Innovation by BASF - The Chemical Company Walter H.

Dissinger
Santiago, Chile September, 2005

BASF: The Chemical Company

The worlds leading chemical company Help our customers to be more successful one of our strategic pillars Comprehensive portfolio of chemical competencies to offer solutions for a wide range of industries and their needs Environmental protection and social responsibility at the core of our activities
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BASFs Business Profile

Chemicals 19% 14%

Agriculture & Nutrition

Chemical Activities

Plastics 28% 21% Performance Products

14%

Oil & Gas

2004 total sales: 37.5 billion Euro

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Innovation in BASFs History

1965 2005 From Ludwigshafen to the world 1953 1965 The beginning of the plastics age 1945 1953 Reconstruction and new beginning

1925 1945 New high-pressure syntheses 1901 1925 The age of fertilizers 1865 1901 Founding of BASF the age of dyes
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Innovation Strategy Driven by the Market

BASF Innovation Strategy

Market Requirements

Product Innovations

Process Innovations

New Fields of Technology

- Materials Science - Nanotechnology - Energy Management - Biotechnology

Tailor-made business models

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Roles & Responsibilities in the Innovation Process

BASF Innovation Scouting

Establishment of BASF industry innovation scouting teams

Establishment and development of market intelligence Identification and verification of potential opportunities Evaluation of business approach to the industry

Evaluating strategic positioning of BASF in the key industies

Research & Development Concept

Universities Specialty BASF Plant Chemicals Science Research Central Technology Platforms Chemicals Polymer Research & Research Engineering

Research Institutes

Operating Divisions

Subsidiaries

High-tech Joint Ventures

Industrial Partners

World Class R&D Capabilities

R&D expenditures by segments

Agriculture & Nutrition
1% 1 1% 1 1% 1

R&D Expenditure 2004:

Corporate Research Plastics & Fibers

1.17 billion Euro

(incl.. Oil & Gas Exploration)

> 6,800 R&D personnel

worldwide
1200 R&D cooperations

1% 1 1% 1

Chemicals

(Universities, research institutes etc.)

Global No 1 in chemical

Performance Products

patents (1999 2004)

Markets and Businesses drive our R&D

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Phase Gate turns R&D into Innovation Management

Phase 1
Opportunity Fields
Gate 1 Gate 2

Phase 2
Gate 3

PhaseGate method to manage all innovation projects Defined phases for the whole innovation process Go / stop decision at each gate based on predefined deliverables Stronger involvement of marketing units in the idea generation process Introduction of Business Case phase
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Gate 4

Gate 5

Gate 6

Business Case

Phase 3
Lab Phase

Phase 4
Pilot Phase

Phase 5
Launch

Management Tools in Phase Gate

Portfolio Management

Debriefing

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A Prime(r) Example of Customer Partnership

Innovative solution in close collaboration with customers Shorter paint lines thanks to the Integrated Process II Significant cost and time savings
Standard Process Clearcoat

E-Coat

Integrated Process
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AdBlue: Ideal Combination of Economy and Ecology

AdBlue reduces the environmental impact of diesel-fueled commercial vehicles Advantages: lower levels of pollutants in exhaust gases and lower fuel consumption European commercial vehicle manufacturers regard AdBlue as a promising concept

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Opportunities offered by Plant Biotechnology

Plants resistant to cold or drought Plants resistant to disease and pests

New renewable raw materials in plants

Better food quality due to healthy ingredients

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What is different now?

Culture

Efficiency

Creativity

Focus
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Innovation: Responsibility of the Whole Company !

To turn market trends, customer needs and technology ideas into BASFs economic success even faster is and will be a challenge for the whole company - not only for research and development, but also for production, logistics, marketing and sales Dr. Stefan Marcinowski Member of the Executive Board Research Executive Director, Ressort VI

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