Innovation at BASF: Courage to Dream of a Better World

EVENT SUMMARY – the TSSS community gathers to hear the VP of Innovation & Technology from BASF talk about culture and innovation.
______________________

“Either there is a sustainable future, or there is no future.”  With these words, Carles Navarro, President of BASF Canada, made it clear to the TSSS audience on June 12, 2013, that his company understands the sustainability imperative.  BASF, ‘The Chemical Company’, produces chemicals used in industries as varied as energy, health, agriculture, transportation, nutrition, packaging, health and electronics. Navarro made it clear that BASF takes its social and environmental responsibilities very seriously.  “We want to be good citizens, to do the right thing.”

Chemistry for a Sustainable Future

After introductory statements by Navarro, Dr. Volker Schaedler, BASF VP Innovation and Technology, addressed the crowd gathered at the Toronto offices of Bennett Jones LLP.  Dr. Schaedler made it clear that this would not be a typical discussion of corporate sustainability. “I’m not going to talk about carbon trading, waste handling or water treatment. I’m an innovation person.  That’s what I’m going to talk about.”  He proceeded to enthral those gathered in the room, and many others listening worldwide via webcast, with the BASF story: who they are, why they embrace sustainability, and how they have created a culture of innovation.

BASF makes its mission clear, declaring in its statement of corporate purpose, “We make chemistry for a sustainable future.”  This purpose defines the focus and activities of this world leading chemical company with over 110,000 employees, over €72 billion in annual sales, and customers and partners in most countries of the world.   But why has BASF adopted sustainability as the driving force behind its business operations?

BASF understands that our current rate of resource consumption is not sustainable.  Schaedler explained, “We have only one earth, but already today, we consume 1.5 earths worth of resources.  By 2050 we will have 9 billion people on this planet, but still only one earth.  It’s about supply and demand.”   BASF understands that any company that wants to be sustainable in business needs innovation.

A Long History of Innovation

BASF’s culture of innovation dates back to its foundation in Germany in the 19^th century. BASF has long understood that innovation is not just about working internally to generate new ideas, but also about magnifying potential and possibilities through external open collaboration with both private industry and academia. BASF can credit these types of “Open Innovation” partnerships with many break-through chemical innovations including ammonia (1913), polystyrene (1930), large scale synthesis of Vitamin A (1963), biocatalytic production of Vitamin B2 (1990), the strobilurins class of agricultural fungicides (1996), and CAMOL™ Catalytic Coatings (2011).

Verbund – Integrated to the Maximum Degree

These types of revolutionary innovations have not come about by accident.  The concept of ‘Verbund’ is integral to BASF. It is a German word meaning “linked” or “integrated” to the maximum degree.  It is the Verbund philosophy that is behind BASF’s integrated approach to not only research and innovation but also manufacturing, infrastructure and processes. Verbund lends itself to the principles of industrial ecology; BASF applies these principles by using the by-products of one industrial plant as the starting materials of another. In this type of system there are both resource and energy savings, emissions are reduced, and costs are decreased.

The Verbund principle of integration extends beyond products and processes to include human connections. The BASF Open Innovation Web Portal informs employees and other stakeholders about BASF’s “innovative solutions to address the challenges of tomorrow” and keeps people engaged with questions like, “How will everyday needs be met when 9 billion people live on the planet?”, and “What will life be like in 2020 with 1.4 billion cars on the roads?”

Beyond Engaging – Empowering People

BASF recognizes the intrinsic value of its human resources, and identifies that, “a culture of innovation is about empowering people.”  Schaedler emphasized the need for bottom-up communication channels as much as top-down leadership. He made the distinction between simply engaging employees and truly empowering them.  Part of this distinction is having systems in place to actively respond to ideas generated by employees, and to be willing to start things on a small scale.

HooDoo I talk to about…?

Internally, BASF has a number of systems to engage and empower its employees.  “eTV” is an intracompany TV channel that offers employees the opportunity to speak up and communicate their thoughts and ideas; an important part of eTV implementation is that senior personnel are encouraged to lead by example and present their own ideas on eTV, thereby drawing in other employees.  Another internal program is an intracompany networking tool called “HooDoo” which was created to increase connectedness between employees (the name of this tool is a playful use of words, based on the question, “HooDoo I talk to about…?”).

Making Connections – Both Internal and External

Volker Schaedler (VP Innovation at BASF) and Nelson Switzer (Director, Sustainable Business Solutions at PwC Canada) sharing ideas after the presentation.

At BASF it is not only internal connectivity but also external connectivity that is fundamental to its business practices.  These external relationships allow BASF to see things from a new perspective and to work within collaborative networks to achieve significant results.  These networks include advanced partnerships with universities such as MIT and Harvard, initiatives with teams of postdoctoral researchers, and idea sharing with entrepreneurs and start-ups.  An important aspect of BASF’s approach to external connectivity is the recognition that it’s not simply about 1:1 partnerships, but about the connections that those partners have with others and the vast networks of connectivity that result.

Eco-Efficiency Analysis

Over the years, BASF has not only developed innovative products and processes, but it has also developed different methods of evaluation for its innovative ideas. In 1996, BASF embraced the holistic approach of Eco-Efficiency Analysis. This analysis method compares the economic and environmental life cycle costs of similar products and processes, from ‘cradle to grave’.  BASF was the first chemical company to use eco-efficiency analysis in its business activities and for many years this was the sustainability gold standard.   But times have changed…

Beyond Eco-Efficiency: SEEBALANCE

Today, a sustainable approach demands an examination of social as well as environmental costs. SEEBALANCE®, a SocioEcoEfficiency analysis method, was developed by BASF in cooperation with various academic research institutions. With SEEBALANCE, products and processes are simultaneously measured and evaluated according to the three pillars of sustainability: ecology, economy and society.  Results of SEEBALANCE analysis can be used to help make decisions in areas as varied as marketing, research & development, and business strategy.  There is no end to the constant evolution that is required of companies that truly adopt sustainability and innovation in their business practices.

Idea sharing

Dr. Schaedler’s presentation ignited the imagination of many in the room, leading to a vigorous discussion about how companies can truly create a culture of innovation.  The audience shared thoughts about how companies must set clear goals so ambitious that they don’t quite know how they will achieve them.  Companies must have a culture where there is a willingness to take risks, where there are even incentives to take risks that may lead to failure, and where failure is always acceptable, as long as lessons are learned from it.  There must be a tolerance for ‘craziness’ explained Schaedler, so that true innovation is nurtured.  Ultimately, through the audience discussion, Schaedler made it very clear that success is dependent on courage at both a corporate and a personal level: courage to challenge the status quo, courage to try and fail, courage to trust external partners, courage to challenge old assumptions and explore new opportunities, courage to dream.

Innovation Triple Play: Driving Sustainability

BASF has embraced the Innovation Triple Play:  Culture, Empowerment, and Connectivity.  Schaedler offered this advice about embracing innovation and collaboration: “Open the doors, be open to new models of collaboration, and be patient to develop ideas that would not typically survive in the corporate world.”  He emphasized the need to move forward with both courage and vision.  And, he explained, never forget the fundamental principles that guide your business. At BASF, a simple question is asked of every new project or idea: “How does this help to drive sustainability?”
____________
TSSS is widely recognized as Canada’s premiere forum for dialogue and problem solving among sustainability professionals. Each year over 1000 sustainability change agents attend TSSS events to exchange ideas and delve into trends, risks and opportunities that are presented by our shifting business model.  Click to learn more about our Capitalism 2.0 project.  Follow us on twitter and/or LinkedIn.