Sparking the spirit of innovation

When Murugan, Susela and Jumbo kicked their new heavyweight football so hard it threatened to demolish the walls of their enclosure, their keepers at Amsterdam’s zoo confiscated it. The ball, weighing 140 kilograms (308 pounds) and made of a new construction material, had been given to the elephants to demonstrate its durability. It was a success.

Shell researcher Rini Reynhout invented the material 10 years ago in a moment of inspiration. The story of how he pursued that inspiration and developed it into a successful product illustrates one way companies can encourage employees to pursue radical new ideas, then develop and test them until they become commercial successes.

Innovation is notoriously hard to nurture, especially in large companies, with their inevitable bureaucracy. Many executives are preoccupied with identifying techniques to foster innovation. They know it is a key to their companies’ success – and that without it they may be vulnerable. For instance, Apple’s fortunes rose on the back of the iPod’s success giving it a majority of the portable music player market, while sellers of traditional compact discs struggled to keep pace with consumers’ rapid embrace of music downloads.

Reams of literature have been devoted to different models of innovation. Ideas range from encouraging an employee suggestion culture like Toyota’s, to establishing “corporate incubators”, semi-independent teams aimed at fostering entrepreneurial fervour. Yet few have come up with a failsafe blueprint for routinely generating new ideas and turning them into hit products or novel ways of doing business.

“It’s a little bit like getting a dog to walk on its hind legs,” said Gary Hamel, an expert on innovation and Visiting Professor at the London Business School. “If you give it attention and you hold a biscuit in front of its nose, you can get it up on its hind legs for maybe a few steps. But the moment you turn your back, you know it’s down on all four paws again, because it’s just not in the nature of dogs to walk on their hind legs.”

Rini Reynhout got his brainwave in 1997, the day after seeing a short film about the Kyoto conference on climate change. In holiday greeting cards to former Shell Chief Executives Cor Herkstroter and Sir Mark Moody-Stuart he explained his idea for a recyclable construction material that combines the properties of asphalt and concrete, but dries faster and is more flexible than the former and more durable than the latter.

Herkstroter encouraged him to pursue the idea, even though building materials are not part of Shell’s core energy business. After several years of development with industry partners and funding from a Shell innovation programme called GameChanger, the product became the basis for a company called C-Fix B.V., whose sales have increased some 20% per year since it was set up in 2002.

Concrete alternative

The product, also called C-Fix, is an alternative to the cement used to bind together sand and gravel to make concrete. Its name derives from carbon fixation, because it also has the potential to lower CO2 emissions. It is produced from carbon-rich mineral oil formed at the final stage of refining, after petrol and other products have been extracted. This residue is commonly used as a component in heavy fuel oils for ships. However, it can also be made into a high-quality carbon glue and mixed with sand and gravel to make everything from paving stones and roof tiles to sewage pipes and breakwaters.

As an alternative to the cement used in concrete, whose energy-intensive production accounts for about 8% of global CO2 emissions, C-Fix could make a contribution to lowering greenhouse gas emissions. Making one kilogram of cement emits around one kilo of CO2, an emission that can be avoided if C-Fix is used, said C-Fix B.V. technical manager Willem Van der Horst. So far CO2 emissions have been reduced by some 13,700 tonnes by substituting C-Fix for concrete, the company reckons.

Heineken, Europe’s largest beer brewer, uses C-Fix-based asphalt in four heavy-duty warehouse floors in the Netherlands, one of which typically stocks up to 5 million crates of beer bottles. Fork lifts stack pallets of 70 cases of beer weighing 1,100 kg (2,425 pounds) around the clock. Regular asphalt used in the past was deformed by the intense traffic, but the C-Fix floors have proven more resistant.

Heretical ideas

Recognising and nurturing a promising new idea like the one that led to C-Fix is easier said than done. Yet it is clear that fostering technological innovation will be key to meeting the world’s fast-rising demand for energy, as well as for managing the CO2 produced by burning fossil fuels.

Shell spends about $1.2 billion a year on research and technology development. To further stimulate innovation and ensure a steady flow of fresh ideas, in 1996 it set up GameChanger, a programme run by a small panel of business-savvy scientists and engineers. The programme gives novel ideas that would otherwise not see the light of day a place to develop. “One real problem of radical innovation is that most radical ideas are heresies at the outset,” said Russ Conser, who manages GameChanger for Shell’s Exploration & Production business.

The programme is an experimental kitchen to vet ideas. It is based on the premise that ideas need a safe, separate space with different rules to get started before having to fight for survival in the real world.

Anyone can submit an idea to GameChanger, including those with no connection to Shell, by filling out a form on the company’s website. Typically some 70% of proposed projects include at least one individual from outside Shell. If the idea is deemed to have potential, those who proposed it are invited to give a 10-minute pitch to a panel of experts. Approved ideas may receive initial funding of about $25,000 for a month of research to further develop it.

If the idea still looks promising, a broader group of experts and business heads may award further funding – typically about $500,000 to $1 million for one year – for a project team to prove that the idea works, determine its potential and present a basic business plan. GameChanger’s role ends after ideas are proven to be feasible. Then they may be further developed by one of Shell’s businesses, converted into a spin-off company, or sold to third parties.

A successful idea each month

Since the programme’s creation, about 150 ideas from a total of 1,500 have turned into successful projects – just over one a month on average – in fields as diverse as developing oil and gas wells and alternative fuels. Some have produced significant technical advances. Indeed, the GameChanger programme has played a role in securing 90 patent series out of the 3,000 Shell has earned since 1996.

For example, a child’s toy inspired researcher Erik Cornelissen to improve the way Shell tackles a difficult problem faced by all oil companies: how to stem the flow of underground water that eventually accompanies all oil production. While travelling, Cornelissen was looking for gifts for his nephews and saw a toy dinosaur that grew several times larger when dunked in water. “I bought it for less than a dollar and walking out of the shop realised it could be used for something else,” Cornelissen said.

The dinosaur’s original material melted at 40 degrees Celsius (104 Fahrenheit) and would have been useless in a well where temperatures can exceed 200˚C (392˚F). Backed with GameChanger funds, Cornelissen began developing swellable elastomers, synthetic rubber seals that expand on contact with water. The elastomers are fitted to the entry points of the steel pipes in the wellbore through which oil flows to the surface. If water starts to mix with the oil, they swell and seal off the route.

By the end of 2006, swellable elastomers were being used in more than 150 wells by Shell partner Petroleum Development Oman, increasing production by more than 1.5 million barrels since 2004. They are now being further developed by a new company, Swellfix, set up by Shell Technology Ventures.

Back at the Amsterdam zoo, meanwhile, the C-Fix ball has been moved to the lion’s den. Since the lions are not strong enough to kick it and prefer to sit on it, their enclosure walls aren’t in danger.

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