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THE INNOVATING HABIT

JUMP-STARTING THE PRACTICE OF CREATIVITY

BASF is a German-based multinational that is the world’s largest chemical company. Operating in more than 80 countries and employing over 117,000 people, BASF is involved in a wide range of businesses, including chemicals, plastics, agricultural products, oil and gas industry parts and equipment, and biotechnology. In 2019, the company’s revenues exceeded €59 billion (almost $70 billion).

BASF also boasts a long history of innovation, from its role in developing the Haber-Bosch process (1913) for mass-producing fertilizer, which played a crucial role in dramatically increasing the world’s food output, to its invention of the tape used in music cassettes (1935).¹ Today, it is working on technological breakthroughs that include safer, more eco-friendly plasticizer accelerators used in making products ranging from PVC piping to yoga mats; improved paints and coatings for automobile exteriors; innovative fragrances for use in perfumes, lotions, and shampoos; and new hybrid seeds that can greatly increase yields of basic crops like soy, corn, and cotton. In a typical year, BASF invests more than $2 billion in research and development (R&D), supports some 10,000 employees who are directly involved in product innovation, and generates 1,000 or more new patents—all figures that reflect the company’s commitment to remaining one of the most innovative organizations in the chemical industry.

Given this stellar long-term track record, it might seem surprising that BASF would want to call on outside innovation consultants to help it improve its approach to innovation. But in the mid-2000s, though BASF’s scientific track record was as strong as ever, that wasn’t automatically translating into innovations that would produce value for BASF or its customers.

Meanwhile, structural changes were roiling the chemical industry. New competition was emerging from companies in Asia, where a pool of skilled, well-trained workers was becoming available at lower cost than in Europe or the United States, exerting downward price pressure on products like those made by BASF. Declining worldwide prices for petroleum, a core ingredient in many of the chemical products sold by BASF, were contributing to the price pressure. Under the circumstances, the company’s leaders weren’t content to assume that BASF’s people would automatically make the mental and cultural shifts they needed to ensure that their approach to innovating would work for a new future. The company realized that a traditional approach to innovation, relying on the work of scientists and R&D specialists, was no longer sufficient. So BASF decided to build a more broadly based innovating engine to supplement its existing strengths in science and R&D.

Like many companies, BASF called on outside consultants with a special focus on innovation to help it with this new approach. The challenge was to help people throughout BASF find new ways to make innovating a part of their everyday work—thus creating future growth opportunities for a huge, successful company in a seemingly mature industrial space.

This wasn’t an easy challenge to meet. But over the following decade, through the efforts of its own internal leadership and with advice from external innovation experts, BASF designed and implemented a cascading series of changes that affected every layer of the organization and every geographic and market division of its operations—all designed to infuse a new, more proactive, collaborative, and open-ended approach to innovation into the company’s DNA. The result has been an accelerated and energized program of innovation that has helped BASF maintain its stature as the world’s biggest chemical company, even under continuously increasing economic and competitive pressure.

I learned about BASF’s remarkable innovation program in 2009 through one of the consultants who helped to shape it. He introduced me to Andrés Jaffé, the executive who guided the program during its early years. Jaffé invited me to visit with him and his team, launching a learning experience for me that has now spanned more than a decade.²

New Perspectives for a Venerable Company

The thousands of chemists, engineers, biologists, botanists, and other scientists and researchers who work at BASF have all the talent needed to maintain a steady flow of innovations. But talent alone doesn’t produce innovations that serve customer needs and create value for both BASF and its various stakeholders. Equally essential is a deep understanding of customers and a readiness to collaborate with them in the process of generating ideas, developing and refining those ideas, and then executing them in an efficient, sustainable fashion. Nurturing such attitudes requires a particular kind of corporate culture—one that doesn’t grow naturally or automatically in companies like BASF.

