We at IMT have published numerous opinions on the state of product innovation in the past, and the one thing that I have learned from this plethora of news is that innovation means different things to different industries. Some like to spend billions on R&D efforts, hoping to hit pay dirt, while others take a more conservative approach by making slight alterations to tried-and-true formulas. As some recent news items indicate, this divided approach to product innovation holds particularly true in the coatings market as two giants of the industry, DuPont and 3M each hedge their bets on different areas of an uncertain future.

According to this Knight-Ridder article, DuPont is cooling its enthusiasm for developing groundbreaking inventions — such as its Teflon non-stick coatings — in favor of creating new products out of decades-old ideas. The company says it no longer feels compelled to discover revolutionary new chemical molecules with billion-dollar market potential. It will settle, instead, for creations much more modest, like a new use for its 42-year-old Kevlar fiber. The article suggests that this isn't a strategy of choice, as the company is facing a "drought of blockbuster products from its labs," which is why DuPont is having its scientists focus on developing products based on existing technologies. Now the company is betting on a future steeped in an assortment of chemicals, coatings and seed businesses organized in five groups: safety and protection, coatings and color technologies, electronics and communications, performance materials and agriculture and nutrition.

Some other interesting facts about DuPont's future innovation strategy:

• The development of a sixth group with bio-based fuels, including cornstalks and hair coloring from biologically derived proteins.

• DuPont believes bio-based materials could generate healthy revenue within a few years. A corn-based polymer for carpet and textile fibers, called Sorona, is being rolled out this year.

• DuPont hopes a flurry of spin-off products will lead to pricing power and consistent revenue growth, and will restore Wall Street's confidence in the company.

So far the jury is out. The company's 2005 profit disappointed Wall Street, and DuPont is now in a race against time to replace profit that will fade after 2010 when two big-selling drugs it partly owns lose patent protection.
"We have decided to make something the customer wants to buy, instead of something we want to invent. It's that simple," said Charles Holliday Jr., DuPont chairman and chief executive officer, said of the cultural shift in the company's research-and-development arm. "Our customers want a steady stream of new products," he said, noting that they do not have to be earth-shattering to have an impact. "Customers will rarely ask you for a new concept."

On March 15, DuPont said it would eliminate 1,500 jobs in the coatings business and would close four European research and manufacturing operations in the division. It has said coatings and performance-materials platforms have low returns and face cuts. The company also is in the midst of a huge stock buyback. Funny how this flies directly in the face of competitor 3M, a company that sees nothing but upside in the coatings industry. In his first address to 3M Co. shareholders since becoming chairman, president and CEO last December, George Buckley recently laid out his ideas for growing 3M's revenues.

As cited by a Bizjournals.com article, Buckley said he wants 3M to:

Increase sales at a faster rate than in the past. He plans to do that by focusing on what the former engineer called the core competency of 3M: Applying coatings to different types of backing. About 80 percent of the company's products fit that mold, from Post-It notes to tape to medicines and optical products. He also highlighted the international growth prospects for 3M. International sales are 61 percent now, and should grow to 70 percent by 2011. Specifically, the company plans to double its investments in the developing economies of Brazil, Russia, India, China and Poland. 3M's single-biggest growth opportunity is perhaps its track-and-trace technology. Such products, including radio frequency identification (or RFID) tags, could be used for a variety of industries. The company predicts the track and trace market will grow from about $9.3 billion worldwide to about $35 billion in 2009.

Two leaders in the coatings industry with two completely different views. Who's right? Who's wrong? We want to know.