Academic journal article Research-Technology Management

Creating a Winning R&D Culture-I: A New Approach to Selecting, Training and Coaching People Helped to Improve the Effectiveness of New Business Development at Dow Chemical's Polyolefins & Elastomers Business

Academic journal article Research-Technology Management

Creating a Winning R&D Culture-I: A New Approach to Selecting, Training and Coaching People Helped to Improve the Effectiveness of New Business Development at Dow Chemical's Polyolefins & Elastomers Business

Article excerpt

If we get the right people in the right job, we've won the game.--Jack Welch (1).

Many studies have shown that in spite of the innumerable changes in New Business Development (NBD) thinking in the last 50 years, and in spite of all of the NBD stage-gate processes that have been put in place, the overall odds of success at the commercial launch stage have remained essentially unchanged (2-4). Only 1 in 125 small projects (typically involving one to three person-years of effort) or issued patents succeeds commercially. When a project reaches the stage of major development, including pilot plants and large R&D and commercialization teams, or advanced venture capital investments of time and money, the odds of success typically remain no greater than 1 in 4. Only 60% of new product launches succeed (4).

Even as the use of stage-gate NBD processes within major corporations has grown to now exceed 75%, the average percentage of products new to the company in the preceding five years has declined from 32% to 28% in the last ten years (5, 6). At the very least, traditional linear stage-gate NBD processes are not working well enough. Could the "cure" (standard linear stage-gate NBD processes) be even worse than the disease?

Dow Polyolefins and Elastomers in 1991

In 1991 and before, The Dow Chemical Company's overall odds of success for new product development were only 47% from launch vs. the norm of 60%, where success is defined as yielding economic profit. This was also true for the then-Polyethylene Business, which at the time was being considered for merger or sale. Profitability was declining, not only because the business was in the trough of the supply-demand cycle, but more ominously because competitors had caught up. There had been no major new polymer developments in over five years. Consultants hired at the time advised top management to sell the business. Even top researchers and R&D management at the time said "patents don't matter," and many PO&E business leaders at the rime said the business was nothing more than "three yards and a cloud of dust," implying a low profitability game going forward.

This was the situation that one of the authors, Kurt Swogger, inherited in 1991 when he became the R&D director for the Polyethylene Business. In short, it was innovate or die. The time from first invention to first sales was typically 7-15 years in Dow. Any new initiatives to save the business had to achieve significant sales in less than nine years. The target was set to achieve one billion pounds of new polyolefin product sales in the year 2000, which would be 11 years from the first invention and nine years from the decision to do something, easily more than twice as fast as in the past. (What was actually achieved was 998 million pounds sold in the year 2000.)

The approaches that evolved in the Polyethylene Business (later renamed as the Polyolefins and Elastomers Business, PO&E) were: 1) a technology approach called Insite[TM] Technology, which took advantage of inventions in catalysis, process and materials science, and 2) a development philosophy called Speed Based Development, or Speed, that allowed for very rapid product development cycle times (7-9). A key part of Speed involves selecting the right personality types for specific job roles. The thinking behind personnel selection grew out of the authors' earlier experiences with trying to intuitively match varying personality types with job roles, resulting in both successes as well as some puzzling failures. This raised our interest in understanding more about the genetic nature of personality, a concept just emerging from academia in the early 1990s (7).

Research from the University of Minnesota showed that at least 50% and more likely 80% of a person's core adult personality is determined by genetics (10). This is true for personality traits measured by virtually all valid psychometric profiling instruments including the Myers-Briggs Type Indicator[R] or MBTI[R] (11). …

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