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TRANSCRIPT
Managing Technology for Growth and Profitability
Bringing Innovative Technology to Market: Linking R&D, Engineering and Manufacturing
Dr. James Rekoske – CTO and VP of R&D
Managing Technology for Growth and Profitability
Agenda
• Introduction
• Components of R&D Effectiveness
– Building and Maintaining Alignment
– VPD™ – A Technology Delivery Framework
• Open Innovation as a Multiplier
• UOP Innovation Example
• Conclusions
Managing Technology for Growth and Profitability
We Are Honeywell
Managing Technology for Growth and Profitability 3
Home and Building Technologies
$39.3Bin sales for 2016
53%of sales outside U.S.
• ~1,300 sites, ~70 countries
• More than 129,000 employees
• Morris Plains, N.J. headquarters
• Fortune 100
• NYSE: HON
Safety and Productivity Solutions
Aerospace Performance Materials and Technologies
Managing Technology for Growth and Profitability
UOP Lines of Business
Managing Technology for Growth and Profitability 4
Solutions powered by strong R&D and continuous innovation
A century of experience in refining, petrochemicals and natural gas
Renewable Energy & Chemicals
Innovative solutions that make customers more efficient and profitable
Technology to make fuels and chemicals from renewable sources
Technology solutions and equipment for refineries and
petrochemical plants
Technology solutions and equipment for natural gas
and hydrogen
Connected Performance Services
Software delivered as a service to improve customer outcomes
Enables the chemical reactions that make fuels
and petrochemicals
Catalysts, Adsorbents & Specialties*
Gas Processing & Hydrogen*
Process Technology & Equipment*
Managing Technology for Growth and Profitability
A Century of Innovation
1914: Dubbs Cracking Process
1938: High Octane Aviation Gasoline
1949: Platforming™ Process
1953: Synthetic Zeolites
1957: Zeolites for Catalytic Cracking
1960s: Technologies for Unleaded Gasoline
1968: Biodegradable Detergents
1970s: Automotive Catalytic Converter
1970s: Parex™ Process
1990: Oleflex™ Process
2003: First National Medal of Technology
2006: Green Diesel Technology
2008: MTO, Uniflex™ and Green Jet™ Fuel
2012: Acquired Thomas Russell and Callidus
2014: UOP Celebrates 100 years
2014: Second National Medal of Technology
2016: ISOALKY™ ionic liquids alkylation
2016: Connected Performance Services
For more than 100 years, UOP has developed technology andbusiness solutions for the world’s leading oil and gas companies
Today: UOP licenses more than 70 processes and 300 catalysts to 6,000 refineries and plants
R&D Effectiveness and Sustained Alignment with key stakeholders in the value chain of Technology Delivery
31 out of 36refining technologies
in use today were
developed by
UOP
Managing Technology for Growth and Profitability
Agenda
• Introduction
• Components of R&D Effectiveness
– Building and Maintaining Alignment
– VPD™ – A Technology Delivery Framework
• Open Innovation as a Multiplier
• UOP Innovation Example
• Conclusions
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
Key Elements of R&D Effectiveness
• HS&E Excellence
• Strategic Alignment
• Talent (hiring & retention)
• R&D Capabilities
• Open Innovation
• Regional R&D Investment
• Work Processes & Enablers
• IP Management
Managing Technology for Growth and Profitability
The Importance of Strategic Alignment
NPD Alignment: The state where all aspects of the new product delivery process (strategic, business, functions) have common focus, interdependent metrics and are actively facilitating mutual success.
