Eindhoven: December 11th , 2014

“Intrapreneuring” at Royal DSM

Robert Kirschbaum, VP Open Innovation

Page

Introduction to Royal DSM

Innovation

- DSM Innovation Center

- Open (Chesbrough) Model

- Venturing

- Stage Gate examples

Emerging Business Area’s

- Bio Medical Materials

- Bio Based Products & Services

- Advanced Surfaces

Learnings

Page

DSM – understands change

Coal MiningCommodity

Chemicals

Specialty

Chemicals

Life Sciences &

Materials Sciences

Page 2

DSM at a glance*

Page 3

Sales ~€10 billion

EBITDA ~€1.3 billion

Global presence

~24,500 employees worldwide

Listed at Euronext

NYSE

Share price quintupled in 25 years

• DSM is a global Life Sciences and Materials Sciences company active in health,

nutrition and materials

• DSM delivers innovative solutions that nourish, protect and improve

performance in global markets such as food and dietary supplements, personal

care, feed, medical devices, automotive, paints, electrical and electronics,

life protection, alternative energy and bio-based materials

• 5% of Turnover and 10% of our people in R&D.

Sustainability leader

Top ranking Dow Jones

Sustainability Index

* 2013 numbers total DSM

DSM’s

organization

Page 4

Supervisory Board

Managing Board

Functional Excellence

Shared Services

Associates

DSM Sinochem

PharmaDPx Pharma POET-DSM

Nutrition

DSM Food

Specialties

DSM Nutritional

Products

Performance Materials

DSM

Dyneema

DSM Resins &

Functional Materials

DSM Engineering

Plastics

Corporate Staffs

Polymer Intermediates

DSM Fiber

Intermediates

DSM Innovation

Center

DSM Bio-based

Products & Services

DSM

Biomedical

DSM

Advanced Surfaces

LIFE SCIENCES & MATERIAL SCIENCES

Page

• Our purpose is to create brighter lives for

people today and generations to come

• We connect our unique competences in Life

Sciences and Materials Sciences to create

solutions that nourish, protect and improve

performance

Mission

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DSM in motion: driving focused growth

People - Planet - Profit: creating value along three dimensions

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DSM Innovation Center

EBA Biomedical

EBA Advanced

Surfaces

EBA Bio-based

Products & Services

Business Incubator

New Business Development

CTO Office

Venturing

Excellence in Innovation

Licensing

Enablers / Accelerators

Page 8

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20%Innovation Sales 2015

@ ~5% higher Gross Margins

Top Quartile

McKinsey Innovation

Benchmark 2012

€1BDisruptive Platforms, 2020

Building an intrinsically innovative company

Page 10

Page

FOR INTERNAL USE ONLY

12

FOR INTERNAL USE ONLY

Breakthroughs can be “Proudly Found Elsewhere”

Breakthrough versus Incremental InnovationThe Balancing Act

Long term VisionIntrapreneurship

Agility

Medium term VisionOperational Excellence

Lower risk

Pilot plantsScaling-up

BreakthroughInnovation

Innovation Center Business Groups

Sustainable, Profitable Innovations

Page 14

Page 15

Product newto DSM

Market new to DSM “Adjacent Business”

New toThe World

Mature

Managing the Portfolio across Levels

Emerging

Growth

Decline

Mark

et

life

cycle

Improved Product

Disruptiveness

1~1.5

yr

Established Products

and Business Lines

1.5

–3 y

r3 -

5 y

r5 -

9yr

New

Platforms

Break-Away

New

Applications

and Adjacencies

BioBased: EcoPaXX® Engine cover

Bright Science

70% bio-based engineering plastic

Superb surface appearance

High thermal resistance up to 250 C

Brighter Living

Reduction of 40% of the CO2 emissions

compared to conventional polyamides

Trends

Reducing carbon footprint

Metal replacement

Mercedes A class

© 2014 DSM. All rights reserved

Innovation successes aren’t just luck…

Standardized work process for project execution:

the ‘Project Management Process’

Decision

to Scale-up

Transfer to Running

Business phase

(Commissioning,

Market launch and

Full Scale

Production)

Idea

Generation

phase

Decision 1 Decision 2 Decision 3 Decision 4

Business Feasibility

phase

(Market demand

/opportunity)

Development

phase

(Market and

Technology

development)

Scale-up and

Validation phase

(Engineering, Procure-

ment and Construction;

Validation)

Initial

Screening

Decision

to Develop

Decision to

Launch

Phase 3 Phase 4 Phase 5

Decision 5

Final

Review

Phase 1 Phase 2

FOR INTERNAL USE ONLY

Why do we need Open Innovation?

DSM

99.9996%

of world

population

outside

DSM!

Networks

needed!

FOR INTERNAL USE ONLY

FOR INTERNAL USE ONLY

Networks make Open Innovation workFuzzy F

ront

End

Interaction

/ Synthesis

Intellectual Asset Management

Licensing

In Venturing

Spin in

Joint

Business

Developments

Acquisitions

Licensing

Out

Spin out/off

Divestments

R&D services

(Chemelot)

Market Scouting / Business Intelligence

Competence Development, Technology Intelligence

‘Chemistry connects People’

Innovation is like a parachute…

‘Chemistry connects People’

Innovation is like a parachute…

It works much better when

Open!

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Open Innovation at Chemelot

Start up

SMEKnowledge

sources

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Isolation is a not-winning option

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Stating the obvious: just bigger is not enough !

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The game is getting more and more complex

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Alliances, M&A, JV, Venturing, JDA ….

We need to add new

dimensions to game.

We need to experiment.

And learn from a few mistakes.

