The pace of technological change has always been fast in the chemical industry. But a look back in history reveals more than just the speed of change; it also reveals the long-term continuities that shape a company. DSM is not the company it was a hundred years ago and it is not the company it was ten years ago. And yet there is one characteristic that has been a constant in the company’s history: the build-up of technological capabilities and organisational structures for the longer term. It is a feature that has shaped DSM’s transformations and will continue to do...

Industrial research, or research and development (R&D), is a striking feature of innovation processes. In the twentieth century, large and well-equipped laboratories, staffed by large numbers of researchers, replaced the lone inventor of the nineteenth century. Companies spent large amounts of money on these laboratories, aiming to improve existing technologies and to drive diversification.

But does it pay to do industrial research? Many products that are now ubiquitous, such as nylon, plastics and the transistor, would never have existed without the work of company-owned R&D laboratories. The companies that pioneered these innovations have profited enormously from their investments in these...

Late in 1940, DSM’s researchers moved to a new, large and spacious laboratory building. Their relocation constituted an important change: the new building housed a centralised research organisation. However, DSM’s centralised research department grew out of its existing research organisation and out of its existing research effort. DSM was established as a coal-mining company in 1902 and branched out into coke in 1919 and into fertilisers in 1930. Works laboratories at one of the coke oven plants and at the fertiliser works conducted not only routine quality control but also some research. The initiative to establish a central research organisation...

In the 1930s, Frits van Iterson had set DSM on the chemical industry track, and his successors extended this track. DSM developed into a diversified chemical company by expanding its existing chemical businesses, by diversifying into new fields and, from the late 1950s onwards, also by tapping other feedstocks besides coke oven gas. Top management invested heavily in research as they strongly believed it was a necessity. Research management emphasised the importance of ‘science’ and claimed freedom to explore subjects that interested them. The importance of fundamental research, research not aimed at immediate industrial application, increased.

Research increased in scale...

Although Van Heerden had claimed that in much of the Central Laboratory’s work the interests of the company came first, in the 1970s this claim came under intense scrutiny from both inside and outside research.¹ The failure of the lysine project dealt a blow to the self-confidence that had been nurtured. At the same time, DSM embarked on a programme of expansion and diversification, closed its mines and created divisions. Research reorganised to adapt to these changes, and business management gained a strong say in the direction of research. In the 1950s and 1960s, the Central Laboratory had played a...

The second oil crisis of 1979, and the economic downturn that followed it, deeply affected the chemical industry and marked the end of DSM’s Large Leap Forward. DSM’s turnover grew, but profitability declined and the strategy of expansion had to be adjusted. The company consolidated its activities in bulk chemicals and sought expansion in knowledge-intensive products with high value-added.

The new twofold strategy implied an innovation drive, but its implementation was initially hampered by the company’s weak results of the early 1980s. Nevertheless, DSM’s strategic shift enlarged the playing field for research, as knowledge-intensive products mainly meant research-intensive products. CRO...

Carl Bosch once predicted that the chemical industry would have to transform its foundations every fifteen years. Charles Kline, an American marketing consultant who frequently worked with chemical companies, remarked in the early 1980s that the chemical industry was a ‘chameleon industry’ continuously adapting itself to new circumstances.¹ Change is indeed an important feature of the chemical industry and of chemical companies. DSM is no exception, having transformed itself from a coal-mining company and coke manufacturer into a fertiliser company and then into a large and diversified chemical company focused on bulk chemicals, and then again into a firm focused...

In July 1988, Hans van Liemt, the then chairman of DSM’s Managing Board, said at a press conference: ‘Our large competitors are so aggressive that we have to concentrate on seven or eight areas, and not on twenty.’¹ This statement signalled a change of course: DSM embarked on a process of focus, both in its business and in its research.

The chemical industry changed profoundly in the 1990s. Companies in Western Europe, Japan and the United States continued to suffer from cost disadvantages in raw materials and labour, and continued to face increasingly stringent environmental regulations. In addition, stock markets...