In fact, while opening up BASF to customer needs, problems, and insights might sound like a simple task, it was actually quite challenging. Most companies with a long history (BASF was founded in 1865) and a track record of success tend to develop an insular culture. Having shown themselves to be world-class experts in their fields of activity, company managers and employees begin to doubt that anyone outside their organizational walls has much to teach them. When the industry you work in is intensely competitive, the desire to safeguard your valuable intellectual property can easily lead to an emphasis on secrecy, which only increases the reluctance to engage in freewheeling discussions and explorations with outsiders—even when those outsiders are important company stakeholders.

BASF suffered to a degree from all these tendencies. As one observer noted, BASF was a company whose success had been driven “from the inside out: Excellence in research, driving innovation through proprietary labs, designing core processes with a focus on efficient manufacturing and product line optimization, flawless logistics, reliable delivery, and so on.”³

All of these “inside-out” strengths are valuable and important. But BASF needed to develop a new set of “outside-in” capabilities that would enable the company and its people to learn from their customers and do a better job of keeping up with changes in the external environment.

BASF’s leadership, up to and including the board of directors, recognized the problem. They launched a program, originally housed in the corporation’s Marketing and Sales Academy, to foster interaction and dialogue with customers. Named “Help Our Customers to Be More Successful” (HCS), the project aimed at teaching BASF employees how to learn from customers without prejudging the results, to hold BASF’s own solutions and approaches in abeyance rather than rushing to propose them to customers, and to value the diversity of customers and their needs rather than attempting to impose one-size-fits-all thinking on them.

The initial results of HCS were encouraging, suggesting to BASF that even greater value might be realized by making it available to a much broader range of corporate employees from departments extending far beyond marketing and sales, including product development, manufacturing, logistics, accounting, customer service, and more. As a result, HCS grew into a corporate culture change initiative called Perspectives. Led initially by Jacques Delmoitiez, president of BASF Polyurethanes, a successful $1.8 billion business, it was later taken over by his colleague, Andrés Jaffé. Its underlying goal was to establish a new enterprisewide focus on defining the unmet, often unstated needs of BASF’s customers—as well as others not currently customers of the company—and on innovating to meet those needs. Jaffé’s team included regional representatives from BASF businesses around the world as well as experts with particular forms of functional expertise, who could serve as internal business consultants for BASF units as they participated in the new initiative. As a focused internal entity dedicating to supporting innovation throughout the organization, Perspectives was BASF’s first effort to systematically build its own innovating engine. Its overarching goal was to help increase the innovating capacity of BASF across the entire corporation.

Perspectives began with some deep analytical work into the nature of BASF’s customer relationships. Within every business unit, cross-functional teams were created to meet with customers to discuss their needs, goals, and requirements. Studying the results and uncovering both the commonalities and the differences among BASF’s thousands of customers enabled the teams to map those customers using a classification scheme made up of six different customer types, each demanding a different customer interaction model (CIM):

Type 1: Customers who require products that meet standard specifications, for which price is typically the most important decision factor. In working with these customers, BASF acts as a Trader or Transactional Supplier.

Type 2: Customers who require products that are of high quality and reliability, delivered on time. In working with these customers, BASF acts as a Lean or Reliable Basics Supplier.

Type 3: Customers who want the freedom to mix and match standardized products and services to create their own packages for purchase. In working with these customers, BASF acts as a Standard Package Supplier.

Type 4: Customers who require superior product performance, reflecting the latest innovations in the field. In working with these customers, BASF acts as a Product or Process Innovator.

Type 5: Customers who need a specific, customized solution, often jointly developed with the supplier. In working with these customers, BASF acts as a Customized Solutions Provider.

Type 6: Customers who want to reduce the cost and complexity of their operations by working with a supplier who will take over one or more of their processes. In working with these customers, BASF acts as a Value Chain Integrator.

As you can see, each of these six customer types has very different needs, ranging from the simplest to the most complex. BASF immediately recognized that no single customer service model would be appropriate for all six types of customers. The six types also did not map neatly or consistently against BASF’s familiar organizational structure of product lines, itself an artifact of traditional inside-out thinking.

