Talking about Open Innovation with Rob Kirschbaum

Q: You have decades of experience with various innovation projects. Please tell us about your background.

Rob Kirschbaum : I spent 37 years with one company, and this company changed its strategy and logo three times. So that was one of the reasons why I stayed: it was always a challenge and always a change. Innovation was crucial to those changes.?

I'm a chemical engineer by training from TU Delft. I started my career at the central research laboratory of DSM. At that time, the company was still government-owned, and I became a manager of a pilot plant for polyvinyl chloride.?

Later, I met a great inventor, and he convinced me that his invention needed an engineer, as he himself wanted to focus on inventing and doing science. Eventually, this guy became a good professor, and I followed his advice and got connected to a fiber project where we developed a super strong fiber that became the strongest fiber in the world; stronger than the famous Kevlar from DuPont.?

I have to admit that DSM’s success with this project was only possible because of our joint approach with a Japanese company. Without them, we would not have been successful. The Dutch company Enka, a part of Akzo Nobel, did not want to cooperate because they had their own Dutch version of Kevlar.?

Later, I got involved in high-tech films. We tried to compete with Gore-Tex, a high-tech product [waterproof, breathable fabric membrane by W. L. Gore & Associates], and I became a manager of a research department in that area.?

At a certain moment, DSM assigned me to a new project which was Nylon 4.6, a dream of a top manager of the company that was supposed to change the world. It could have been an interesting project, but there was a wrong product-market combination chosen. So I had to do a strategic reorientation.?

From that phase of my career, I have white hair. If you have to start all over again with a new product-market combination and you already have 125 people on your payroll, cash flows like water but in the wrong direction.?

Eventually, we made it and the product [trade name Stanyl] became a success. So I'm proud of our accomplishment, and it was not only my success, but the success of a group of hardworking people.?

When we were finally able to make money with Nylon 4.6, I became the new business development director of a corporate business unit, which was a sort of catching net for all kinds of weird projects where some top brass people believed in their future. But none of them wanted to say, “Okay, I will pay for implementation.” So I had to conduct serious selections and prioritize projects.?

Then, I got involved in spinning out activities when I saw the value in projects, but this value was not for DSM itself, it was for other companies. And I started to work with venture capital funds on behalf of DSM and learn more about spinning in and spinning out. Together with other professionals, we set up a venture arm of DSM which is still active. We did the pioneering work.?

Setting up this venture fund and other projects where we started emerging business areas gave me the title Vice President Open Innovation. I retired from that role, but I stayed connected to DSM at the right hand of CTO.

In a few years, I was able to develop a lot of activities with different companies [some may be found at https://sakuragiconsult.com/]. These projects keep me busy, keep me happy, and give me energy.?

Nowadays, I mostly select projects where I can create an impact. Sustainability is absolutely key, as global warming brings a lot of problems. So, if I can contribute with my energy and experience, and sometimes intelligence, I think I'm on the right track.?

Q: What are the main benefits of open innovation for the business?

Rob: One form of open innovation is working together with another company, and in the fiber project with the Japanese company, we saw how important it can be. Basically collaboration is a big factor in whether you’re successful or not.?

Then, if you collaborate with more companies, you get access to more brains. And the more brains there are to help solve a major challenge, the bigger the chance that you will find a solution to the problem. This is the key concept of the company iKNOW-WHO, where I am a board member.?

I’m helping a Thai company which has acquired several big companies. They now have an Open Innovation Institute in Thailand, and I was invited there as an expert. They try to merge the R&D and innovation activities of the companies they acquired and build an open innovation model. I believe you have to start there. Gradually, you will understand that if you can prevent legal disasters, it can be mutually beneficial to work together, even with your competitor. However, you have to make good legal agreements.?

It has been proven that you will attain success, find the solution to the problem quicker and for less money [with open innovation]. Even if you don’t get there, you will be able to learn about people you have been working with, and there will be another opportunity in the future, either to work with them or to hire them, because you have built trust.?

Trust is the basis of open innovation.?

When you are successful in building that, there’s always a positive outcome.?

Another advantage is, I think, that an open innovation culture attracts the most enthusiastic people from universities. When you’re studying at university, you’re not in a bubble: everything is possible, all kinds of options in life. Students are afraid that when they join a big company they will have to focus on something specific. So if you propagate an open innovation culture of a big company, you can hire the best people.?

A lot of things have happened to DSM, and now together with the Swiss company Firmenich, it is just a nutrition company. But I can tell you that the people which we hired for the materials units of DSM, they all found great positions in other companies. We have been selecting the best. And I think the open innovation attitude and culture has helped a lot in this selection.

Q: What are the most important lessons that you learned when you were working on the open innovation model for DSM?

Rob: The most important thing when it comes to open innovation is that everybody should understand the system, and that it is not about writing a memo of five pages—because five is already four too many.?

This is why DSM was willing to let me talk about open innovation in Henry Chesbrough’s course. We developed an open innovation funnel model [https://youtu.be/jNNz9poyKJs], and the model/picture is a one-pager. Because the information is so concise, you can quickly explain what’s shown on the scheme, so people don't have to read a lot. They just have to listen and imagine the open innovation selection funnel for ideas from a bright idea at the start to market success. And that worked well.?

Another lesson which we learned is that at the selection stage of the process, you should try to prevent being in a mini bubble. You should invite people from outside. First of all, other businesses, people who are interested in innovation and want to contribute by bringing ideas, not money.?

