Innovation Management at BASF: Strategy, Structure, Processes

JPM, Rastatt, June 21, 2007

Dr. Markus Müller-NeumannScience Relations and Innovation Management

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BASF –The Chemical Company

Sales 2006: € 52,610 million Income from operations (EBIT) 2006: € 6,750 million Employees as of December 31, 2006: 95,247

The world’s leading chemical companyOur portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas

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Innovation is an integral part of BASF´s strategy 2015

Earn a Earn a premium premium

on our coston our costof capitalof capital

Form the Form the best team best team

in thein theindustryindustry

Help our Help our customers customers to be more to be more successfulsuccessful

Ensure Ensure sustainablesustainable

developmentdevelopment

By means of innovations, we can excite our

customers

Innovation has a value creating, or at least a value preserving effect

Innovation is based on the creativity and expertise of the team

Only through innovationssustainable development

can be achieved

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Technology Platforms & Know-how Verbund

SpecialtyChemicalsResearch

PolymerResearch

Chemicals Research& Engineering

CentralTechnologyPlatforms

Plant BiotechnologyResearch

OperatingOperatingDivisionsDivisions SubsidiariesSubsidiaries

Universities

High-techJoint Ventures

ResearchInstitutes

IndustrialPartners

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Plastics

Agriculture& Nutrition

PerformanceProducts

Chemicals

CorporateResearch

20%

11%

14%23%

32%

Businesses and Markets Drive our R&D

2006 actual

R&D Expenditures by Segment R&D expenditures: 1,277 million Euro20 % Corporate Research - Exploratory Research- Research for Growth Clusters80 % financed by operating divisionsApprox. 60 % of total expenditures for product innovationR&D expenditures for growth clusters: > 900 million Euro (2006 - 2008);thereof, 70 % corporate-funded74 % of R&D expenditures in Germany, 17 % in North AmericaApprox. 8,300 R&D personnel at 70 sites worldwide1,400 R&D cooperations worldwide; thereof, > 40 % with industrial partners; > 50 % outside Germany

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Impetus for Innovation

TechnologyPush

SocietyDemand

Market Pull

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From Invention to Innovation

R&DCooperation In-house R&D

Operating Division R&D

Investment

Basic Research

CorporateResearch

STOPSTOP

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Project Management: PhaseGate Process

Phase 4Pilot Phase

Phase 3Lab Phase

Phase 2Business

Case

Phase 1Opportunity Fields Phase 5

Launch

Gat

e 1

Gat

e 2

Gat

e 3

Gat

e 6

Gat

e 4

Gat

e 5

Open idea-finding process

Consistent project

assessment

Focused project work

Customer integration

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Zeichen

Daten

Information

Wissen

Können

Handeln

Kompetenz

Wettbewerbs-fähigkeit

+ Syntax

+ Einzigartigkeit

• Schaffung marktrelevanten Wissens steuern• „Wissensinseln“ verknüpfen• Wissen durch Teilen vermehren

+ Bedeutung

+ Kontext

+ Anwendung

+ Wollen

+ Effektivität/Effizienz

Wissensmanagement

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