It was clear that BASF’s methods of working with customers would have to be intelligently customized to fit specific customer segments as reflected in the six CIMs. This was the first big revelation delivered by the new Perspectives program. It led to a major new challenge: How could a huge, long-established corporation redesign its processes, structures, systems, and methods to better address the new and varied array of customer needs that BASF is called upon to meet?

BASF responded with another new process, named Pathfinder. In the Pathfinder system, a particular business unit within BASF assembles a cross-functional team to tackle a structured set of questions designed to generate a deeper understanding of specific customers—their own value chains, market requirements, industry trends, and more. The team meets with customer representatives to answer these questions and identify one or more CIMs that are most likely to meet the customer’s emerging needs. Thus, interactions between customers and services teams were no longer dictated by one-size-fits-all processes that were uniform across a product line. Instead, they were tailored to the nature of the specific CIM being served, making BASF much more responsive to the actual needs and preferences of customers. This was a powerful process and organizational innovation that would prove to be as valuable to BASF and its customers as any product innovation might be.

Having designed the Pathfinder process, BASF’s leadership realized the need to embed it—and the way of thinking it embodied—deep into the culture of the corporation. As an initial goal, leadership set a target of enabling 20 percent of BASF’s marketing and sales professionals to be “effective change agents” by becoming masters of Pathfinder.

To launch this long-term culture-change program, BASF employees were engaged in the new approach to business through a series of workshops and learning activities. These included:

Deep Dives into specific topics related to customer-centric innovation, such as value capturing and product launching

Business Model Labs, which provided intensive coaching in skills like understanding customers

Cross-Divisional Impact Groups, which helped BASF employees learn from one another as they work together on challenges such as implementing a specific CIM, improving the management of a particular brand, or launching a new product

Impact Events, staged across Europe, Asia, and the Americas, designed to educate BASF team members about the new, collaborative approach to value creation

Note that one or more members of the corporation’s board of directors participated in every Impact Event, sending a clear signal that this project was a high priority for the entire enterprise.

As Perspectives gained momentum, additional programs were created to ensure that awareness and understanding of the new system for innovation would continue to spread. For example, the Perspectives team designed Perspectives Key Concepts (PKC) workshops that all new professional hires were required to attend. Within the first year, more than 7,000 BASF employees had participated in PKC workshops. They became ambassadors for Perspectives and for its new way of interacting with customers, spreading the ideas and methods to others in their departments and functional areas. Business Forums bringing together scores of marketing, sales, and product managers from specific regions began to be held annually, providing venues in which best practices could be shared, discussed, and improved.

“We Help Our Customers to Be More Successful”

BASF’s corporatewide effort to retool itself for an increasingly competitive, fast-changing business marketplace was summarized in an official corporate strategy statement. This statement was built around four crucial pillars, designed to summarize the basic elements of BASF’s approach to business:

We earn a premium on our cost of capital—expressing an emphasis on profitability, which BASF recognizes as a fundamental requirement for long-term survival and success.

We form the best team in the industry—acknowledging the essential role of human talent in making business success possible.

We ensure sustainable development—emphasizing the necessity for social engagement and environmental responsibility.

We help our customers to be more successful—capturing the specific orientation of BASF as a business-to-business partner.

Of these four pillars, the fourth was the one that posed the biggest challenges for BASF, because it demanded a new level of customer intimacy, engagement, and “outside-in” orientation. The Perspectives program evolved as BASF’s way of making this philosophical commitment into a practical, everyday reality.

Supported strongly by the BASF board, Jaffé and his team did a good job of mobilizing the organization’s resources behind the spread of Perspectives into every corner of the business. As Jaffé observed just a few years after its launch, “Today, no one is asking ‘What is Perspectives?’ anymore.” The power of Perspectives, now activated throughout BASF, has been reflected in sharply increased customer satisfaction measures, enhanced profitability, and a greatly improved reputation for BASF as an innovator among the world’s great chemical companies.