Also, don't be afraid to ask to join people from other companies. They sign an NDA and you give them a seat in a selection team when you go from one phase to the next. In the whole open innovation funnel selection process, DSM had six phases.?

So be sure that you have the outside brains available. It is not always that easy because the Corporate Legal Officer may say, “Yes, but this person will get into the core of this potential future big project. Are we sure that he is not going to run away to his own company with this idea and start it there?”

But, without risk, you will never be rich.

Q: Which metrics allow you to evaluate the success of the open innovation model your company chose?

Rob: It’s a tough question. If you look at the picture of the open innovation semi-permeable funnel with the arrows going in and going out, just count what goes in and what goes out and see whether there is activity.?

Then, of course, calculate how much comes out. Calculate what it contributes to the total Earnings before interest, taxes, depreciation and amortization (EBITDA) of the company.?

The financial people tend to forget that a company always loses business because some products become outdated, but the innovation activities compensate what they have lost, so the overall EBITDA might still be constant. So don't blame the innovation crew if the EBITDA doesn’t change. You see a balance of things: some go out of their existence and new products appear in the funnel.

Then, there is something like an innovation culture, and open innovation is one of the nine items to evaluate the innovation power of a company with. Arthur D. Little has created a system to evaluate that using numbers.?

• How many entrepreneurs did the personnel department indicate??
• How many courses for entrepreneurship are there??
• How many people took a course for entrepreneurship??
• Culture-wise, can you show to the outside world that you have been protecting radical innovation platforms? And how many of these platforms do you have??
• What's the score of these radical innovation platforms which are the highest risk for the business?
• What is your balance between innovation activities close to the core technologies where open innovation is in most cases not so easy to apply??

What I'm trying to say is that there’s a balancing act between taking high entrepreneurial risk and preventing taking this risk.?

Another cultural aspect on the list of Arthur D. Little is cultural change. When did you start? Where are you now? Do you realize that open innovation is a long-term activity? Cultural change might be a generational activity, so it might take decades to make it.?

You should also take into account?

• the number of corporate venture investments per year;?
• the number of joint ventures and joint venture contracts;
• the number of joint development agreements;
• the number of patents;
• the number of patents together with the university.

Q: How does DSM work with universities?

Rob: What DSM does is financing PhD students on subjects which are connected to the business of the company and let the HR department know that we have PhDs supported with DSM money. If they do a good job, we should hire them or at least offer them a position.

DSM also allows senior scientists to become part-time professors, which provides better tracking of students’, postdocs’ and PhDs’ performance. The link between a part-time professor from the company and the HR department should also be very good.?

The third point here is that the licensing group of DSM should know the best Technology Licensing Offices of the world. That's where they can buy a technology needed for a certain process which can speed up the project and the time to market enormously.?

Q: How do you see the future of chemistry?

Rob: I'm positive about the contribution of chemistry to solving world problems. And that's also where I, as a person, try to contribute together with others.?

Let's take the science which is not officially science, but it's a direction between materials and life science. I’m talking about biomimicry. If we are willing to learn from nature, that organizes everything in a very good way, then we might be able to solve problems which probably have already been solved by nature. There, I see a combination of life science and chemistry.?

Electrochemistry is recently coming up again. It was a hot topic in the late 80’s. If you can steer electrons through the material, it can catalyze all kinds of processes. The simplest example is using electricity to make hydrogen out of water. However, you need to have renewable electricity and it has to be cheap, otherwise, the hydrogen price will be too high.

We can impose fines for the companies producing CO2, then we could use this money to make cheaper electricity which will then be used to produce cheaper renewable hydrogen.

Transportation problems can be solved with renewable fuel or synthetic air fuel. Airline companies are being punished for using CO2. Now, when you buy a plane ticket, they already ask whether we want to pay extra and compensate for CO2 production during the flight. It's, you know, 6 euro for a trip to Copenhagen. Is that really a lot? I don't think so. And if everybody on the plane compensates, then there's money to produce synthetic air fuel.?

So there are things in society that need support, wise political decisions and energetic technology managers.

Big scale chemistry, like catalytic cracking and all the monomer and polymer production will probably move to the East. I believe we should not dream about staying in that business for another 20 years. I think people from, for example, the board of BASF also understand that, and they are willing to go to an area either closer to the feedstock or with a guarantee to lower feedstock costs.?

In that case, Saudi Aramco for example is in a very good position because they are building whole new complexes on top of their oil business. They will stay in the oil business and they will need to accept that there will be fines on CO2, but I’m talking to them about technologies to take CO2 and make methanol or acetylene and propylene out of it, and they are seriously interested. Fossil fuel will stay their core business, but they will use the money they make and compensate for what they contribute to global warming. Maybe just the pace at which they do it should be quicker.

Q: What are your plans for the future?

Rob: I can have fun by working with people who respect me, and who are honest and have the same enthusiasm, and give me the feeling that together we can make an impact instead of just minor improvements.?

I will continue working on projects that make an impact. I will continue because I like it and it gives me satisfaction. And I have the luxury to combine my work with free time which means I can enjoy my time with grandchildren, I can go sailing, which is more than just my hobby, it’s rather my passion, and can travel with my wife. But my energy comes from working with people I like and working on intellectual challenges.