STAMYPOR

MANAGEMENT OF INNOVATION

Abhishek Divekar
Kalyani P
Ralins A
Vineela Bavineni
Naved Hasan
Priyesh V P

PGP/18/137
PGP/18/140
PGP/18/160
PGP/18/337
PGP/18/356
FPM/04

INTRODUCTION
Dutch State Mines(1902)
Coal Mining to Fertilizers and Chemicals
By 2000, 16 BGs in 3 Clusters
R&D, HR, Finance and Strategy

Corporate
Secretariat

Managing
Board

Internal Audit

Corporate
Staff
Departments

Central
Services

Formation of NBD in 1995

NBD

New Resin STAMYPOR

Large investments made

Does STAMYPOR qualify as an NBD

Project?

Does it add value to resin Industry?

Does the market potential justify the
sunk costs and further investments
required?

Life Sciences
Products
Fine Chemicals
Anti-infectives
Food
Specialities
Bakery
Ingredients
Sales = 30%

Performance
Materials
Elastomers
Engineering
Plastics
Coating Resins
Composite Resins
Engineering
Plastic Products
Sales = 30%

Polymers and
Industrial
Chemicals
Polyethylenes
Polypropylene
s
Hydrocarbons
Fibre
Intermediates
Melamine
Agro
Sales = 40%

What is the Innovation of

Stamypor?
What is its Uncertainty Profile and
Managerial Challenges

Uncertainty
Profile
Adaptive New Entry

Huge
Low
Medium
investment
supplier
buyer
s made and
power : Inbargaining
further
house
power
required

Extended Markets
Radical Innovation

Both Direct
and
Indirect
Competitio
n high

Lower
Substitute
Threat

Product
Innovation

Is the product
high tech?

Are the
resources
available?

What were the

competitive
conditions?

How is the
market
potential of the
product?

Why is it interesting to have

a separate NPD unit in the
light of innovation?

New Business Development

Division
It is a perfect example of Corporate
Entrepreneurship followed by companies nowadays
which involves investments in creation of new value
that create either new source of competitive advantage
or renewal of the value proposition

There are two types focused approaches to Corporate

Entrepreneurship :
New Venture Groups which is a group of individuals, or a
division within a corporation, that identifies, evaluates and
cultivates venture opportunities
Business incubators is a corporate new venture group that
supports and nurtures fledging entrepreneurial ventures until
they can thrive on their own as stand-alone businesses.

CONTINUED

The New Business Development Division set

up by DSM to commercialize successfully radical
new technological innovations

NBD can be put in the New venture group category

as it is a part of DSM group and could works on
product development projects that were out of scope
of the Business Groups (BGs)

The main reasons that DSM went for the setting up of

NBD in spite of having separate R&D centres for each
business unit and a corporate R&D centre were
The growing gap between fundamental and applied
scientific research
A disparity between the industrial research and
application of the results in existing companies

Effectiveness of Stage Gate Process

3 Stage
Process
Selection of
Ideas

New Business
Development

Stage Gate Process

Innovativeness
Autonomy
Structured process

Project
Development
Business Evaluation
Project

Business
development
Start up company

Periodic review
Elimination of infeasible ideas

Disadvantages
Not very effective for radical
innovations which require iterative
processes.
Quality of ideas selected was
limited by the capability of
the person at stage 1

Is Rein Nieland the right person to

evaluate the project?
Nieland being Project Team Leader, may not be
the right person.

Managerial Conceit :
Successful managers believe they possess superior
expertise to manage uncertainty
Likely to shift away from analysis to trusting own
judgement
Tend to overlook small problems which may possess
serious threat ( while doing related diversification)
Escalation of commitment : Sticking around and
try to make their decision work

Is Rein Nieland the right person to

evaluate the project?
The idea of joint effort with IGM for dying process
after analysing a lot went wrong
Team Leader may find hard to reverse process. As
the experiment goes for 10 years, investment may
go in vain.
Team leader has the autonomy in defining certain
actions (may be biased)
A dedicated team should be in place for evaluation
of the project

Real Options Analysis: What

should Rein report?
Looks at investment as a sequence of steps and at each
step the investor has the following options
Investing additional funds to grow or accelerate
Delaying
Shrinking the scale of project
Abandoning the project

The financial analysis of continuing the project shows

that
It could cause huge losses to the firm
It doesnt meet the criteria for NBD projects

Rein Neiland should report to abandon the project

Difficulties and Lessons to be learned

Entrepreneurial strategy: Presence of
Opportunity, Resources and people

Managing innovation: Huge investment, leading

the innovation, building capability inside vs
collaboration

Strategic envelope: leveraging innovation efforts

Checklist of innovation
efforts
How much will the innovation initiative cost?
How likely is to actually commercially viable?
How much value it will add?
What will be learned if it does not pan out?

Financial Analysis

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Thank You