CEO: Disruptive innovation fuels today's markets

CLEVELAND—Disruptive innovation—the kind of innovation that creates markets and changes economies—is crucial to the survival of any industry, including rubber chemistry, according to the keynote speaker at the ACS Rubber Division's International Elastomer Conference and Rubber Expo at the Cleveland Convention Center.

“Innovation creates new opportunities, new jobs, new values, and new markets,” Thomas M. Connelly Jr., executive director and CEO of the American Chemical Society, said in an Oct. 13 speech that opened the three-day conference and trade show.

“Disruptive innovation is occurring more rapidly than at any time in our nation's history,” Connelly said.

Many factors can drive disruptive innovation, according to Connelly. These can include shifts in the age, location or ethnicity of populations; the price and availability of raw materials; and new needs that changes or problems in the society can create, he said.

“Where there are problem areas, there are also opportunities for innovation,” he said.

Connelly quoted Harvard Business School professor Clayton Christensen as saying, “Disruptive technologies typically enable new markets to emerge.”

The Japanese, he said, have an interesting concept, “seeds and needs.” The concept considers whether the seed of an idea creates a new need, or a new need creates the idea.

“There are plenty of examples to support both sides, but I like to start from the marketplace,” Connelly said.

There is an essential difference between invention and innovation, according to Connelly. Whereas invention converts the cash of investors into ideas made manifest, innovation seeks new applications for existing technologies or situations.

“Innovation can only occur in the marketplace,” he said. “It converts ideas into cash when applied successfully.”

As an example, Connelly cited the difference between Elias Howe, inventor of the sewing machine, and Isaac Singer, who popularized the sewing machine by creating moving parts and making sewing machines affordable. Howe the inventor and Singer the innovator were equally important to creating the sewing machine market, he said.

There are three types of innovation, according to Connelly:

• Market-creating, the most disruptive but also the most job-creating. “You address a need some people didn't even know they had,” he said. “It carries the highest risks, but it also brings the highest rewards.”

• Sustaining, in which good products are continually improved. “Sustaining innovation is the bread and butter for most companies,” Connelly said. “It accounts for nearly all new R&D investment, and appropriately so.”

• Efficiency-related, which essentially is how to produce more with less, according to Connelly. It has a bad reputation because it often reduces employment, but it has value in that it cuts costs and brings environmental benefits by using fewer raw materials, he said.

Major innovations can come for unexpected reasons, Connelly said. Dick Drew, a salesman at 3M, created masking tape in the 1920s to allow auto makers to have an effective boundary in painting two-tone cars, he said.

Although economic conditions can affect innovation, creativity itself is recession-proof, according to Connelly. He pointed to the creation of synthetic rubber and the vast proliferation of SR types, during the darkest days of the Great Depression. He also cited Bill Hewlett and Dave Packard, who started Hewlett-Packard in 1939, in a garage in Palo Alto, Calif., with exactly $538 in capital.

It might seem that less disruptive innovation is going on today, Connelly said. Actually, there is more, but its form and function have changed.

“The developed world does not need more stuff,” he said. “But it does need higher-performing, more sustainable stuff. The opportunities are there, but it doesn't look like the opportunities we had in the past. We are looking for value, not volume.”

As examples of new disruptive innovations in the elastomeric field, Connelly cited the development of non-pneumatic tires by Michelin, Hankook and Bridgestone; nano-engineered rubber; new developments in carbon black and silica; biorubber; anti-microbial glass; and 3-D printing.

He also spoke of the ACS' efforts to encourage innovation. These include bringing the chief technology officers of major and medium-sized chemical companies with policymakers and regulatory officials in Washington, as well as the creation of the pilot ACS Entrepreneurial Research Center.