Symptoms and Effects of poor alignment:
• Working on wrong projects
• Unbalanced project portfolio – across products, across horizons
• Missing your growth goals
• Long cycle time to completion
• Missing delivery date and exceeding budget
• High COPQ (cost of poor quality)
• Missing customer’s CTQs (critical to quality) or OTTR (on-time to request)
• New products are not “fit for purpose”
• Frustrated and de-motivated staff
Failure to have a strategic alignment will have a negative impact on organization’s growth
Managing Technology for Growth and Profitability
Execution:
• List long-term (3-5 years) strategic objectives
• List corresponding objectives – 1 year
• Tie R&D objectives to specific initiatives
• Align initiatives to metrics (KPIs)
• Assign primary and secondary owners to each initiative to clarify accountabilities
• Create second and third level targets for each primary initiative
• Establish Management Operating System (MOS). Address issues and take action
Strategy Deployment Techniques: An “X-Matrix” Example
Strategy execution process to align business and functional strategies with transparent accountabilities
CEB Research and Development Council - 2010
Incre
ase
Rev b
y x
x%
Reve
nu
e In
cre
ase
by $
10
0M
Conduct VoC
HP
R&
D D
ir
Refinin
g M
ktg
Dir
Primary Responsibility Secondary Responsibility
Charter team. Low hanging fruits
Increase HP Rev by xx% w/o M&A
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
Governance Structure
Growth Board
Growth Management
Team
Exploratory
Projects
Key Roles
• Process owner• Approve new focus areas/platforms• Cross-SBU prioritization decisions • Nurture new businesses• Quarterly decision meetings
• Recommend Focus area/platform • Project selection decisions • Project leader mentoring• Monthly checkpoint meetings• Portfolio management
Membership
• CEO• VP Strategic Marketing• VP R&D• SBU VPs
• SBU BD Directors• Strategic Marketing Director• Research Sr. Director• Development Director • S&A Sr. Director
Improve commitment & alignment for major growth investments.Commitment has the highest impact on innovation success
Technology
Platforms
Growth Focus
Area Projects
Managing Technology for Growth and Profitability
VPD™: Velocity Product Development
ScopingProductConceptSelection
Develop-ment
CommercialDemo
ProductLaunch
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Gate 1 Gate 3
Scale-upApproval
Gate 4
Post LaunchReview
ProductLaunch
Approval
Gate 5
IdeaScreening Development
Approval
Gate 2
ProjectSelection
ExPAC
PAC 3PAC 1PAC 2
Project Teams
Team Leaders
ExPAC
PAC 3PAC 1PAC 2
PAC 3PAC 1PAC 2
PAC 3PAC 1PAC 2
Project Teams
Team Leaders
PACPAC
PAC
EPAC
Idea Generation
Stages• Structured project phases representing increasing levels of investment
• Pre-defined technical and business activities in each phase
• Established tools provide consistency
• Pre-defined deliverables for each decision point
Gates• Formal reviews by a cross functional teams of senior leaders
• Success criteria for passing each gate are established in advance
• Each gate represents a Go/Stop decision
A Business Process – Stewarded by Technology
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
The Value of Connections
R&D
EngineeringManufacturing
• Effective technology delivery requires strong interdisciplinary connections between customers, R&D, Manufacturing and Engineering
• Connections are best established through regular rotations of some personnel
– Organizational Balance: some “long and
deep” experts, some “generalists”
• Rotations, communication are complicated by geographic distance
The UOP ModelRegionalization of Technical Services, Engineering, R&D and ManufacturingClose to our customers = faster, more robust NPD
Managing Technology for Growth and Profitability
UOP Regional R&D
• Deploy resources to grow where our customers are
• Increase customer interaction
• Provide faster response
• Better understand customer needs
• Access talents, ideas and capabilities, and accelerate commercialization
• Key roles: – Establish business driven engagements
– Develop / demonstrate new technology
– Develop regional solutions
– Support sales and Tech Service Scouting
• Strengthen sustainable relationship
• Position UOP as the “Partner of Choice”
Integrated global work force aligned with regional strategies
Technology GlobalizationUnited States India China
Middle East
• India – Guragaon
• China – Shanghai, Zhanjiagang
• ME – Dhahran Techno Valley
• SEA – Penang, Malaysia
Almost 50% locatedoutside the US
Managing Technology for Growth and Profitability
Agenda
• Introduction
• Components of R&D Effectiveness
– Building and Maintaining Alignment
– VPD™ – A Technology Delivery Framework
• Open Innovation as a Multiplier
• UOP Innovation Example
• Conclusions
Managing Technology for Growth and Profitability
Manage
Implement & manage formed agreements and
relationships
Want
Identify capabilities and resources we need to
meet our strategic objectives?
Find
Locate and evaluate needed
resources?
Get
Establish processes to
access selected resources?
