In 2020, Clariant considerably strengthened its innovation capabilities and drove its digital transformation with cutting-edge innovation formats such as the Innovation Engine (iEngine) and the Innovation Garage (iGarage), as well as the cross-functional digital program Digital4Clariant. With strategic innovation governance and processes, Clariant leveraged its digital R&D footprint to create innovative business models and gain efficiency. Internal and external collaboration helped deliver high-quality innovation outcomes that combined sustainability and digitalization. Clariant also announced the creation of the new organization Group Innovation & Sustainability (GIS), which will further enhance its transformation roadmap in the areas of innovation and sustainability.

2.1. Innovation and Technological Advances

In 2020, Clariant strengthened the links between innovation and two of the main trends defining the chemicals industry: sustainability and digitalization. It adjusted its innovation governance, expanded its digital R&D footprint, and continued building on internal and external collaboration formats to deliver high-quality innovation outcomes.

2.1.1. Development of key performance indicators in 2020

After achieving the growth target in 2019, Clariant’s innovation sales met the expectations again in 2020, despite the exceptionally difficult economic environment linked to the COVID-19 pandemic. While overall sales of the continuing operations contracted by –5%, innovation sales of the continuing operations showed a growth of over 2%, proving the remarkable resilience of Clariant’s innovation activities in such challenging times. This is a result of Clariant’s continuous commitment and effort to understand the challenges that customers are facing and apply its expertise to deliver better and more sustainable solutions.

Research & Development spending in 2020 was CHF 190 million (excluding Business Unit Masterbatches), compared to CHF 207 million in 2019. As a share of sales, R&D spending was 4.1%. Due to the divestment of Business Unit Masterbatches, which had a relatively low R&D spend, this indicator increased compared to 2019. The overall number of active projects in the innovation pipeline remained above 350 in 2020. Both iEngine and iGarage innovation formats helped fuel the innovation pipeline through fast-paced, highly efficient ideation processes and agile design thinking methodologies that support the development of market-validated innovations.

State-of-the-art equipment and infrastructure in eight R&D Centers and over 50 Technical Centers formed the basis for successful innovation. In 2020, Clariant increased the number of employees who were trained as innovation belts from 325 in 2019 to 365 — a key factor in ensuring a well-filled project pipeline and maintaining a high number of Class 1 projects.

In 2020, Clariant’s patent portfolio counts 5 400 patents at year-end, and the trademark portfolio includes 7 400 trademarks. The number of patents and the number of trademarks decreased in comparison to 2019 due to the divestment of Business Unit Masterbatches and portfolio optimization measures.

2.1.2. Driving sustainability with cutting-edge innovation formats

In 2020, Clariant further developed its innovation governance to strengthen the link between innovation and sustainability, and continued to leverage its collaborative innovation formats to support the development of creative and sustainable solutions. Read more in Value Creation

With its latest iEngine event, Clariant aimed to develop a sustainable and easy-to-handle alternative to standard washing detergents, all of which have several disadvantages, including dispensing issues, costly logistics, or plastic packaging. Business Unit Industrial & Consumer Specialties worked to find nontoxic, sustainable solutions that addressed all these problems. The iEngine was held in close collaboration with Group Technology & Innovation and external partners and was finalized in 2020. Read more in Care Chemicals

An iGarage was conducted with Business Unit Functional Minerals on the subject of spent bleaching earths. Spent bleaching earth is a by-product of the purification process of oil media: impurities and contaminants are typically removed from oil media using bleaching earth. Spent bleaching earth is what remains after this process: bleaching earth saturated with impurities and the oil. In some cases, a second life can be assigned; however, a significant amount of spent bleaching earth is landfilled or incinerated. In some regions, disposal costs are increasing and put additional cost burden on Clariant’s customers. The goal is to assign spent bleaching earth a sustainable purpose that will profitably accommodate a circular economy and create additional value. Read more in Natural Resources

To find new ways to increase the sustainability of bleaching earths, Clariant used the Discovery-Incubation-Acceleration (DIA) process in this iGarage. In the Discovery phase, a cross-functional team evaluated high-potential business models, including identifying secondary industries in which spent bleaching earths could be used. After the Management Committee of Business Unit Functional Minerals selected one of the business models, the team further developed the model in the Incubation phase, conducting technical pilots with an interested customer. In the Acceleration phase, which is planned to start in 2021, Clariant will identify viable regions to roll out the business model and prepare a go-to-market strategy.

