Interview

Continue to Innovate through Economic Downturns

Posted on 08 February, 2010 | Tags:

"What we're dealing with today, and what we call the new reality has hugely changed many of our marketplaces.  And what is clear is that the world that will exist, going forward, will be very different than the world that we were very used to and comfortable with before this occurred." Balvinder Singh Kalsi , President, E I DuPont India Pvt Ltd in an Exclusive Interview. Excerpts:

-Balvinder Kalsi President, E I DuPont India Pvt Ltd

Innovation has been the driver for growth of DuPont right from the beginning; please throw some light on growth of organization?
At DuPont, change is in our DNA. During its 207 years, DuPont has evolved through three transformations, emerging stronger each time as we continue to innovate through economic downturns. Today, as a market-driven science company, DuPont continues its legacy of delivering innovation during challenging times.
DuPont has been awarded patents for more than 34,000 inventions, many of which gave the modern age its look and feel and many of its most useful materials. Today, one of the key metrics that we use to measure the progress of our R&D pipeline is "sales from new products". Last year, more than USD10 billion of our revenues came from products launched in the previous 5 years - this was more than 35 percent of our global sales, up from 24percent in 2001. DuPont commercialized more than 900 new products or new product-applications last year, bringing the total to more than 5000 new products or applications launched in the last 5 years. This is a demonstration of our commitment to innovation, and reflects another of our growth strategy - Putting our Science to Work.
DuPont has ventured into new businesses and has been extremely successful in each of these. May we have your comment?
DuPont is a market-driven science company , which means innovation-driven, connected to the market and to the customer needs. All this means we have to constantly transform ourselves as a company, stay connected to external trends, listen closely to our customers and bring solutions that deliver sustainable growth to all our stakeholders. This is our core strength  to constantly transform and innovate.
Change is in our DNA. Our success lies in our ability to anticipate market needs and develop solutions that are sustainable for the present and the future. At DuPont, we have often been successful by stepping out of our comfort zone in order to address the needs of a dynamic market place. And we have done this with a strong commitment to provide sustainable solutions that will make lives of people better, safer and healthier - everywhere.

How has the global meltdown affected the businesses of DuPont globally?
In DuPont, about a year ago we started looking at what was going on in financial markets, and we started talking about a new reality.  We figured it was going to impact us, but we really were not quite sure how.  That became very clear end of last year.  So we call this environment our new reality. And today we are addressing this new reality by realigning our businesses and products to what we call the global mega-trends: Increased food productivity.  Decreased dependence on fossil fuels.  Protecting lives.  Focus on Emerging Markets. Today we are gearing our businesses to address these four major "megatrends". The company's research and development efforts including more than three-quarters of its R&D budget are focused on these megatrends.
We have seen a lot of change over the history of our company. We've experienced 18 recessions since World War I and 33 recessions since 1854, which is the first year for which we can find the data. One thing we learnt and that has helped us emerge successful after each event. The fact that during most of the down times, our investment in the engine of R&D and innovation helped us emerge stronger each time.
Recently, a Financial Times reporter observed that in 1937, 40 percent of our revenue that year came from products that weren't in existence in 1929, which means that, during the Great Depression, we continued to innovate. As a matter of fact, nylon and neoprene are some of our biggest inventions that occurred in these times. That was really the invention that propelled us into the second half of the 20th century. That didn't happen by accident. It took real leadership to maintain and increase our research funding during that period of time. And look at the transformation it brought to our lives right from textiles to aerospace.
Today we are a company that sells into almost every industry and market segment that touches each of our lives. From the moment you wake up and pick up your toothbrush to the newspaper you read to the breakfast you have to the car you drive to the phone you use to the clothes you wear to the laptop you use - there is a little DuPont in almost everything that is in our daily lives! That is the amazing power of DuPont innovations.

What are the strategies adopted by DuPont to sustain the growth during the current times of global meltdown?
DuPont put in place some aggressive actions to reduce costs and capital expenditures, in addition to maintaining an appropriate level of investment for high-growth, high-margin businesses including seed products and photovoltaic. In the first quarter, DuPont launched more than 500 new products, nearly double the number introduced in first quarter 2008.
DuPont is also working at expanding actions to help preserve our strong cash position, streamline and accelerate our approach to markets and better position our businesses as global economies rebound. As a market-driven science company with strong growth opportunities, our objective is not simply to weather the recession and wait for recovery. Our goal is to emerge from this global recession stronger, faster and more agile than ever before.

How has DuPont expanded its operations in the Asia Pacific region and specifically in India as it has emerged as such a fast growing economy?
DuPont already has a solid foundation in emerging markets, where the company has established strong brands, reputation and key local relationships. Over the past five years, DuPont has grown in emerging markets at a compounded growth rate of 16 percent and, in 2007, sales into emerging markets exceeded $7 billion.
India is a critical emerging market for DuPont, where DuPont's sales in 2008 totaled about half-a-billion dollars. As one of the fastest growing economies in the world, India provides a tremendous opportunity for DuPont with a trillion-dollar economy and a strong growth rate in the high single digits. Demographic change is under way in India, with a youthful population, more women in the work force and dramatic growth among the middle class -- triggering more disposable income and an unprecedented demand for goods, services and brands. DuPont is poised to support the country's transportation and construction needs with a portfolio of products that range from engineering polymers to building innovations, provide advanced seeds and crop protection technologies for better agriculture productivity, and provide solutions in alternative energy. Emerging markets such as India provide DuPont with tremendous growth opportunities.
 
