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Innovation First Responders
Posted on January 26th, 2016 by Michael D. Brown in Chemical R&D
Basic, or “revolutionary,” research and innovation has come to the forefront of the chemical industry as pundits lament the current state of the chemical industry in the aftermath of the Dow/DuPont merger announcement. Particularly newsworthy has been discussion of whether shareholders are getting acceptable return on their investments given the rather poor success rates of basic research over the last few decades. Causes range from long commercialization leadtimes, to new products that miss the mark by delivering questionable value to customers and consumers. While some blame rests on poor execution and mismanagement, other contributing factors include the “commoditization” and natural evolution of maturing chemical markets that place less value and importance on revolutionary new products which are often more expensive than incumbent products and require significant switching costs for customers.
Overlooked in this discussion is the much higher return from investment on research and innovation that is more “evolutionary” and incremental, usually involving simple improvements to existing products. This innovation is often application and customer specific and much less glamorous than basic research resulting in fewer patents, fewer papers published and certainly no Nobel prizes awarded. Yet the majority of research spending in the chemical industry falls in to this evolutionary category which arguably is much more successful at delivering value to customer and shareholders.
The unsung heroes of evolutionary innovation are applications specialists embedded within the sales and marketing functions of many chemical companies. The role of these “innovation first responders” is to manage the technical relationship between chemical suppliers and customers by deeply understanding the manner, processes, methods and techniques by which customers use a chemical company’s products. The responsibilities of these specialists are typically to:
- provide routine troubleshooting,
- provide routine product safety training
- run trials for introducing new products
- identify and translate emerging unmet customer needs
It is this last responsibility which ideally suits application specialists as “first responders” of evolutionary research and one that is too often overlooked in chemical companies today. While applications specialists are seldom listed as the inventors on patents, they are a vital link in the innovation process by transmitting market needs back to research chemists and then subsequently supporting the newly innovated products as they go to market.
As a simple example of the importance of application specialists, let us think about the engineered plastics market for automotive components. Engineered plastics are used to make a wide range of functional parts throughout the automobile, often replacing metal. Customers chose these plastics based upon the best combination of performance and final part cost. The choice of a specific plastic product is often made by the part designer considering factors such as the need to reduce part weight (which in turn requires increasing performance of the plastic) while lowering part costs (which in turn requires lower material and processing cost). Designers are incredibly effective at understanding the cost/performance ratio for a given part and choosing the best plastic material. Collectively these designers make up a market that is quite efficient at determining winners and losers among the vast options of plastic materials. The applications specialists of the plastics supplier work closely with these designers and are well-positioned to understand this cost/performance relationship and the designer decision making process.
As first responders, application specialists can identify market needs for improved cost/performance and help to technically articulate how an existing product can be improved. In our example of engineered plastics, “performance” of a plastic is a function of tensile strength, stiffness, impact strength, heat/chemical resistance and a few other properties such as appearance, hardness and wear resistance. The relative importance of these properties varies greatly from one application to the next and application specialists not only know how designers place weighting on each property, but can advise research chemists on how these are measured and suggest ideas on how existing products might be modified to improve upon and displace a competitive product. How designers think about “cost” is equally complex and is a function not only of per unit material selling price, but also processing times and ability to eliminate other costly processing costs. Again, application specialists can translate these costs, without the bias introduced by customers, in a way that allows research chemists to think holistically about part cost targets and not just focus on plastic selling price.
Applications specialists should be an integral part of a chemical company’s innovation process by:
- Identifying incremental customer needs unique to a specific customer or application that might not surface otherwise
- Providing the “voice-of-the-customer” stripped of the biases and agendas inherent in direct dialogue with the customer
- Understanding the value proposition of competitive products and helping to craft the new features and benefits so that a new product has clear and sustainable advantages over competitive incumbents
- Testing and trialing prototypes in customer facilities
- Providing the on-site support to assist customers as they switch to new products
As the chemical industry adjusts to the new reality of commoditization, it will be vital to maintain investment in research, carefully balancing the more risky revolutionary innovation with less risky evolutionary. “First responder” application specialists should play an increasingly important role in managing this risk by being the sentinel of market needs.
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Michael D. Brown
President, StrategyMark Inc
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