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

Digitalization is a key driver of Clariant’s innovation activities, providing the tools to increase quality and speed. This is especially true for the development and implementation of transformational platform technologies such as High-Throughput Experimentation (HTE), where lab automation allows Clariant to generate very large sets of product performance data and new formulation leads. In 2019, the company launched a new HTE facility in Houston, Texas, USA. This facility provides key support to Business Unit Oil & Mining Services, such as in the development of pour point depressants (PPDs). Clariant also significantly invested in a high-throughput center for catalyst research in Palo Alto, California, USA. The enlarged state-of-the-art facility will accommodate additional technical experts and cutting-edge equipment, substantially accelerating Clariant’s catalyst discovery and development. Another HTE facility will be inaugurated on the One Clariant Campus in Shanghai, China, in 2021.

2.1.4. Broaden the use of the Electronic Lab Notebook (ELN) with a global rollout

In 2020, Clariant further drove the introduction of the Electronic Lab Notebook with a rollout in Brazil, USA, South Africa, Australia, India, and China. In addition, it integrated an analytical information system into the ELN and introduced data visualization and correlation functionalities to support predictive analytics in the future.

2.1.5. Open Innovation initiative

The Open Innovation initiative supports Clariant’s Business Units in identifying collaboration partners around the world, ranging from large corporations to start-ups, universities, and other research institutions. An important element of Open Innovation is the crowdsourcing of technology solutions through Open Innovation challenges.

In 2020, a new challenge was launched under the lead of Group Technology & Innovation and Business Unit Industrial & Consumer Specialties, inviting partners from Clariant’s innovation ecosystem to explore new opportunities for Clariant’s surfactant technology. Participants can choose to work on one of three topics: discover new materials derived from N-methyl glucamine; develop an innovative formulation containing at least one of Clariant’s existing surfactants; or develop a new business model based on one of the provided glucamides. Finalists will receive access to Clariant’s in-house expertise and customer network and will be considered for partnerships or funding. The top eight finalists will get the opportunity to pitch their idea to an expert jury in June 2021.

2.1.6. Broad external innovation network

Continuously seeking collaboration with external parties to promote innovation, Clariant engaged in more than 100 scientific partnerships in 2020. This vast network encompasses some of the brightest minds in trending fields, including data science, where Clariant is working with world-class data scientists from the University of Geneva.

2.1.7. Collaboration with the University of Eindhoven

Clariant also entered a strategic partnership with the Technical University of Eindhoven. The cooperation with the university’s Institute for Complex Molecular Systems (ICMS) not only allows Clariant to use the institute’s infrastructure but also to access their network of specialists. To benefit most from this setup, Clariant applied the iEngine format and involved experts from many different fields, such as material scientists, biologists, physicists, and chemists. This collaboration is a great example of how the iEngine format can be extended to crowdsource expertise from external partners. Read more on tue.nl/icms

2.1.8. Participating in public-private partnerships for circularity

Clariant also participates in public-private partnerships that aim to improve the sustainability and circularity of the chemical industry. For example, it is a member of A.SPIRE, a European association committed to developing enabling technologies and best practices to support a resource-efficient process industry. A.SPIRE represents more than 150 practitioners from various process industries and researchers from over a dozen European countries. Read more on SPIRE2030.EU/INTRO

2.1.9. Working with the World Economic Forum to support the transition toward a climate-neutral industry

As part of the World Economic Forum’s »Low Carbon Emitting Technologies« (LCET) initiative, Clariant contributes to innovation that supports the transition to a low-carbon or even climate-neutral chemical industry. Clariant is involved in the »Biomass Utilization« cluster, which addresses the use of biomass as feedstock for chemicals, and in the »Waste Processing« cluster, which works on plastics recycling. Members of the cluster collaborate on contracting techno-economic studies and life cycle analyses, as well as defining interdisciplinary Research & Development programs to drive the transformation of the industry. Read more on WEFORUM.ORG

2.2. Digitalization

Digitalization is profoundly reshaping the chemical industry. Clariant leverages new technological possibilities and collaboration opportunities to create innovative business models, improve customer satisfaction, and gain efficiency in operations. Clariant’s cross-functional digital program, Digital4Clariant, drives Clariant’s digital transformation. Read more in Strategy

2.2.1. Transformation to a data-driven company

Clariant is progressing toward its goal to be a data-driven company, using data as the basis for as many decisions as possible. Data science plays a vital role in putting this ambition into practice. While the use of descriptive and diagnostic analytics is already widespread throughout the company, in 2020, Clariant also embarked on using it for predictive, prescriptive, and cognitive analytics.

001 ANALYTIC DISCIPLINES IN DATA SCIENCE

2.2.2. Further establishing the technical foundations

The company established a Competence Center for Data Science in 2018 and laid the technical foundation for the company-wide use of data science in 2019 by implementing data science software and a data lake — a central data repository that facilitates access to data and information across the organization. In 2020, Clariant further developed the existing technical foundations, set up automated data collection, cleaning, and organizing, and invested in the data science capabilities of its workforce, thereby supporting the development of the five building blocks of a data science-driven company.

