibilities increased Cross fertilization possible Specific proposition or business plan available Weaknesses Not always neutral in evaluationcan limit opportunities Often strong NIH syndrome Time consuming IP? Trust? Strategic fit has to be evaluated Key Partnership Messages Build the relationship (trust) Identify respective weaknesses and fix them Then establish the partnership 20
Contents Introduction BASF Open Innovation History at BASF Definition of Open Innovation Partnership as a fundamental part of Open Innovation Examples of Open Innovation Summary and conclusion 22
OI@BASF: Strategic Partnerships with Universities BASF Advanced Research Initiative at Harvard University Objectives Executing BASF projects related to the fields Polymer-based formulations Understanding the formation of biofilms on surfaces New chemical approaches for processes and materials, e. g. exploring CO 2 chemistry Cooperation with 9 Faculty Professors Focus on new topics and novel concepts Creating visibility of BASF in Harvard facilitation of recruiting access to innovation circles Scouting for start-ups 23
OI@BASF: Platforms Organic Electronics InnovationLab in Heidelberg Universities Heidelberg (40%) Mannheim (10%) Scientific Advisory Board 50% 50% Shareholders Board Industry BASF SE, Merck, Freudenberg, Heidelberg, Roche, SAP (each 8,3%) Research & Development 5 Competence Centers for OE Projects Forum Organic Electronics Transfer and Incubator Education and Training Joint master program HD - KA Training Lab in cleanroom Services Cluster Management il Colloquium / Cluster Conference 24
OI@BASF: Strategic Partnerships Competitors High yield hybrid rice Higher yielding, stress-resistant hybrid rice varieties BPS licenses yield-increasing technologies for commercialization in Bayer CropScience s Arize hybrid rice Market launch by 2020 Advantages: 10% more yield over conventional hybrid rice seeds Global, non-exclusive, agreement that encompasses all major rice growing geographies Rice is the world s largest food crop. 25
OI@BASF: Cooperation with start-ups Evolva, Switzerland Goal of cooperation: Develop compounds applied to protect crops Description: Joint research on the design of novel and optimized biosynthesis routes for selected natural products with crop protection potential 26
Summary Open Innovation has been existing at BASF since the beginning of the company As markets become more dynamic and complexity of products or solutions increase new competencies are required Partnership and openness are successful if trust between partners exist Open Innovation is best adapted for new areas where core competencies are not key Open Innovation is a strong tool to solve future challenges 27