Idea to Market

With a new organizational structure, cutting-edge innovation formats such as the Innovation Engine (iEngine) and the Innovation Garage (iGarage), and the introduction of a strategic innovation process, Clariant considerably strengthened its innovation capabilities in 2019. In addition, Clariant continued to leverage digitalization to create innovative business models and gain efficiency.

2.1. Innovation and technological advances

Clariant achieves its growth targets by developing innovative and sustainable products based on state-of-the-art technologies. Read more in Idea to Market

In 2019, Clariant grew slightly below 3% through innovation projects, achieving its 2 – 3% target and realizing 1 – 2% sales growth from Top Line Innovation alone. For continuing operations only, the young and innovative products of Clariant grew by more than 3.5%. This is the result of a continuous commitment and effort to understand the challenges that customers are facing and apply Clariant’s expertise to deliver better and more sustainable solutions. Research & Development spending in 2019 was CHF 207 million, compared to CHF 209 million in 2018. As a share of sales, R&D spending was 3.2%, maintaining the level of 2018. The overall number of active projects in the innovation pipeline remained stable, compared to 2018. The innovation formats iEngine and iGarage both contributed to maintaining continuous and stringent innovation portfolio management.

State-of-the-art equipment and infrastructure in eight R&D Centers and over fifty Technical Centers formed the basis for successful innovation. In 2019, Clariant increased the number of employees who were trained as innovation belts from 290 in 2018 to over 325 – a key factor in ensuring a well-filled project pipeline and maintaining the high number of Class 1 projects (those with a double-digit million sales potential).

In 2019, Clariant lost some patents, due to the divestment of Healthcare Packaging, leading to a total number of more than 6 500 patents at year-end. The number of trademarks increased from 8 900 in 2018 to over 9 000 in 2019, despite the divestment of Healthcare Packaging. This was mainly due to the filling of gaps in certain countries and the creation of new trademarks.

2.1.1. New organizational structure fosters strategic innovation

In 2019, Clariant restructured its Group Technology & innovation organization by integrating Clariant Innovation Excellence (CIX) and New Business Development (NBD) into the new unit, »Innovation Excellence & Business Incubator.« The unit will continue to provide state-of-the-art innovation and capacity-building tools, including Innovation Green Belt and Innovation Black Belt trainings, innovation workshops, and portfolio management support. The Business Incubator provides a platform for incubating and accelerating innovations before they are integrated into a Business Unit.

2.1.2. Innovation formats support discovery and incubation

As part of the Business Incubator, Clariant conducts iGarages to develop innovative growth options that are adjacent to already served markets but cannot be addressed with the existing Idea-to-Market toolbox. Read more in Idea to Market

In 2019, Clariant completed four iGarages based on market opportunities from various Business Units. The iGarage project for the Business Unit Catalysts focused on a specific market segment with significant growth potential, but that was difficult to access. The iGarage team consisted of R&D, marketing, and sales experts from the Business Unit as well as two members of the Business Incubator. In a first step, the team explored the targeted ecosystem, technological requirements, and the needs of potential customers and partners. Then, market-tested business models were designed, including differentiated value propositions, viable technical concepts, and go-to-market strategies that will allow the Business Unit to tap into opportunities for further growth. Finally, the team defined and started the R&D activities, developing new solutions for identified white spots.

While the iGarage develops strategic innovation growth options at the discovery and early incubation stages, the iEngine is used in the scout phase. Since the start of the iEngine in 2018, the format has been well received by employees and actively used whenever obvious solutions to technical challenges do not exist or have proven unsatisfactory. iEngine workshops are generally well attended and usually generate more than 30 ideas per session. In 2019, six iEngines were conducted, and the identified technology options are being pursued as part of various Idea-to-Market projects.

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2.1.3. Gaining efficiency and speed with High-Throughput Experimentation (HTE)

In 2019, Clariant continued to focus on accelerating the innovation process by exploiting the potential of the High-Throughput Experimentation (HTE) method.

Due to the large number of requests from Business Units received by the HTE laboratory in Frankfurt, Germany, Clariant opened another facility in Houston, Texas, USA, in 2019. The new laboratory will enhance the innovation capabilities in North and South America. Initial work with the Business Unit Oil and Mining Services focused on applications such as pour point depressants, hydrate inhibitors, asphaltene inhibitors, corrosion inhibitors, and scale inhibitors used in the oil and gas industry. In 2020, the existing laboratory in Frankfurt will be enhanced, and another facility in Shanghai is planned to be operational by 2021.

2.1.4. Lab Excellence program

In 2019, the Lab Excellence program (LabX) was successfully implemented in the Biotechnology, Chemistry & Materials, and Process Technology Platforms. In these areas, project lead times from discovery to scale were reduced by 25%; the number of lab trials per week increased up to several 100%, and the average waiting time before the start of an experiment decreased by more than 80%, while maintaining an acceptable workload for the team. Introducing agile working methods has helped to enhance the operational performance of the R&D laboratories.

