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Speed Based Development for Customers

Kurt Swogger, R&D VP, Plastics

Simon Lee, Project Leader, R&D Center China

The Dow Chemical Company

May 28th, 2005

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Business is a Balance

• Plastics Expresses This Balance With This Strategy Statement

Sell Out The CapacitySell Out The Capacity

Sell Up – Higher Value ApplicationsSell Up – Higher Value Applications

Change – New Markets and BusinessesChange – New Markets and Businesses

To Make More MoneyTo Make More Money

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PO&E “Portfolio”

*Trademark of The Dow Chemical Company 2 DuPont Dow Elastomers 3Partnership with Exxon 4Acquisitions from UCC

1991 (5 Billion Pounds)

Slurry Polyethylene (PE)Solution PELDPE

• Slurry PE• Solution PE• LDPE

• Gas Phase PE4

• Polypropylene

• TYRIN2 CPE

DOWLEX* PE

TYRIN2 CPE

• DOWLEX* PE• ELITE* enhancing PE• PET

• INSPIRE* HMS performance polymers

• Wire and Cable4

SARAN resins and filmsPRIMACOR* copolymers

• ENGAGE* elastomers

• NORDEL IP2 elastomers• NORDEL MG2

elastomers4

• AFFINITY* polyolefin plastomers• DOW XLA* elastic fibers• SARAN resins & films

VECTOR styrenic

block copolymers3

• Propylene-based plastomers and elastomers• INSPIRE* HST performance polymers

• ADC Elastic Nonwoven• Wax• High Temp. Resins• NG Elastic Fibers

DEVELOPMENTAL PRODUCTS

2003 (20 Billion Pounds)

BASICS

DIFFERENTIATED BASICS

SPECIALITIES

PO&E “Portfolio”

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Awards

Outstanding Corporate Innovator (OCI) Award• Presented by the Product Development &

Management Association (PDMA) in October 2003 to the PO&E business at Dow

• Provides global recognition for companies exemplifying the spirit of innovation and demonstrating sustained excellence in the development and profitable commercialization of new products and services

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What Are the Major Factors to Achieve These Results?

• INSITE* technology

• Speed-Based Development

*Trademark of The Dow Chemical Company

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What Does Speed Require?

• Leadership who understands, uses and continually improves the principles and their implementation

• People using good judgment: who apply the principles of speed to best meet the needs of a specific project or situation

• Flexibility: This is NOT a formal work process, but was founded on experiences of a small core of successful development people

• Integration: many principles of this concept are not new, but the power of their integration and execution is a new concept

• Dow Values: Dow’s values of safety, ethics, environmental responsibility are used

• A Business Approach, not a functional approach• Accountability for Results

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(Cont’d)

• New Concepts: Some principles, however, are relatively new to our industry – such as: » Selecting the right people with the right aptitude» Using parallel processes» Linkage of business strategy to individual goals» Using science to develop model-based data storage and use» Flexible allocation of resources

What Does Speed Require?

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Right

Execution

RightInformation

Right

Projects

RightPeople

Principles

• Leadership must lead• Create and sell a vision that delivers

Theme #1: Right LeadershipRight Leadership

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Right

Execution

RightInformation

Right

Projects

Theme #2: The Right People Right People

Right

Leadership

Principles

• Choose the right people for development• Use scientist / manager partnership to lead

development• Use flexible allocation of resources

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Right

Execution

RightInformation

RightPeople Principles• Link business strategy to individual results• Involve marketing early• Use Net Present Value (NPV) to help

select projects • Use marketing to position the product

Theme #3: Do The Right Projects

Right

Leadership

Right Projects

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Right

Execution

RightPeople

Theme #4: Find The Right Information

Right

Leadership

Right Information

Right

Projects

Principles• Use science• Involve customers early • Use outside experts, consultants or info• Continue to learn• Use performance requirements for application development

• Use intellectual capital• Use prior experience to avoid mistakes

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RightPeople

Theme #5: Right Execution-Achieving Results

Right

Leadership

Right

Projects

Principles• Use Six Sigma methodology• Make and deliver commitments• Emphasize decision making• Use a parallel process

Right Execution

RightInformation

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Summary - Speed Based Development

• Philosophy is useful for both existing and new businesses• Philosophy is useful for product, developments, process and applications

• It’s all about getting the right results