2.2.3. Piloting the creation of »single sources of truth«

In 2020, Clariant successfully implemented the data science-based project TRUST+ at the Catalysts/CATOFIN™ site in Louisville. TRUST+ refers to the »single source of truth« pillar of a data-driven company. A cross-functional team with experts from Business Units Industrial & Consumer Specialties and Catalysts, Digital4Clariant, Group IT, Group Technology & Innovation (GTI), and Clariant Excellence (CLNX) installed a cloud-based data lake where information from different data sources was collected, integrated, and made ready for use in a single, trusted data repository. Additional tools were set up to analyze and visualize the data. The project improved the production process by using data-based insights, significantly increasing production capacity. The project now builds the basis for similar projects in other Business Units.

2.2.4. Digital@Operations

Since the start of Digital@Operations as a Digital4Clariant program workstream, Clariant has successfully implemented several use cases. For example, it introduced a smart factory concept at its Singaporean site, which delivered convincing results in manufacturing and supply chain management, started using robots to digitize transactional processes, and introduced chatbots to improve customer service. Clariant decided to turn the initial workstream into a dedicated Digital@Operations team responsible for assessing the potential of digital solutions for efficiency improvements and cost reductions. The team also executes projects, many of which are based on data science and advanced analytics.

The first projects have shown that progressing from Operational Excellence to Digital@Operations requires a dedication to cross-functional collaboration. The Digital@Operations team and projects are now governed by the newly instituted Operations Council. The council consists of the Chief Operating Officer, the heads of Operations of all Business Units, the head of Digital4Clariant, the head of Group IT, the head of Process Technology, the head of Group Technology & Innovation, the head of Clariant Excellence, and a member of the Clariant Excellence team. Clariant will work on improving its digital governance and collaboration over the coming years. In 2021, agile principles will be further embedded at Clariant production plants to better leverage the potential of digital tools. To increase diagnostic capabilities, Clariant rolled out new analytics tools in 2020, such as Trendminer, that can be used not just by data experts, but by larger groups of employees.

»Better decisions based on data science and advanced analytics lead to higher business value. Clariant sees a big opportunity in becoming a data-science-driven company. For this, we must increase Clariant’s data literacy and nurture a data-driven culture.«

Sibylle Mutschler Head of Digital4Clariant

2.2.5. New digital business models

The combination of chemical knowledge and data science enables Clariant to offer completely novel products and services.

One example is Navigance®, Clariant’s start-up that uses artificial intelligence to optimize chemical processes by providing real-time recommendations for optimal control parameters. This cloud-based service helps formaldehyde and methanol producers increase production volumes and efficiency. In 2020, Clariant successfully sold the first Navigance® product, a software-as-a-service solution that is also key to the go-to-market approach of Business Unit Catalysts.

CHEMVISION™ is a second example of a digitally enhanced service, which was developed for Business Unit Oil and Mining Services. Traditionally, the process of developing the right chemical treatment for each oil well is time-consuming and requires extensive manual work from Clariant’s account managers, including the preparation of monthly reports. CHEMVISION™ allows for the automatic collection, aggregation, and analysis of laboratory data, customer data, financial data, production data, and chemical treatment effectiveness data. Key performance indicators are displayed in an interactive dashboard, facilitating a more transparent discussion about the performance of the chemical treatment between the customer and Clariant’s account manager.

2.2.6. The Digital Formulation Factory

Since formulation is a core competency and differentiator for Clariant, digital formulation is a significant opportunity to serve customers with high-quality and high-speed formulation development. Following positive experiences with past projects, such as InstaColr of the former Business Unit Masterbatches, Clariant established a dedicated team to create new digital formulators in the future. In 2020, the operating model for this functional team was developed and a project pipeline has been created and approved.

2.2.7. Digital upskilling through extended learning journeys

To support its transformation into a data-driven company, employees need to know about the key concepts of data science and learn how to base business decisions on data, models, and algorithms. Data-driven behavior can transform a company’s culture by triggering behavioral changes in work practices and leadership routines. Thus, Clariant further invested in the digital upskilling of its employees in 2020. While standard digital trainings on topics such as SCRUM, design thinking, or digital office tools have already been part of the Clariant Learning Academy, the company put more emphasis on developing holistic data science learning journeys in 2020. Clariant recognizes that data science upskilling is less about isolated training events and focuses more on allowing participants to apply new knowledge and try out desired behavior in practice. In 2020, for example, 19 Clariant employees from Europe joined a four-month virtual learning journey in data science, which consisted of tailor-made elements and standard modules from established training providers. A global rollout of the program is planned for 2021.

Clariant believes that upskilling is a shared responsibility and thus collaborated with other companies such as Linde, Infineon, Munich Re, and the Bavarian State Ministry of Digital Affairs to jointly educate employees in digital transformation skills.