After successful demonstration of the power of LabX through the pilot projects, Business Unit Catalysts launched LabX in its major R&D sites in Louisville, USA, and Heufeld, Germany, supported by the LabX core team. After analyzing their processes in a cross-functional value stream design workshop, R&D teams identified substantial areas for improvement, which will be addressed by Kaizen events at the sites. One of the goals is to reduce the cycle time from sample preparation, characterization, and performance testing. Having a shorter cycle time leads to quicker development and commercialization of new products. »Waste« in processes is eliminated; resources are utilized more effectively; and the overall innovation process is accelerated. The LabX program supports Clariant’s strategy of profitable growth.

In 2020, Clariant plans for its R&D laboratories to contribute even more to value creation, by continuing the LabX program and rolling out an optimized end-to-end process in Idea to Market to other Business Units.

2.1.5. Electronic Lab Notebook

Clariant leverages the potential of digitalization to gain efficiency in the R&D and innovation system with the Electronic Lab Notebook (ELN) – a cloud-based, digital knowledge repository that stores Clariant’s scientific know-how by capturing all relevant information along the innovation chain. It consists of three core elements: a chemical inventory management system to backtrack and manage reagents used in laboratories; a study notebook with templates to enter R&D data; and analysis and visualization tools to analyze and correlate experimental data.

The ELN was developed in partnership with the scientific informatics company Dotmatics. In 2019, Clariant introduced the chemical inventory management system and the study notebook application at seven German facilities across all Business Units (excluding discontinued operations) and Group Technology & Innovation. At the end of 2019, the chemical inventory management system was also introduced at five North American sites. For 2020, Clariant plans to roll out all modules to sites in Brazil, USA, China, Japan, and India.

2.1.6. Open Innovation initiative

The Open Innovation (OI) initiative supports the Business Units in identifying collaboration partners around the world, ranging from large corporations to start-ups, universities, and other research institutions. Important elements of OI are engaging technology scouts, promoting scientific partnerships, crowdsourcing technology solutions through commercial OI portals, and pitch days.

OI, which is managed by the new unit »Innovation Excellence & Business Incubator,« generated more than 300 technology proposals in 2018. In 2019, the total number of proposals grew to over 400. This increase is due to the fact that many strategic projects, such as iGarages, the technology screening for Class 1 projects, and the plastics recycling initiative, started using OI. The number of leads became so large that many proposals from 2018 are still pending consideration within the responsible Business Units. Some of the proposals did not materialize due to negative proof of concepts, problems with intellectual property, mismatching business models, or suboptimal cost perspectives. However, by facing these hurdles, Clariant learned how to better identify and select potential partners.

Clariant’s objective for OI is to create better innovations and accelerate time to market by collaborating with outside partners with market-leading technologies. In 2019, along with facilitating more scouting activities across regions, OI focused on executing the best concepts through a series of testing, development, and implementation processes, aiming to increase the number of success stories.

2.1.7. External collaborations

For Clariant, partnerships with external parties are vital to stimulate innovation. From the numerous external collaborations Clariant was involved in, in 2019, Clariant engaged in more than 125 scientific partnerships, which is comparable to the number in the previous year. The OI initiative contributes significantly to these partnerships and has led to success stories such as Clariant’s collaboration with the Barcelona Supercomputing Center (BSC).

BSC specializes in high-performance computing (HPC) and hosts MareNostrum, one of the most powerful supercomputers in Europe. In 2018, Business Unit Oil and Mining Services and Group Technology & Innovation started a collaboration with BSC to conduct molecular modelling studies that support the development of high-performing anti-agglomerants that are used to prevent gas hydrate formation, which is a huge risk to pipeline flow assurance in deepwater oil and gas exploration. There is a growing need to innovate high-performance solutions that allow the oil and gas industry to push the boundaries into reserves that are deeper, hotter, more saline, and under higher pressure. After the successful establishment of computational methods, the collaboration will be used to screen new chemical formulations that can then be tested in the new HTE laboratory in Houston, Texas. Other examples of successful external collaborations that materialized in 2019 are the partnership with the British start-up Polymateria regarding biodegradable and compostable plastics Read more in Circular Economy and the partnership between Clariant, ExxonMobil, and REG Life Sciences (acquired by Genomatica over the course of the project) to evaluate the potential use of cellulosic sugars from sources such as agricultural waste and residues to produce biodiesel.

To benefit more systematically from partnerships with external parties in the future, Clariant is convinced that collaboration needs to be extended along and across value chains. The goal is to create innovation ecosystems that include suppliers, academia and research institutes, technology providers, industry partners, and regulators, as well as public funding agencies and NGOs. Clariant considers its OI initiative to be the right vehicle to further pursue this goal in the future.

