INNOVATION PROCESSES

Example of Stamypor

Lets review the what, why and how

INNOVATION PROCESS

FROM IDEAS TO PROJECTS

I have a great idea!

FROM ORE TO DIAMONDS

Best practice
(Theory)
DSM NBD
(Design)
Stamypor
(Practice)

Stage Gate System

What will it look like?
Who will care?

Winner?
Loser?

What will it cost?

Who will pay?

How will we build it?

Where?

Here is a prototype
Do they like it?

We made X
They bought Y

Things to consider:

Accountability: what is the cost of doing, not doing, doing wrong?

Tracking: how many in, how long there, how many out, how
many successful?
Where did the ideas come from: congregated in R&D or spread
throughout?
What kinds of innovation: all along the keyboard or just one key?
What prompted them: competition, new employees,
partnerships, customers?
Who benefits: existing customers, new customers, internal
people?
What did we learn? Are we getting better?

Contextual Innovation
The way you structure innovating
activities depends on industry,
organization, competitive environment,
business model, organization culture,
resources available, sense of urgency,
etc.

Stamypor Case Questions

1.
2.
3.
4.
5.

Type of innovation?
Why separate NBD unit?
Nielands recommendation to NBD board?
Usefulness of stage-gate process?
Lessons learned?

Type?

Do something new
Exploration
Change basis of competition
Stamypor:
Radical innovation
Long-term development

Improve what exists

Exploitation
Safe, cheap, less risk,
low impact, quick returns

BGs versus NBD unit

BG

NBD

Short-term profit targets

Small, autonomous, flexible

Incremental innovations

Radical innovations

Longer time horizon

Balance risk with promise

PRODUCT PORTFOLIO

BALANCING RISK AND INVESTMENT

RISK
Accumulated investments
progressively increase

Failure risk progressively

decreases due to stage
gate process

TIME

What are the risks?

Potential application area is new to DSM
Technological challenges in development of
product and production technologies
While lead customers are not new, markets
and applications are new
Relationships with lead customers based on
trust

What is the commercial value?

Value generated when porosity is translated into

advantage for customers
Value creation depends on customer application
DSMs customers customers
Price depends on value to customer
Sales volume depends on value added over time
Product cost/quality depends on volume and
process technology
Different customer groups mean different value
considerations and competitor responses

Application of stage gate process

1.

New Business Creation investigating 35

new ideas/year for feasibility; 2-3 proceed
to 2nd phase.

2.

Business Evaluation Project project

manager & team develop against criteria.

3.

Stamypor?

Stamypor?

Start-up Company if satisfy criteria

become small start-up companies.

ASSESSMENT AGAINST CRITERIA

Financial Criteria

Non-Financial Criteria
Not within charter of BGs
Fit with company culture,
strategy and competencies
Synergy in raw
material/technology/market
Fit with NBD Portfolio

Annual average market

growth > 10%

Dependent on
customer

Potential turnover 3 5
years: 1-3 million

2000: 82 tons/yr X
5/kg < 500,000

Potential turnover > 5

years: > 10 million

2006: 910 tons/yr X

2.25/kg = 2 mill (if
5/kg = 2.5 mill)

Gross margin: > 50%

Not if using batch

production

IRR (10 yrs): > 20%

< 20%

Low-risk scenario possible

(no high up front costs)

What should Rein Nieland recommend?

Lessons
Stage gate process
Team composition
Technical problems
Market problems
Financial issues