One of the big changes in BASF’s operating methods has been the increased emphasis on cocreation with customers. In the “old BASF,” the company’s brilliant chemists would work in their labs on developing and testing new molecules that they believed had the potential to serve useful roles in the real world. When the scientists were convinced they’d developed a product with valuable applications, they’d begin to work with the marketing, sales, and customer service teams to create a plan for bringing the innovation to market. Sometimes it worked, but sometimes it didn’t; not every product developed in this way offered the ideal combination of performance attributes, price, and other characteristics that customers needed or wanted. Like companies in almost every business, BASF ended up with a mix of hit products and failures.

The new “outside-in” orientation fostered by the Perspectives team has changed the equation. Now BASF scientists increasingly work in partnership with their colleagues from the marketing, sales, and customer service functions as well as with multidisciplinary teams from BASF’s customer firms. Rather than starting their experimentation with new molecules they hope will have some practical value, they start with the expressed needs of customers and then collaborate with those customers at every step of the process to ensure that every experiment, test, and redesign is focused on producing a product with powerful market appeal.

Finding Value in Unexpected Places: Tales of BASF Breakthroughs

BASF’s thousands of scientists continue to produce a steady stream of scientific discoveries, just as they have for generations. What’s changed is that today they are doing a better job of working with customers to cocreate products that generate value for both parties.

That’s the story behind Boost, a new form of polyurethane originally discovered by BASF chemists and then developed by them in collaboration with Adidas into a groundbreaking foam for use in the soles of high-performance running shoes—a market into which BASF had previously never ventured.

So-called thermoplastic polyurethane (TPU for short) was a familiar BASF product long used in a variety of applications, such as electrical cables. But one day Frank Prissok, a chemist in a BASF lab in Lemförde, Germany, noticed that by applying pressure and heat the material could be expanded into a foam, filled with tiny air pockets—“like popping corn in the microwave,” as one of his colleagues explains. It was an interesting discovery—but what value could it have? The scientist had no idea.

Fortunately, he didn’t shrug his shoulders and leave it at that. Instead, he decided to solicit input from his colleagues across the corporation. He filmed a number of short videos showing the characteristics of this new foam, now dubbed E-TPU, and circulated the videos among BASF professionals. One of these caught the attention of Martin Vallo, a marketing professional who’d been working with materials for shoe soles (already a significant market for BASF, though separate from the market for running shoes). He reached out to product experts at some of the leading running shoe makers.

The Adidas team members, who already knew Vallo well from their work together on other projects, were the most enthusiastic about the potential of the new foam. They were impressed by its unique qualities—high long-term durability, extreme flexibility, effectiveness under a wide range of temperature conditions, and, above all, outstanding resilience. E-TPU had the potential to give competitive runners an energy-fueling rebound effect that would boost their performance with every stride.

Adidas agreed to collaborate with BASF on perfecting E-TPU, and the cocreation process kicked into high gear. Vallo describes how it worked:

You have to picture a whole bunch of techies engaged in discussions that were hard fought but always on an equal footing. Adidas had very clear ideas on what an insole from a new material should be able to perform, for instance, in terms of elasticity or temperature resistance. There were fundamental issues to be resolved too, such as whether a whole new set of tools or machinery would be needed . . . The product was sent back to the lab on a regular basis to see whether certain properties could be improved even more by tweaking certain parameters. . . .

Just because something works in the lab doesn’t mean that it’s going to work on a large scale. . . . It’s not easy to find the ideal process. A lot of fine-tuning is required. For that reason, we brought together BASF experts with different skills: chemists, plastics experts, engineers, project technicians.

Under an exclusive arrangement with BASF, Adidas brought E-TPU to market with the brand name of Boost in 2013. It caused an immediate sensation in the world of competitive running. Within a year, a new world record of 2:02:57 for the marathon was set by Kenyan Dennis Kimetto using a pair of Adidas shoes fitted with Boost soles. Other shoe companies that had turned down BASF’s initial inquiries about the material even sued for the right to produce Boost-soled shoes of their own.

