Bio-chem Industry Gets Social

Industry report shows companies that adapt to social networking are more successful

By Seán Ottewell, Editor at Large

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Facebook, Twitter, LinkedIn and other social networks are synonymous with changing human social interaction. However, it now appears that such networks are also driving corporate collaborations. This is especially true in the field of bio-based materials and chemicals (BBMC), which is benefiting from increasing ties between start-ups, corporations, universities and investors.

So says a new report from Lux Research, Boston, Mass., a company that specializes in providing strategic advice and ongoing intelligence for emerging technologies.

In "Green Materials' Social Networks," Lux Research points out that making plastics, catalysts, solvents and other industrial chemicals from renewable sources requires an exceptional degree of interdisciplinary science, and bringing them to market cuts across industries ranging from agriculture to automotive. So without thriving social networks, these important new products will fail, it says.

Social networking can help smaller players navigate new paths to market.

The report maps the interlacing relationships that define and drive open innovation in today's BBMC industry and provides strategic guidance for successful future collaborations, internal activities and market initiatives.

It also presents a new method for analyzing the impact of business partnership networks on products, industries and competitors. The report largely indicates the stronger a technology developer's commercial partnerships are, the stronger the company tends to perform overall.

"Financial backers and academic collaborators help new green materials get started," says Mark Bünger, a Lux Research director and the report's lead author. "But too many promising technologies stop at that stage. Only multiple, active commercial relationships with other businesses will turn these technologies into mature processes and products that actually have a commercial and environmental impact, and a return for their investors."

In preparing the report, Lux Research interviewed more than 80 BBMC technology developers as well as select businesses with which they partner, and complemented its findings with secondary research. The analysis also drew on research into human and organizational social networks to apply it to the specific companies and clusters in the renewable chemicals space. In addition to assessing each company's individual social network, the firm found patterns across the field that reveal new insights.

The first of three key findings highlights that BBMC encourages interdisciplinary partnering more than other fields. Compared to other markets, BBMC demands a broader diversity of expertise, ranging from biochemistry, industrial scale-up, and even consumer marketing and branding. Thus, it encourages more cross-industry partnerships. While collaboration between a drug-maker like Merck and a carmaker like Ford would be unthinkable, writes Bünger, both of those firms have relationships with companies in the BBMC field (Codexis and Merquinsa, respectively).

The report also finds that successful BBMC developers sustain several strong, significant partnerships. Like gregarious humans, leading technology start-ups tend to be prolific networkers. For example, BTG-BTL has Akzo Nobel, DSM and Shell among its list of friends; Elevance counts Cargill and Dow Corning; Algenol Biofuels has Dow Chemical and Linde; and little Lignol works with Novozymes, Huntsman, PPG and Pacific Ethanol. The report says that these partnerships do more than help validate smaller companies — they provide technology advice and engineering expertise, and open paths to market that would be difficult for small players to navigate alone.

The last finding notes that the strongest clusters of relationships form at intersections in the value chain. Like people, companies don't form relationships randomly. In the case of BBMC, the value chain — feedstocks, products and applications — is strongly associated with almost every aspect of a company's identity. Compared even with seemingly fundamental factors like a company's technology, size or geographic location, the partnerships it forms within the value chain overwhelmingly determine its success or failure.

The report concludes that examining individual relationships as well as the collective "social network" of the bio-based industry as a whole reveals opportunities and threats for everyone: "Relationships in the bio-based materials and chemicals field have been deepening over the past few years, showing that commercial maturity is near and that consolidation in the space will accelerate, and inter-industry partnering is more common in BBMC than other spaces. To build a stronger corporate social network, companies should reconnect with prior partners on new terms, use corporate networking to increase personal productivity and morale, and use existing networks to help coordinate actions, especially in feedstock and finance."


Seán Ottewell is Chemical Processing's Editor at Large. You can e-mail him at sottewell@putman.net.

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