Wednesday, 19 January 2011

Mega-trend focus grows

Recent news from Clariant that it is investing Euro50m in a new global innovation centre in Frankfurt, Germany, came with the statement that "our product innovations will also address current mega-trends such as renewable energies, energy efficiency and renewable resources with a view to opening up new business opportunities beyond current markets."

The new centre in Frankfurt will support
mega-trend-driven  innovation
Now, I've watched the rise of the mega-trend concept amongst leading chemical producers for a year or so now, as first one then another and then many companies jumped on this particular innovation bandwagon. Not that there is anything wrong with the concept of aiming your R&D spend in markets that will provide large markets for new technology platforms, rather than purely incremental growth. Dow Corning has been a particular leader in this respect.

But there is a sense that a herd mentality has set in here now - with some proponents really not up to exploiting the mega-trends they have identified, given lack of core expertise in some vital areas. I discussed this idea with Alasdair Nisbet of Lazard bank not so long ago - you can see his views in this ICIS article.

A quick search over the strategy pronouncements of the the leading innovation-centred chemical producers shows that many are focusing on the same mega-trends - not so much room there to carve out a competitive edge.

Take AkzoNobel - it is focusing its longer-term strategic thinking around population growth, climate change, scarcity of natural resources and improvement in quality of life in high growth markets. Or BASF - urbanisation, demographic change, growing energy and mobility needs and world population growth. And Dow - energy, transportation and infrastructure, health and nutrition and consumerism... see what I mean - I could go on with another half a dozen companies. Well why not: Lanxess - mobility, agriculture, urbanisation and water; DSM - global shifts, climate and energy, health and wellness...

My point is that to exploit a growing mega-trend a company needs a wide range of associated innovation competencies - some of which may be lacking. This may, as Nisbet predicts, spur M&A activity as producers try to buy in technology to widen their competency. Or it might really lead to step-out innovation in new areas.

Which I guess is where we get back to the Clariant investment. The new innovation centre will house 500 scientists and business personnel, in open-plan architecture designed to combine chemical research and development activities with application-oriented labs and technical marketing functions of several business units. In this respect it looks to emulate Evonik's science-to-business centre philosophy which has garnered critical acclaim in recent years.

But whether anyone can forge ahead with the mega-trend bus is now a moot question, as everyone seems to be onboard and heading in the same direction!

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