Years later, with new running sole materials from a range of companies having hit the market, Adidas is continuing to sell huge numbers of running shoes incorporating newly evolved versions of Boost, including the latest innovations, Ultraboost 19 and Pulseboot HD, both introduced in 2019. Boost is a tribute to the kind of long-term success that can be created through cocreative partnerships between a highly innovative company and a customer with an intimate knowledge of the needs and desires of the market.

Another vivid illustration of the degree to which the new culture of innovation has permeated BASF is the story of an unlikely product: Basotect foam, a sponge-like melamine resin that has become one of the company’s greatest success stories.

For years, BASF sold Basotect as a soundproofing and insulating material for use in the construction and automotive industries. But one day, by sheer accident, a new quality of Basotect was discovered. During a sales call at a Japanese construction company, a BASF representative spilled a cup of coffee on a blueprint that had been spread out on the table. Hastily trying to mop up the spill, he grabbed the nearest material, which happened to be a slab of Basotect foam. When he applied the Basotect to the wet blueprint, not only was the spill absorbed but so was the ink. Wherever the Basotect touched, the blueprint became totally blank!

After the BASF sales rep apologized, he thought about what he had discovered. He shared his experience with the chemists at the office, and they realized that Basotect, when combined with water, becomes a powerful dye- and stain-remover.

In the past, this discovery might well have been dismissed within BASF as a mere novelty. In an engineering-centered culture where brilliant scientists are focused on researching specific issues, seemingly irrelevant data points may tend to be ignored. Furthermore, like many large corporations with divisions that pursue widely disparate technological and market opportunities, BASF’s operations tended to be heavily siloed, making it difficult for ideas or problems that surfaced in one part of the company to get picked up on the radar of a different part. If “business as usual” had prevailed, it would have been easy for an accidental discovery made by a sales rep in BASF’s construction business to have died there, never reaching the attention of anyone with interest in a product with stain-removing potential.

But in a company newly attuned to the importance of systematic innovation, that didn’t happen. Instead, BASF launched a search for customers who might be looking for a substance with the newly discovered capabilities of Basotect. Within two years, it established an R&D partnership with Procter & Gamble (P&G), which led to the development of a household cleaning tool made from Basotect foam. Under the brand name of Mr. Clean Magic Eraser, it was dubbed one of the Best Inventions of 2004 and rapidly became one of P&G’s fastest-growing product lines. By 2012, it had spawned a series of spin-off products, including the Magic Eraser Extra Power, Magic Eraser Bath Scrubber, and Magic Eraser Select-a-Size, and surpassed its billionth unit sale. As of 2020, the Magic Eraser family of products is still going strong, a pillar of P&G’s global profitability.

Incidentally, BASF has not neglected the other properties of Basotect foam. The company continues to market the product as a construction material with remarkable insulating and soundproofing qualities. In 2017, artist Doug Wheeler used 400 pyramids and 600 wedges of Basotect foam to construct a room at New York’s Solomon R. Guggenheim Museum. The immersive experience creates an environment of near-perfect silence, relieved only by the faint recorded sounds of desert winds playing quietly over hidden speakers, all just a few feet away from the bustling traffic of Fifth Avenue. Titled PSAD Synthetic Desert III, the art installation was designed to induce the kind of “serene and silent escape” that only the “semi-anechoic chamber” made possible by BASF’s chemical talents could provide.⁴ Talk about the art of innovation!

Beyond the Product: Business Model Innovation

Product innovations like Boost and Basotect foam will always play a big role in keeping BASF at the forefront of its industry. But the company’s new focus on an outside-in orientation and cocreation with customers has also enabled innovation that goes beyond a stream of new products. BASF has become one of the world’s masters of business model innovation—finding ways to rethink and redesign the entire array of relationships, processes, and systems that produces economic value for BASF, its customers, and all its stakeholders.