New product meeting Market & customer needs
Create
Value
Based on Roche Pharmaceutical Model
• Corp Goals
• VoC
• Mkt Trends
• Regulations
• Competition
• Emerging Tech
The “Open Innovation” Model @ UOP
• Road Mapping
• Gap Analysis
• Collaboration Formation
• Other agreements
• Scouting
• Networking
• Collaboration Imp & Management
• Portfolio management
A structured approach to leverage external capabilities to speed up commercialization of new profitable ideas that will satisfy customer needs and market requirements.
Business Strategy
Project
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
Collaboration Formation ProcessBased on “The Strongest Link”, Gene Slowinski & Mathew Sagal
Achieve InternalConsensus
Approach Potential Partners
Conduct ResourceFit Assessments
Finalize PartnerSelection
Negotiate Agreement
Inputs
• Strategic Plan
• Gap Analysis
• Partner request
Collaborations are doomed to failure without internal consensus
Quickly Walk away as friends if there is no strategic fit
Resources complimentary? Available? Outsourcing?
It is painful to recover from selecting the wrong partner
Outputs• Framework Document
• Agreement
• Implementation Plan
Charter Formation Team
• Identify needs / business case
• Confirm collaboration is the best alternative
• Draft collaboration framework document
• Get input from stakeholders
• Resolve internal disagreements
• Identify potential partners
• Discuss framework document
• Assess strategic fit – Go / No Go decision
• Execute NDA
• Evaluate capabilities of potential partners
• Assess resource fit
• Confirm strategic & resource fit of partner
• Review framework doc with stakeholders
• Resolve IP RTU and commercial terms
• Negotiate legal Agreement
Managing Technology for Growth and Profitability
Long History of Open Innovation at UOP
Technology Field Partners
SRC Uniflex Slurry hydrocracking of heavy residual oils Canmet, many others
Ecofining Green diesel from vegetable oils and animal fats Eni
Hydroprocessing Removal of sulfur & nitrogen from gasoline, diesel, etc. Albemarle
MTO Methanol to olefins Norsk Hydro, Statoil
Olefin Cracking Cracking of heavier olefins to ethylene & propylene Total
Catalysts Manufacturing various proprietary UOP catalysts Fushun
EBOne Liquid-phase alkylation of benzene to ethylbenzene Lummus
SMART Dehydrogenation of ethylbenzene to styrene Mitsubishi, Lummus
Phenol Cumene peroxidation to phenol and acetone Sunoco
Cyclar Conversion of LPG to aromatics BP
Hydrocracking Cracking of heavy oil with sulfur & nitrogen removal Unocal
SHP Various selective hydrogenation applications Huels, Degussa
Aluminas Manufacturing various amorphous Al2O3 products La Roche
Tatoray Transalkylation of toluene, A9 to xylenes Toray
Sulfolane Liquid-liquid extraction of aromatics Shell
Udex Liquid-liquid extraction of aromatics Dow
Representative list of successful, non-confidential collaborations:
Managing Technology for Growth and Profitability
Agenda
• Introduction
• Components of R&D Effectiveness
– Building and Maintaining Alignment
– VPD™ – A Technology Delivery Framework
• Open Innovation as a Multiplier
• UOP Innovation Example
• Conclusions
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
The UOP/Inovyn Advanced MTO Process
0
10
20
30
40
50
C2= C3= C4= C5+ C1-C5Paraffins
Coke +COx
SAPO-34
ZSM-5
% Y
ield
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
Technical and Commercial Success
• Since deployment at Wison Clean Energy in 2013, MTO technology has expanded dramatically
• By 2020, nearly 20% of the worlds propylene will come from on-purpose processes like MTO and Oleflex
• In the next 5 years, China will invest more than $100 billion in additional coal to chemicals processing through MTO
Wison Nanjing MTO Plant Construction – July 2013
Managing Technology for Growth and Profitability Managing Technology for Growth and Profitability
Summary
• Robust business processes are need to ensure strategic alignment of all functions involved in your NPD process
• Deployment, communication of the strategy is an essential and often overlooked element
• Governance is not the goal – keep your processes agile
• People are your most critical asset – design your organization to promote their development
• Open Innovation, properly deployed is a true Multiplier
• Success can be transformational