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Investment

DowDuPont CEO favors short-term R&D

Ed Breen wants to avoid the uncertainty and expense of moonshot projects

by Alexander H. Tullo
June 10, 2018 | APPEARED IN VOLUME 96, ISSUE 24

 

09624-buscon4-breen.jpg
Credit: DowDuPont
Breen

DowDuPont CEO Ed Breen says he prefers small, short-term R&D projects that quickly yield marketable products to moonshots that are risky and more expensive.

Breen took over as DuPont CEO in November 2015 and quickly inked an agreement to merge with Dow Chemical. At the Bernstein Strategic Decisions Conference in New York City on May 31, Breen discussed his company’s R&D strategy.

Breen said that he scaled back ambitious projects as soon as he was in charge at DuPont. “When I got to the company, we killed almost all of what I’d call the moonshot projects,” he said. “And, by the way, the moonshots cost the most money. I didn’t feel comfortable with most of them.”

He cited DuPont’s $200 million cellulosic ethanol plant in Nevada, Iowa, as an example. The plant, meant to process agricultural residues from local farmers, opened in October 2015. The company closed the plant last year and has since been trying to sell it.

Additionally, in late 2015, Breen recast DuPont’s Central R&D organization, famous in the chemical industry for its devotion to long-term projects, into a smaller organization, Science & Innovation.

At the conference, Breen said the company is now taking on R&D projects that cost between $10 million and $30 million, which he said were less risky and yield profits sooner than larger initiatives. He said DowDuPont rolled out 20% more new products in 2017 than it did in 2016. This year, he expects new launches to increase another 25%.

“We have gone to a very disciplined look at our innovation pipeline,” Breen said.

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Comments
Shankar (Wed Jun 13 07:17:53 EDT 2018)
If you have no idea of what you are doing, you will do anything hoping you are right! Wrong man for the wrong job!
Phil (Thu Jun 14 23:14:41 EDT 2018)
Anyone else notice that any company that uses the word "innovation" a lot is taking the exact same approach to R&D as Ed Breen? I've leared to be very afraid of that word.

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