The work on developing the six CIMs that the Perspectives team led was a crucial starting point for BASF’s evolution into a great business model innovator. Studying the CIMs helped BASF’s people understand the complexities involved in serving customers with widely differing needs and preferences. They came to recognize that developing a high-quality product was just the start of their innovative work. Equally important was mapping an entire chain of activities that would add crucial value for customers and other stakeholders in specific, highly targeted ways. This business model would define exactly how BASF would profit in a particular market—which meant that there was no one-size-fits-all model that would work in every market. In fact, choosing and refining the business model for a specific business is a highly complex, demanding innovative task that calls for teamwork, deep customer insight, flexibility, and creative thinking.

Once BASF made business model innovation into one of its core competencies, the company’s leaders soon discovered just how complex such innovation can be. The new head of the Perspectives program, Dr. Uwe Hartwig, senior vice president, played a central role in driving this work.

Working with business analysts from the Institute of Technology Management at the University of St. Gallen in Switzerland, BASF’s innovation experts actually created a set of printed cards depicting each of the possible business models they believed were theoretically applicable to various kinds of businesses. For example, one model is defined as the “Product and Effect Package” model, in which “a company not only produces a product, but also provides and sells value claims associated with it . . . The improved value proposition to the end consumer therefore enhances the willingness to pay for the complete package comprising product and associated claims. Depending on the industry, central tasks in this business model may include scientific testing and validation of claims, and/or interaction with regulatory bodies.”

Another model is “Lock-In,” in which “customers are locked into a vendor’s world of products and services . . . This lock-in is either generated by technological mechanisms or substantial interdependencies of products or services.” And a third is “Integrator,” in which a company “is in command of the bulk of steps in a value-adding process. The control of all resources and capabilities in terms of value creation lies with the company.”⁵

Using the models defined on these cards as touchpoints, the BASF Perspectives team set about analyzing the range of existing business models already being practiced within the corporation. Over the decades, teams dedicated to product development, marketing, and sales within various divisions and departments of BASF had semi-deliberately adapted a range of business models based on the challenges and opportunities they discovered around them.

When these various models were defined and codified by BASF’s strategic analysts, they found that as many as 30 different models were in use around the organization out of some 45 possible models they’d defined. This is a remarkable number. In fact, BASF’s innovation specialists believe that their company may actively operate using more different business models than any other corporation in the world.

Defining this range of business models was just the first step. The next step, which is happening in BASF operations around the world, is studying whether the current models are optimizing value creation for BASF and its customers. This is a task that requires a lot of creative what-if thinking. It may lead to the conclusion that the business model being used in a particular market needs to change—a challenging innovative process.

Sometimes, BASF operating divisions find themselves under positive pressure to change their business models. One starting point for a business model change may be a division finding that their sales and profitability are in long-term decline. In this case, without a change in business model, the entire division may be facing ultimate demise.

In other cases, one or more customers may ask the company to consider altering its way of doing business—by providing new services, for example, or by shifting the organizational boundaries that determine which company in a business partnership does what. In this sort of case, the new business model may be shaped through a cocreation process between customer and supplier.

Thus, as explained by Michael-Georg Schmidt, director of innovation excellence for BASF, the company has found that its CIM model is not just a list of six buckets into which each batch of customers can be sorted: “We need to constantly closely monitor the dynamics in the system because our customers’ needs are always changing, which means our relationships with them need to change as well.”

Business model innovation is no simple matter. Hartwig once estimated that it takes an average of 8 to 10 years to change a long-established business model. It usually happens in stages, with new activities being gradually introduced and old ones altered or eliminated, all involving close collaboration between BASF employees and customer teams.

Consider, for example, the way BASF’s business model for providing paints and other coating materials to auto manufacturers has evolved over the years. At one time, BASF simply manufactured paints and sold these to the carmakers as finished products. This wasn’t a very lucrative business for BASF; the division was constantly subject to price pressure from competing companies that might offer similar (though not necessarily equally good) paints at slightly lower prices. And the results that the automakers enjoyed weren’t optimal; their factory teams didn’t necessarily have the expertise needed to accurately define the best types of coatings or to apply them with minimal waste and the highest possible quality.