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2.1.8. Sustainability screenings

Sustainability is an integral part of the innovation process and a fundamental prerequisite for all new major product developments. Corporate Sustainability Assessments, as defined under Clariant’s Portfolio Value Program (PVP) and known as PVP screenings, are systematically carried out not only for the entire product portfolio but also for Clariant’s innovation project pipeline. Read more in Manufactured Capital

2.2. Digitalization

2.2.1. A two-way approach

Digitalization is a megatrend reshaping many areas of the chemical industry. Competitive pressure, investments in R&D, and digitizing operations are on the rise, requiring that Clariant also leverage digitalization to gain efficiency and create innovative business models. Clariant’s cross-functional digital program, Digital4Clariant, helps the company keep up with the speed of this transition. In 2019, Clariant further developed the program’s three core workstreams: »New Business Models,« »Big Data and Advanced Analytics,« and »Digital@Operations.« By implementing internal projects as well as customer-facing services, Clariant is leveraging all three workstreams to support the five pillars of its corporate strategy by improving decision-making with data-driven mathematical models and algorithms. Read more in Strategy

2.2.2. New digital business models

In 2019, the workstream »New Business Models« incubated several minimal viable products and brought new services into the market progressively for testing. For example, Navigance™, Clariant’s Munich-based start-up, offers a cloud-based solution for providing real-time recommendations for optimal control parameters to help producers optimize chemical processes. Navigance™ uses artificial intelligence to combine data from customer plants with the expertise of chemical process experts. Rolled out in 2019, the service increases production volume and efficiency of formaldehyde production plants and serves methanol producers.

Chemberry™, the online ingredient-sourcing platform launched in 2018, continued its impressive growth in 2019. With over 35 000 ingredients listed from more than 550 suppliers, Chemberry™ has become one of the most comprehensive ingredient platforms in the Personal Care market. In 2019, Chemberry™ expanded its coverage by including ingredients for the Home Care market and entered several strategic partnerships that will help the platform become the central node of the chemical industry ecosystem and the go-to platform for Consumer Care brands and suppliers.

In 2019, Clariant also launched InstaColr™, a backward-integrated color-matching solution based on digital formulation algorithms that completely changes the value proposition and go-to-market approach of Business Unit Masterbatches. Digital formulation solutions pave the way to seamlessly link the front end to Clariant customers with the support services in R&D and Business Units. In the years to come, integrated solutions will combine digital formulation and application development, data science, High-Throughput Experimentation, and lab robots to capture efficiency and growth potential.

2.2.3. Using data science at scale

The workstream »Big Data and Advanced Analytics« uses data science methodologies to complement Clariant’s chemical competencies and offers process improvement potential. While the use of descriptive and diagnostic analytics is already widespread throughout the company, Clariant also embarked on systematically using data science for predictive, prescriptive, and even cognitive analytics. In 2018, Clariant inaugurated a Competence Center for Data Science within Group Technology & Innovation (GTI) that focuses on data intelligence and process simulations. The Competence Center increases the speed and quality of digital and non-digital product and service developments, as well as process improvements, by improving evidence-based decision-making on inventory levels, cash management, or production-line operations. In 2019, Clariant continued to build the technical foundation for the use of data science at scale by implementing a data lake – a central data repository that facilitates access to data and information across the organization – and data science software.

2.2.4. Developing the digital operating model

In 2019, Clariant continued enhancing its Clariant Excellence approach with digital solutions, for example, by upgrading the Clariant Production System with a tailor-made digital assessment entirely run on internal resources. This enables production sites to systematically identify and implement measures that improve productivity.

As part of the »Digital@Operations« workstream, Clariant started developing and using robots to digitize transactional processes. For example, the monitoring of contract expiration dates in procurement is now handled automatically, and customer service was upgraded with chatbots that can answer the most frequent customer queries autonomously. In the future, Clariant plans to use robots for more intelligent tasks, such as the review of legal contracts.

2.2.5. Enhancing digital skills

Many of Clariant’s job profiles increasingly require advanced digital skills. Therefore, the company is developing upskilling and reskilling measures in the area of data science and advanced data analytics. To enable more data-driven decisions, employee trainings now go beyond the general introduction to new tools and involve innovative training formats such as self-organizing learning groups and learning games, which encourage self-learning. Clariant also intensified the education of employees on agile project management methods and tools as part of both formal and on-the-job training programs.

Thanks to its collaboration with leading educational institutions and improvements made in the recruitment process, in 2019, Clariant attracted new employees with expertise in data science and digital business development, strengthening the digital skills of its workforce. Read more in Talent Attraction and Development

To underscore its commitment to continuous learning, particularly in digital skills, Clariant joined the »Lifelong Learning Pledge« initiated by DigitalSwitzerland. This initiative offers every member of the Swiss workforce opportunities to enhance their existing skills with digital competences in order to stay competitive in the increasingly digitalized labor market.

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