1. INNOVATION PROCESSES
Example of Stamypor

2. Let’s review the what, why and how…
Innovation process

3. FROM IDEAS TO PROJECTS
I have a great idea!

4. FROM ORE TO DIAMONDS

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

6. Stage Gate System √ X √ X √ X √ X What will it look like?
Who will care?
Winner?
Loser? √ X
What will it cost?
Who will pay?
How will we build it?
Where? √ X
Here is a prototype
Do they like it? √ X
We made X
They bought Y √ X

7. 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?

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

9. Stamypor Case Questions
Type of innovation?
Why separate NBD unit?
Nieland’s recommendation to NBD board?
Usefulness of stage-gate process?
Lessons learned?

10. 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

11. BG’s versus NBD unit BG NBD Short-term profit targets
Small, autonomous, flexible
Incremental innovations
Radical innovations
Longer time horizon
Balance risk with promise

12. PRODUCT PORTFOLIO

13. BALANCING RISK AND INVESTMENT
Accumulated investments progressively increase
Failure risk progressively decreases due to stage gate process
TIME

14. 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

15. What is the commercial value?
Value generated when porosity is translated into advantage for customers
Value creation depends on customer application – DSM’s 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

16. Application of stage gate process
New Business Creation – investigating 35 new ideas/year for feasibility; 2-3 proceed to 2nd phase.
Stamypor?
Business Evaluation Project – project manager & team develop against criteria.
Start-up Company – if satisfy criteria become small start-up companies.

17. ASSESSMENT AGAINST CRITERIA
Non-Financial Criteria
Financial Criteria
Not within charter of BGs √
Annual average market growth > 10%
Dependent on customer
Fit with company culture, strategy and competencies
Potential turnover 3 – 5 years: €1-3 million
2000: 82 tons/yr X €5/kg < €500,000
Synergy in raw material/technology/market
Potential turnover > 5 years: > €10 million
2006: 910 tons/yr X €2.25/kg = €2 mill (if 5/kg = 2.5 mill)
Fit with NBD Portfolio
Gross margin: > 50%
Not if using batch production
Low-risk scenario possible (no high up front costs)
IRR (10 yrs): > 20%
< 20%
What should Rein Nieland recommend?

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