Integrating R&D, innovation and technology management GPCA R&I Summit Dr. Ulrich Kuesthardt (Chief Innovation Officer) Bahrain, March 9, 2017 1
Evonik is a dynamic company that focuses on speciality chemicals Overview of Evonik One of the global leaders in specialty chemicals 12.7 Aim Profitable growth and sustained value creation Evonik global footprint Evonik has production and distribution sites in 52 countries and operates in more than 100 countries Billion euros sales 2.2 Billion euros EBITDA 17 % Profitability (EBIDTA margin) 34,351 Employees (2016) 2
Innovation is key for Evonik and increases the enterprise value Role of Evonik s Innovation 1 Innovation as sustainable growth lever Fuel growth above market level (extend/create) Increase of Evonik s Enterprise value 2 Maintaining / improving competitive position Continuous improvement of existing processes and products compensating the errosion (defend) 3 Innovative company reputation Innovative perception by customers, public, investors, scientific community and employees 3
Evonik favors a decentralized R&D approach 438 million (3,4% of sales) Structure of R&D expenditures, 2016 Expansion of existing businesses ~90% Business Segments Focus on existing markets and technologies Strong customer orientation Short-term and medium-term projects Establishment of new businesses, competence platforms ~10% Strategic innovation unit - Creavis Focus on new business options and new competence platforms Medium-term and long-term projects 4 Evonik Venture Capital ( 100 million over the medium term) Direct investments Nanocomp, Biosynthetic Technologies, Algal Scientific, Wiivv, JeNaCell, AOG etc.
To become leading in innovation, you need to lead innovation Key Ingredients: Longterm Vision Ambitious Targets Clear Strategy Right Innovation Culture 5
Evonik has created an ambitious vision and defined the roadmap Evonik is one of the most innovative companies in the world Innovation Targets Increase of innovation pipeline value 16% contribution of innovation to sales by new products Profit contribution by new/improved processes Innovation Strategy Balanced innovation portfolio management Fostering disruptive innovations: Growth Fields Open innovation approach by partnering and venture capital investments Truly global Leading Innovation Innovation Culture Guiding principles of innovation (trust, openness, transparency) Fostering entrepreneurship and courage to deal with high uncertainty and constructively manage setbacks 6
Ambitious and stretching innovation targets in place R&D rate Continue to exceed 3 percent mark in the medium term R&D expenditure 4 billion in the next ten years (from 2015) Our goals Innovation pipeline Continuous increase in value Evonik growth fields 1 billion additional turnover by 2025 Products/applications younger than five years 16 percent share of overall sales (medium term) 7
Common strategic growth fields drive our transformational innovation efforts Megatrends Health & Nutrition Resource Efficiency Globalization Evonik Growth Fields Sustainable Nutrition Advanced Food Ingredients Healthcare Solutions Cosmetic Solutions Membranes Smart Materials Additional contribution to sales of more than 1 billion by 2025 Evonik Technology Competence Fields Polymer Design Inorganic Particle Design Interfacial Technologies Coating & Bonding Technologies Catalytic Processes Biotechnology 8
You can t tell smart creatives to be innovative, but you can let them Stimulating Culture Ambitious Targets Trust Empowerment Diversity Contructive Feedback Failure as Learning Example: Evonik Entrepreneurship Award: Idea from Evonik-internal ideation jam Entrepreneurship contest: 6 finalists 1 winner 100%-committed intrapreneur one year time for incubation of the idea (business/technology) Lean startup methodology/disruptive innovation management Celebrating Success Entrepreneurship 9
Leading Innovation to become leading in innovation Evonik s Leading Innovation Initiative is directed towards business leaders involves Top Management requires Leaders as role models brings innovation on the agenda of Top Management adresses cultural issues of innovation delivered already tangible results Source: Nachrichten Chemie 10
Corporate Innovation takes on the role of guiding and setting the direction for innovation at Evonik Role of Corporate Innovation Strategic Innovation Steering Growth Fields Overall Innovation Portfolio Performance Measurement Best Practice / Methodology Pioneering Innovation Excellence Processes Pioneering Cross Vertilization Strategic Development of future growth opportunities Disruptive Innovations Incubators Corporate Venture Capital Innovation Marketing Increase the image and reputation of Evonik Scientific Network Management 11
Corporate Innovation plays a pioneering role for new Best Practices especially driving Evonik s Open Innovation approach Crowd Sourcing Corporate Venturing Global R&D Network Co-creation Industry Cross Innovation Corporate Foresight Scientific Partnership Technology Scouting Industrial Research Alliances Social Innovations 12
The Evonik Foresight Team provides future trends and scenarios for innovative solutions of tomorrow Example: Game Changers 13
The Evonik Foresight Radar provides future trends and scenarios for innovative solutions of tomorrow 14
Big data pioneering: Chemicals Network Simulation describes the chemical world from raw materials to consumer products as a balanced chemical network (including world trade flow) disruptive developments and changes in environmental factors anticipated impacts shown in different quantitative Scenarios Evonik Chemicals Network Simulation Result: Quantitative robustness test of businesses models Identification of emergent, non-obvious options for Technology Development 15
Innovation Marketing is key for creating an innovative reputation How innovative would you rate Evonik? 1% not innovative at all 15% somewhat innovative 14% very innovative The number of people who believe Evonik s aspiration to become one of the most innovative companies in the world within a few years is achievable (in %) 49 39 6% don t know/no idea 64% innovative Source: forsa, Estimations of Evonik s innovative power, 17.05.2016 16
Creavis is Evonik s internal incubator for new business options and the major driver for our disruptive innovations CREAVIS Science to Business Creavis supports Evonik in its growth and sustainability strategy mid to long term innovation with transformational innovations providing new business options Creavis develops and provides competence platforms for Evonik Creavis fosters Evonik s image as an innovative company: Example: Project Houses Project Houses are physical co-creation spaces Used for transformational innovation and competence development Nucleus for new future business areas Limited lifespan of 3 years Substantial co-investment Evonik. Power to create. 17
Evonik Venture Capital is an additional lever for innovation growth and disruptive innovations Overview EVC (total investment volume up to 100 m ) Investment History Established in 2012 2012 Startups Funds Direct investment in 15-20 start-up companies Participation in 4-5 venture capital funds 2013 Global investment strategy with focus on Europe, North America and Asia Maintains a minority share and typically invests up to 5 million per company 2014 Investments are driven by strategic goals and financial returns 2015 Wiivv Wearables More than 2000 start-up companies reviewed since 2012 with a large number of cooperation started 2016 18
Leading Innovation to become Leading in Innovation Innovation is key for Evonik and increases the enterprise value Evonik favors a decentralized R&D approach Evonik has created an ambitious vision, challenging targets and defined the strategic innovation roadmap Corporate Innovation takes on the role of guiding and setting the direction for innovation excellence at Evonik Open innovation is imbedded in our DNA and we successfully co-create with many partners in innovation eco system Disruptive innovations are an important portfolio element at Evonik and Creavis is our internal incubator for such business developments 19
Thank you for your attention We know what the future will bring Because we deliver the goods. 20
21