Intelligence Drives Open Innovation at DSM
Interviewed for this case is Mr. Ubald Kragten, Manager, Business & Market Intelligence in the DSM Innovation Center. Kragten has held a number of different positions at DSM, such as Technology Manager and Technology Portfolio Manager before taking responsibility of the company’s intelligence operations.
At DSM, it has been explicitly stated that “innovation is key for reaching DSM’s Vision 2010″. Market driven growth and innovation along with increased presence in emerging economies have further been listed as the company’s strategic objectives. By 2010, DSM should have generated EUR 1 billion in additional revenues through active innovation efforts. With a vision and objectives like this, it is hardly surprising that intelligence activities play a vital role in facilitating innovation and product development at DSM.
Intelligence Organization at DSM
At DSM, intelligence is an integral part of all key operations so as to minimize risks, maximize opportunities, and to make sure that all analyses are based on joint efforts between different teams and units. In different units, intelligence has been organized as a staff function, i.e. several people are involved in the process on a full or part-time basis. Corporate Marketing is targeted to own DSM’s intelligence process.
Intelligence for the Innovation and Product Life-cycle process
Intelligence activities specifically related to innovation have been organized under the DSM Innovation Center that consists of three units:
- Innovation Services ““ Working on issues related to patents, trademarks and other Intellectual Property issues
- Emerging Business Areas ““ Setting up and managing projects and companies within DSM’s “innovation funnel”. Includes a business incubator.
- Intelligence Services ““ Focussed on the Emerging Business Areas
DSM is a life sciences and performance materials company employing 23,000 people in total, and the company’s net sales in 2007 amounted to EUR 8,757 billion.
Intelligence output at DSM has been divided into three categories based on the level of analysis that different organizational activities require:
- Strategic ““ Business Strategic Dialogue: The intelligence team at DSM is responsible for developing and updating a Strategic Data Set for top management with which management can discuss and make decisions based on intelligence from the external business environment.
- Tactic ““ Project/Business Plans: The intelligence team is heavily involved in helping business managers develop business plans throughout the innovation and product launch process.
- Operational: Structured information portals
DSM have identified four key innovation pockets which form the foundation for innovation towards the Vision 2010:
- Process technology
- Information technology
These technology areas and trends relate to trends in the society such as aging and the growth of tne world’s population, environmental, health and safety awareness, individualization of the society, and global networking. The present intelligence activities aim at developing a better understanding of these trends and topics in order to identify new business opportunities.
Examples of opportunities that have developed into emerging business areas are biomedical materials, specialty packaging, personalized nutrition and white biotechnology. It is important that the intelligence process focuses both on the initial idea development, patenting and market launch and on the full commercialization process. Intelligence therefore plays a vital role in both the value creation process and in the value capturing process.
The intelligence team at DSM Innovation consists of eight persons.
Intelligence for the Open Innovation process
Intelligence is a key element in DSM’s Open Innovation Process, together with competence development and intellectual asset management, all the way from the fuzzy front end to the well defined rear end, where DSM’s company and product portfolios are managed.
Table 1. describes the innovation funnel and the various types of intelligence provided for each step in the process.
Intelligence is needed
At this stage, much
In the development
Starting a business can
Based on the work
Case 1 ““ Sciona:Societal Trend Analysis leads DSM to go into nutrigenetics
One example of how intelligence supports the idea generation process at DSM has been identifying and linking societal trends with competence areas within DSM, or with areas where DSM believe they should be active in the future. The obesity trend, in this case the fact that 200 Mln Americans are overweight and 50% think about losing weight is one example of such trends.
When DSM has identified trends of potential interest, business ideas will be developed that might be successful in leveraging the trends. With the obesity trend, DSM worked on identifying companies active in the field that might relate to DSM’s own competences or products.
Sciona Inc. was one of the companies that were identified. Sciona develops and commercializes genetic tests for personalized health and wellness advice with applications in nutrition, sports performance and skin care. DSM took a shareholder position via its Venturing group in Sciona and put one person on the board of the company, making efforts to influence the steering of the company in a way that would benefit the cooperation.
Case 2 ““ Micabs Laser Marking : Intelligence changed the perspective for DSM
Another business opportunity that is being managed under the business incubator at DSM is Micabs Laser Marking that focuses on laser marking technology. Increasingly many consumers, companies and industries rely on proper marking of products applied in a wide range of markets. The DSM Innovation Intelligence team was part of this initiative from idea generation to starting and running the business.
The Intelligence team conducted all related evaluation studies, partner screening, competitor analysis and market estimation. At the current moment, the intelligence team is responsible for maintaining and updating the strategic data sets regarding the industry and the company.
Ubald Kragten explains why this initiative has been particularly interesting from DSM’s intelligence team’s perspective: “DSM changed the whole business approach during the evaluation process, once we had added the Market Intelligence we had gathered to the existing technology perceptions that we had knowledge of. The results of our intelligence work showed that the market actually perceived the project completely differently compared to our own engineers”, Kragten says.
“It was very fortunate that we managed to successfully mix Market Intelligence with the technology perceptions”, Kragten concludes. “Otherwise, we could have been in great trouble, or at least would have missed out on a good opportunity. Our experience demonstrates that an integrated approach to intelligence is very fruitful where Market and Technology Intelligence are not conducted in isolation but as an integrated and coordinated effort.”
Feedback on a Job Well Done
At DSM, there is an annual evaluation process in place to measure the success of the intelligence efforts. Each individual within the intelligence function as well as the operation as a whole are evaluated for timeliness, thoroughness, sufficient levels of analysis, and efficiency of communication. “This is a very important process for us”, Kragten says,”it helps us understand where we need to improve our intelligence work.”
Kragten moves on listing out Critical Success Factors that are being used at DSM to measure the value of intelligence in and around the innovation and product management processes.
1. Customer orientation
It is vital to have an in-depth understanding of the needs of the decision makers that should be supported through intelligence work.
2. Outside-in thinking
The intelligence team needs to bring in external perspectives to the company.
3. Being independent
By remaining an independent staff function, the intelligence team at DSM is able to stay clear of any intra-political issues that might cloud their judgement. The analysts must be able to stand up for their analysis without fear of risking their own position.
4. Market Intelligence + technology Intelligence = justified decisions
It is vital not to be driven by the technology perspective alone, but to add the market perspective in order to properly estimate the business potential of each initiative.
5. Managing external partners
The reporting of consultants and other information providers should be made to follow the same format and structures as DSM’s intelligence team in order to facilitate seamless integration of both internal and external input in the intelligence process.