DSM Venturing : How to mitigate risks?

FOR INTERNAL USE ONLY

Corporate Venturing A win-win situation is the objective

34

DSM Venturing - Mission

DSM´s competence center for external (VC)

participations aimed at boosting innovation & growth

Window to the world

Explore new emerging markets, technologies and products in order to

enhance DSM´s product portfolio, technology toolbox and business model's

Strategic value

Add value internally and externally through facilitating strategic co-

operations with start-ups

Financial return

Create value by investing in and divesting start-up companies

DSM Venturing – Corporate VC of DSM

When to invest in the startup life cycle?

High

LowLow

High

EmergingTechnology Proof of principle Commercialization Expansion

Time

Venture Capital

Public/PE

Grants

"Angels" Sa

les

Inve

stm

en

t &

Ris

k

Financing

gap

Risk

Investment

amounts

Sales

DSM Venturing

Portfolio snapshot May 2014

Nutrition (Bio)medical OtherBioBased

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Gate 1: New Business CreationFuzzy F

ront

End

Licensing

In Venturing

Spin in

Joint

Business

Developments

Acquisitions

Licensing

Out

Spin out/off

Divestments

R&D services(Chemelot)

Gate 1

Gate 2

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1981: We need €’s for a strong fiber “lab-line” !

FOR INTERNAL USE ONLY

Dyneema contributes to Sustainability

Page 41

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Gate 2: New Business PlanningFuzzy F

ront

End

Licensing

In Venturing

Spin in

Joint

Business

Developments

Acquisitions

Licensing

Out

Spin out/off

Divestments

R&D services(Chemelot)

Gate 1

Gate 2

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1991: We need true commitment for survival !

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Stanyl contributes to Sustainability

Stanyl (polyamide 46)

turned out to be the

best value-proposition

as high temperature

resistant LED-Lamp

holder

LED technology will use only 10% electricity

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The Intrapreneur’s “10 commandments”

1. Come to work each day willing to be fired

2. Recruit a strong team

3. Ask for advice before resources

4. Forget pride of authorship, spread credit widely

5. When you ‘bend the rules’, keep the best interest of the

company and its customers in mind

6. Honour your sponsors

7. Underpromise and overdeliver

8. Be true to your goals, but realistic about ways to achieve

them

9. Remember, it is easier to ask for forgiveness than for

permission

10. Do any job needed to make your project work, regardless of

your job description

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Intrapreneurs play to win !

Play to win means:

• Start small, but think big

• Develop what is needed

• Address new customers

• Optimizing reward vs. risk

• Place the eggs in many baskets

• Fail often to succeed sooner

• Long term gains

• Effectiveness

• The Exploratory “WoW”

Poker game

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Top managers tend to… play “not to lose”

Play not to lose means:

• Big volume markets

• Develop what you can

• Serve current customers

• Minimizing risk

• All eggs in one basket

• Right first time, never fail

• Short term gains

• Efficiency

• The Exploiting “WoW”

Chess game

Play to win means:

• Start small, but think big

• Develop what is needed

• Address new customers

• Optimizing reward vs. risk

• Place the eggs in many baskets

• Fail often to succeed sooner

• Long term gains

• Effectiveness

• The Exploratory “WoW”

Poker game

Page

Introduction to Royal DSM

Innovation

- DSM Innovation Center

- Open (Chesbrough) Model

- Venturing

- Stage Gate examples

Emerging Business Area’s

- Bio Medical Materials

- Bio Based Products & Services

- Advanced Surfaces

Learnings

Page

DSM Biomedical

Page 49

Page

Open Innovation in practice

Internal Innovation

Licensing

R&D Alliances & Cooperations

Scientific Advisory Board

& other Consultants

Mergers & Acquisitions

(Joint) Venturing

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52

DSM Bio-based Products & Services

Eco+

Biomass as a source of fermentable sugars

Plant cells

Cellulose Hemi-cellulose

Lignin

Glucose

Xylose

Arabinose

Glucose

Galactose

Mannose

Biomass

© 2014 DSM. All rights reserved

Inspired by Nature – Xylose Isomerase

• C5 Yeast

• Conversion of Xylose and Arabinose

• Increased yield of EtOH

Page

PAGE 57

Corn Stover Feedstock

58Emmetsburg, September 3rd, 2014

• Cellulosic bio-ethanol

• Renewable diesel

• Bio-Succinic

+

Current major Biomass Ventures

Confidential

DSM Advanced Surfaces

Anti Reflective Coatings

Market

• Demand for anti-reflective (AR) coated solar

cover glass is growing strong

• AR coatings are expected to become standard

Value proposition

• KhepriCoat® AR coating provides an

improvement of PV module efficiency of up to

up to 4% due to reduction of reflection of the

sunlight on the solar cover glass

Glass substrate

Coating

(approx 100 nm)

air

glass

KhepriCoat®

Same sun, more powerKhepriCoat® anti-reflective (AR) coating technology for solar glass

• Rooftop Project at DSM with 365 modules coated with Khepricoat®

• 1MWp project in India start of construction Q3/13• 4,75MWp project in Belvedere New Jersey

FOR INTERNAL USE ONLY

Key Take Aways

• Venturing improves the power to select options

• Open Innovation : A tool to rejuvenate your business

• Partnerships mitigate innovation risks

• Partner with an open mind; dare to share

• Construct Alliances based on complementarity

• Focus on the Grand Challenges

Page 65

FOR INTERNAL USE ONLY

Velox speed record attempt

FOR INTERNAL USE ONLY

133.8 Km/Hour !

Questions ?

Slide 68

BRIGHT SCIENCE. BRIGHTER LIVING