R&D partnership between speciality chemical companies and their customers are relatively commonplace in the development of new products. Several European chemical companies are taking this further and extending product development to include not only suppliers and customers, but also other players in the chain, such as retailers and designers in the home and personal care markets.
With a current allocation of around 20 per cent of its R&D budget to such broad-based research partnerships, Rhodia considers itself to be pioneering a new way of conducting research and development in the chemicals sector. ‘This is truly a revolution in the approach to new product development’, says Jean-Julien Baronnet, Rhodia’s group executive vice-president responsible for developing the new partnership business model. ‘Companies in sectors such as detergents, automobiles and food are moving away from a culture of secrecy in research into one involving strategic alliances’, he adds. ‘The future of R&D now lies in these sort of alliances. Trying to develop products alone is wishful thinking. The discovery of new products has become more and more complex because it involves so many different competences in addition to chemicals.’ In October 2002, Mr Baronnet, speaking at the World Detergents Conference in Montreux, Switzerland, stated that when tackling new product development, companies like his own are beginning to think more in terms of functionalities than technologies. ‘Our organization is market- and customer-oriented, so that we may have an intimate understanding of market trends and our customers’ expectations’, he explains. ‘This enables us to identify unmet customer needs. These needs are translated in terms of functionalities, and we determine what technologies and expertise are necessary to satisfy them.’ Functionalities in detergents include surface modification for easy cleaning, surface adhesion for textile fabric care and controlled release for time-controlled discharge of perfumes. ‘A major problem with perfumes in detergents is that 80 to 90 per cent of them are destroyed in the wash, yet they can account for around 30 per cent of the cost of the formulation’, Mr Baronnet notes. ‘The solution to the problem in terms of functionality is controlled release, which can help to reduce the destruction level down to 40 per cent and generate huge savings. But a control release system can involve three to four complementary technologies in areas like latex, polymers, [and] minerals such as silica and surfactants.’ Like technologies, similar functionalities can be applied across a range of markets. Rhodia is using surface modification in sectors such as fabric care, hygiene and automotives. ‘Our polyamide fibers division is working on the surface modification of fibres so they can capture smells like dog odours in cars’, says Mr Baronnet. ‘We are using surface modification of fibres to eliminate stains, while we also see opportunities for applications in areas like babies’ tissues.’ Around half of Rhodia’s R&D expenditure is allocated to one-to-one co-operation projects with individual customers, which are based on the company’s system of cross-fertilisation of technologies. Over the last two years, Rhodia has pursued a strategy of cross-linking its own technologies to help build close R&D partnerships with customers. In these, Rhodia businesses that have helped launch the new strategy, research partnerships have boosted average returns on capital employed to around 15 per cent, roughly a fourfold increase. The partnerships have been such a success that the company is rolling out the concept across the company and extending the scope of the alliances beyond direct customers. ‘We are bringing together companies which are complementary to each other’, explains Mr Baronnet. ‘In the field of surface modification, for example, we would want to get around the table a textile manufacturer, our own polyamide and detergents businesses, a soaper, a retailer and a designer.’ The company is already helping to develop clothes using fibres with antibacterial and anti-odour properties for Benetton, the retail chain. ‘If necessary, we will bring into these alliances competitors who are strong in a specific technology relevant to a functionality we are working on’, Mr Baronnet says. ‘The important thing will be that we will not be in competition with these chemical companies in the same markets with the same functionality.’ Rhodia is finding that in sectors such as detergents, these broader alliances tend to comprise three to four companies. In its automotives activity, the partners number five or more. ‘What we are helping to develop are virtual companies whose members have the same objective of satisfying unmet consumer needs by working together on the same research programs’, Mr Baronnet explains.