What are the key focus areas of DuPont in India?
Our Growth mission in India is aggressive, sustained profitable growth. DuPont India will grow its existing businesses and focus on mega opportunities in agriculture & food, transportation, building & construction and renewable energy. The other key focus will be on fully leveraging India advantage for global DuPont. The DuPont Knowledge Center that we opened last year in Hyderabad will work on the agriculture and industrial biotechnology research as well as product application development. It will also provide engineering design services, bio-informatics and intellectual property protection. The DuPont Services Center will work on providing services in the areas of IT, Sourcing, Finance and Accounts and the like.

May we have your comment on short and long-term future plans of DuPont in India?
As I mentioned earlier, DuPont is a science & technology-company - our focus is to bring science based solutions to our customers, with major focus in India being on agriculture & food, transportation, building & construction and renewable energy. We are pursuing 'sustainable growth'. As part of this strategy, we have strengthened our focus on our philosophy 'Go where the growth is', which applies to both high-growth geographies (like India) as well as high-growth market segments.
DuPont India is of strategic importance to the global operations of DuPont, and we are investing in sustainable long-term growth. As we are growing in the Indian market, we are also positioning ourselves to fully leverage on the country's advantages for global DuPont operations.
We will continue to aggressively grow in India and fully leverage the India advantage for global DuPont. The DuPont Knowledge Center in Hyderabad is critical to our growth mission. It provides us the necessary speed to market and it demonstrates our commitment to India and confidence in India's talent. We are expanding our manufacturing operations in Vadodara and Madurai. We are working collaboratively with our key corporate accounts and investments for the right business opportunities will not be a limitation. We are investing a lot in human resources and expect to double our employee strength in the next 2-3 years.

Please tell us about Research & Development as the key focus area in DuPont.
DuPont invests USD1.4 billion a year on research and development in a diverse range of technologies for a broad range of markets from agriculture to industrial materials. DuPont has more than 5,000 scientists and engineers globally. Funding includes scientific advancements for discovery research, product development and process improvements.
Today, we spend more than 5percent of our revenues on fundamental R&D as well as technical & product innovation programs. About 10percent of our global workforce are scientists and engineers. Even while we are headquartered in the US and over a 3rd of our revenues come from that country, we have 7 major R&D centers outside the USA. The more recent ones include DuPont Knowledge Center in India, that we opened last year over 15 acres in Hyderabad, and a newly opened Technology & Innovation center in Brazil that we opened this year. Of these seven, four are in Asia,  a reflection of our strategy to 'go where the growth is' and be closer to our customers, as Asia's share in our global revenues continue to rise steadily.
Investments in the field of R&D in India are very low as compared with investments in the developed nations. What are the initiatives that should be take by the Industry, Academia and the Indian Government that would further boost the growth of R&D activities?
India is a country where there are large number of qualified professionals, highly educated highly educated PhDs and degree holders. We are a modern economy and a strongly emerging market and stakeholders - be it government, academia or industry - should continue to collaborate to fully leverage on the country's advantages for global operations.
The government has already taken initiatives regarding tax incentives for R&D and other developmental efforts. There should be an increased focus on providing fiscal and tax incentives. Intellectual property laws need to constantly be strengthened and enforced. Being a knowledge economy, Intellectual property protection is becoming increasingly important for India. So our education syllabi can be expanded to include IP rights and focus on all areas of R&D.

When do you see the markets getting stabilized and how is DuPont looking at the future.
What we're dealing with today, and what we call the new reality has hugely changed many of our marketplaces.  And what is clear is that the world that will exist, going forward, will be very different than the world that we were very used to and comfortable with before this occurred. 
What can make a big difference between success and failures during such times is the skill and quality of 'anticipation'. In DuPont, we had already geared our thinking and our approach both to R&D and the way we do business for the current and future market needs. We are constantly challenging ourselves with this question:  Are we doing the right things to build a stronger company, help solve the world's toughest challenges, and build a brighter future for people and our planet?
DuPont is a market driven, science-company and we keep unwavering focus on innovation as a lever for our future growth. Innovation is core to what we are; whether we're at the peak of the cycle or at the depth of the cycle. We will continue "Putting science to work". It means we will innovate by listening to the market, by addressing needs of not just today but also by anticipating what will be needed tomorrow. This is what we call "Market-driven innovations"

What is your message for our readers of CEW?
India has tremendous entrepreneurial skills and talent for research and innovation. Combined with the highly educated and qualified pool of professionals, India is in the best position to address the research opportunities in the world.
Today, we all know India's global leadership position in the field of Information Technology. I believe we should be able to position India with a similar competitive edge in other areas of R&D and innovation, beyond Information Technology, so that we attract R&D investments from around the world in diverse areas and India becomes the innovation capital of the world. This is what we have tried to do in DuPont, where we set up the DuPont Knowledge Center as the company's first knowledge center outside the US which will undertake not only application development for local markets but also basic research. I believe this is the way to go in developing India's inherent talent.