Beginning with Mercedes-Benz, BASF started working with its automaking customers to develop a more satisfactory business model. BASF experts began to be stationed at auto factories to serve as consultants and advisors on the painting process. Auto design and manufacturing teams started working closely with BASF chemists to develop paint and coating products more finely attuned to carmakers’ needs. The boundaries between organizations and processes broke down as innovation morphed into cocreation.

Today, BASF offers what it calls its Integrated Process for Automotive Paint Procedures. Workers from BASF’s coatings division take responsibility for finishing cars directly at the customer’s factory. BASF manager John Fatura explains, “We like to work with our OEM [original equipment manufacturer] partners to determine what sustainable, automotive paint processes will work best in both their current and new facilities while meeting the demands they have in terms of operational costs and environmental standards.” The savings generated by the resulting efficiencies go to reduce costs for the carmakers while also increasing the profits enjoyed by BASF—a true win-win.

BASF has gone on to apply business model innovation to an array of other businesses, in fields ranging from construction and mining to personal care products. Business model innovation isn’t as widely known or understood as traditional product innovation. But as BASF has found, it can be even more powerful as a tool for business growth.

In my work as a corporate consultant, coach, and trainer, I’ve found that more and more companies today are focusing on business model innovation as a vital element of competitive adaptation. In a world where technological, social, cultural, and demographic changes are constantly shaking up marketplaces and creating both new opportunities and new competitive threats, companies can’t assume that the familiar ways of doing business they’ve practiced for years will continue to work in the future. As you work on energizing your organization’s innovating engine, make sure your team members are continually examining the ways your current business models are serving the needs of customers—or failing to do so. You may well discover—as BASF did—that responding to those evolving needs requires not just the creation of innovative products and services but also the design of entirely new ways of relating to your customers.

“Endless Opportunities”—the BASF Story of Innovation

In 2017, the Perspectives program at BASF came to an end. The task it had undertaken to jump-start a new way of innovating throughout BASF had been successfully accomplished. Out of some 15,000 eligible managers at the company, 12,000 had received training in the Perspectives approach to innovating, and 90 percent of BASF’s product departments had worked through the Pathfinder process to improve their understanding of customer needs.

Today, the legacy of Perspectives is being carried on through a number of continuing innovation programs. New BASF employees are trained in the key concepts underlying Perspectives as part of a Marketing Starter Kit of tools, skills, and practices. And a separate department known as the Marketing and Sales Academy works to maintain company knowledge of innovating techniques and to train BASF employees and managers in how to use them. Through programs like these, innovating the Perspectives way has become a basic component of the corporation’s DNA.

BASF’s Schmidt is an eloquent advocate for the company’s culture of innovation. He describes with special vividness the wide range of creative possibilities the company enjoys, as well as the innovative challenges these diverse options create:

I think what is very exciting in the chemical industry is that you have touchpoints to all kinds of value chains and areas of human life, because chemistry is everywhere—in a kitchen table, in a smartphone, in a pencil, in the cosmetics in your purse. This means we have almost endless opportunities to innovate. The big question is figuring out which opportunities are most promising and which ones we want to focus on. This kind of focusing is the most important challenge for us.

As of 2021, BASF is focusing its innovating model on challenges in a number of specific areas, including the development of digital and service-based business models, and the design and implementation of processes that enhance the environmental sustainability of BASF and its customers. The goal is to prepare BASF to be part of the emerging circular economy that experts say will be needed to support a world in which growing populations put increasing pressure on limited resources.

BASF’s approach to innovation illustrates some of the crucial insights that leaders of all kinds of companies can use to enhance their own organizations’ innovative capabilities. Once you take innovating by anyone, anytime, anywhere as your goal, you can begin turning your organization into a true innovating engine.