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“We used the financial crisis to take a look at ourselves and adjust”
When Ellen Kullman became DuPont’s 19th Chief Executive in January 2009 and its Chairman later that year, she immediately began championing what she calls “market driven science.”
Issue Date - 01/03/2012
The idea is to use DuPont’s formidable research capabilities, along with its power to innovate, and to focus them on the needs of the world’s growth markets. By doing that, Ellen Kullman, President, Chair and CEO of DuPont is continuing the company’s evolution from a manufacturer of gunpowder, two centuries ago, to a chemical producer, over the last century, to something with a much larger portfolio of activities that now includes agriculture, nutrition, health, biotechnology, engineered materials, and many other business areas. In today’s DuPont, with just under $34 billion in revenue, the chemicals business accounts for only about 20% of revenue, well behind agriculture, the company’s largest segment. Kullman has been pushing DuPont into new areas that more closely track with the big trends (and needs) of the world. To explain how she is making DuPont a more innovative, science-driven company, Kullman spoke with the Korn/Ferry partners Andy Talkington and Jim Aslaksen, and with the Briefings Editor-in-Chief, Joel Kurtzman, at DuPont’s corporate headquarters in Wilmington, Del. What follows is drawn from that conversation.

Q. You recently gave a speech at the Detroit Economic Club in which you discussed the world’s megatrends – the big changes and challenges everyone faces. You tied those trends to your business. How does that link work?
Ellen Kullman (EK): If a company needs to grow in order to satisfy shareholders and create returns, then you have to understand the trends that are facing the world and how they affect your business. Now, we don’t understand where the world’s actually going to end up, but there are a lot of things that are clear and one of them is that we have seven billion people in the world now and we expect nine billion by 2050. That means we’re going to have to feed two billion more people by 2050. These people are also going to want access to energy – for transportation, communication and their general way of living. They are also going to need to have water, which requires energy to purify and transport. We’re also going to have to protect people and the environment. Today, we don’t do these things very well, and if there are another couple of billion of us on the planet, we’ll have to do a better job than we are doing now. To me, these challenges represent huge opportunities for our company.

Q. You’re talking about focusing DuPont’s resources around sustainability?
EK: When we first started talking about this, our employees said, well, those big trends are all very interesting, but why are we talking about them? And I said, this is more than interesting because this is where we’re going to put our research-and-development dollars. These are the real needs the world has, and these needs will create opportunities for growth for our company. These are long-term and not cyclical or short-term changes. These changes involve billions of people. So, following the megatrends is about sustainability, but it is also about creating long-term growth. And, because we have the science that can help in each of those areas, if we’re successful, not only will we be helping to solve some of humanity’s most difficult issues, we will also be creating growth and returns for our shareholders.

Q. What are the other megatrends you are looking at?
EK: It’s all driven by population growth, but the trends include feeding the world, access to energy – and we think alternative energy is a key part of that – and protecting people and the environment. We also believe that a very large share of future economic growth, as well as future demand, will occur in developing countries, since that’s where the population growth is. We have to be prepared for that, which is what we’re doing. We have research centers around the globe, including India, China and Brazil, and we’re focusing resources there.

Q. Are people onboard with the idea of using science to address the large-scale trends you just mentioned?
EK: I was pleased as we came through our execution reviews last year, which are our tactical reviews, how much of our research and development and how much of our capital expenditures were focused on these megatrends. It was a huge number, over 85%. That wasn’t because we dictated it. It’s because our people are getting really excited. That’s what we need all of our 67,000 people to be doing.

Q. Since becoming CEO, you have focused the company around innovation through science. Isn’t that a pretty big shift for a 209-year-old company? How are you going about it?
EK: It’s actually not such a big shift, because it’s really been occurring over a long period of time. In fact, it seems more like the natural evolution of the company. When I started at this company 22 years ago, it was clear that DuPont was different from other companies because of its emphasis on the utilisation of science. It did basic research in a way that piqued my interest. Back then, it was chemistry – breaking down hydrocarbons with catalysis – and other techniques. Today, it’s biology. That’s a natural evolution. It’s following the science. DuPont got the portfolio of products it had – nylon, Kevlar® – using the science of the day. But if you think how much biology has changed over the last 30 years, and if your view is that innovation at DuPont is science based, then it’s natural for us to be integrating the sciences of chemistry, biology, materials science and others, to create new opportunities.

Q. Does pursuing innovation so intensely require a culture change?
EK: To change culture, you first have to honour it. You have to know what’s really important about it. For us, it starts with our core values of safety and health, environmental stewardship, highest ethical behaviour and respect for people. Then, you build off of the strength of these core values.

Q. How does that work in practice?
EK: One of the things we did coming out of the global financial crisis was to use the crisis as an opportunity to take a look at ourselves. One of the conclusions from that exercise was to simplify the company. We created 13 businesses, instead of 22, and we took out a layer of leadership. We also regionalised the businesses to make sure they were closer to the customers. We used the financial crisis to take a look at ourselves and adjust so we could respond more rapidly to the environment.

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