Abstract
The CSD of 2005, and in particular its acceleration by the new CEO Feike Sijbesma in 2007, aimed to complete the transformation of DSM. Remaining businesses in the Industrial Chemicals were targeted for divestment. At the same time, ambitious targets were set to boost innovation as well as DSM’s presence in emerging economies. When, despite the financial-economic crisis in this period, the company was able to execute these priorities successfully, the Board felt able to announce that DSM’s transformation had been completed in 2010. The chapter concludes with a reflection on DSM’s evolutionary transformation, as conducted through subsequent ‘strategic learning cycles’ initiated by intensive Corporate Strategy Dialogues.
By the mid-2000s, Mr. Sijbesma was chief executive and the company had divested itself of all its petrochemical plants. It was no coincidence that Mr. Sijbesma, a trained biologist, drove the company’s shift towards nutrition. Coming from its biotechnology side, he was ‘seen as one of the new boys,’ he says. And he credits his biology training with not only helping to form his views on how DSM should evolve but also his determination to force it to happen. ‘I always found it astonishing how cells adapt to changed environments, and DSM is obviously an example of a company that has adapted quite a bit,’ he says.
—Feike Sijbesma, interview (“Feike Sijbesma, Chief of DSM,” interview in the Financial Times on 18 August 2013.)
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See: Sanderijn Cels, Rigor by Design: DSM’s Approach to Open Innovation, Amersfoort, Institute for Sustainable Process Technology (2014), as well as Robert Kirschbaum (VP Open Innovation), ‘Open Innovation applied by DSM,’ presentation 6 May 2011.
- 2.
White Biotech is Industrial Biotechnology: the application of nature’s toolbox (for example, micro-organisms, enzymes) to the production of chemicals, materials and fuels from renewable resources. In the CSD of 2010, it was decided to continue with Biomedical Materials and White Biotech (renamed Bio-based Products and Services) and to add Advanced Surfaces as an EBA. Also, see Reflection 1 at the end of this chapter.
- 3.
Over the years, DSM had broadened its focus on Safety to Sustainability. The ranking on Sustainability was the Dow Jones Sustainability Index, where DSM regularly scored the top position in the Chemical industry.
- 4.
‘Feike Sijbesma, Chief of DSM, Financial Times, 18 August 2013. It is fair to say that DSM has learned this lesson the hard way, since it has missed several opportunities to sell, for example, the Energy business at the various peaks in oil prices. The natural tendency is then to ‘enjoy the ride’ for a little while longer but, inevitably, the cycle will turn in cyclical activities. A similar observation can be made about the Caprolactam business, which could have been (partially) sold in 2010/2011 before the peak prices plummeted again.
- 5.
The next acquisition for Biomedical Materials was Kensey Nash in 2012.
- 6.
The next step in this strategy was to acquire Ocean Nutrition in 2012.
- 7.
Shareholder value creation includes share price growth and distributed dividends. For an external reference, see: “Dertien jaar later zijn de weduwen en de wezen de absolute winnaars op de beurs,” Het Financieele Dagblad, 5 March 2009. This article tracks the development of the share price (excluding dividend) of all companies listed in the AEX in the period 1995–2009. It concluded that the DSM had shown the best performance (+93 %), while the AEX index itself grew only 5 % over this period of time.
- 8.
DSM’s overall ‘culture change’ agenda emphasized: (1) external orientation, (2) accountability for performance and (3) inspirational leadership.
- 9.
This is comparable with the evolutionary principle of variation > selection > retention. New variations are necessary to keep the evolutionary process going. Some will be selected and retained (exploitation). Others will be rejected (‘selected out’). New variations (explorations) are then necessary for optimal adaptation to the changing environment.
- 10.
See: Value Based Business Steering at DSM: An Introduction, company brochure, 2000. The ‘C-curve’ was meant to convey the message that for any business not recovering its cost-of-capital, the prescription was to reduce its Gross Asset Base by shedding structurally weak, low-return positions. Only after improving profitability would the business be allowed to grow again by investment. Applied to making acquisitions, please refer to Chap. 11 and the genesis of the saying “two lame ducks don’t make a flying eagle.”
- 11.
See, for example: Fig. 1.12 for a typical strategic evaluation in the early 1990s.
- 12.
See: http://www3.dsm.com/newsarchive/1998/~nl/230298_nl.htm (accessed 2 Dec 2014)
- 13.
“De overname die geen overname heet,” Het Financieele Dagblad, 24 February 1998. Translated by the authors.
- 14.
This part of the DSM M&A manual was to be based on P. C. Haspeslagh and D. B. Jemison, Managing Acquisitions: Creating Value Through Corporate Renewal, NY: The Free Press, 1991.
- 15.
- 16.
See: DSM in Motion: Driving Focused Growth, DSM Capital Markets Days, Bergisch Gladbach, 2010. The ‘dual desk’-policy, whereby one MB member is also based in Asia and another also in the US is most probably an intermediate step toward further internationalization.
References
Cels, S., Rigor by Design: DSM’s Approach to Open Innovation, Amersfoort: Institute for Sustainable Process Technology, 2014.
Haspeslagh P.C. and D.B. Jemison, Managing Acquisitions: Creating Value Through Corporate Renewal, NY: The Free Press, 1991.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2015 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Jeannet, JP., Schreuder, H. (2015). Completing the Transformation of DSM. In: From Coal to Biotech. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-46299-7_13
Download citation
DOI: https://doi.org/10.1007/978-3-662-46299-7_13
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-662-46298-0
Online ISBN: 978-3-662-46299-7
eBook Packages: Business and EconomicsBusiness and Management (R0)