MAXIMIZING OI EFFECTIVENESS BY UNDERSTANDING YOUR IQ (INNOVATION QUOTIENT)

European Open Innovation Summit May 23, 2012

Linda A. Beltz, Ph.D., NPDP Director, Technology Partnerships Weyerhaeuser

AGENDA

Context Weyerhaeuser Overview U i your IQ Using IQ: OI Structure S & Start S up Determining what is right for your company OI Success Stories Examples from Weyerhaeusers Journey Conclusions

AGENDA

WEYERHAEUSER: FOREST PRODUCTS LEADERSHIP

FOUNDED: 2011 REVENUES: FORTUNE 500 RANK: NUMBER OF EMPLOYEES: TECHNOLOGY STAFF: FORESTLAND OWNED OR MANAGED: HOME OFFICES: OPERATIONAL EXPERIENCE: SALES AND SUPPORT: 1900 $6.2 Billion 147 12,800 in 10 countries 300 scientists / engineers 20.5 million acres Federal Way, WA
Australia, Brazil, Canada, China, France, Indonesia, Ireland, Japan, Malaysia, Mexico, New Zealand, Philippines, Uruguay, USA

Worldwide (> 60 Countries)

SUSTAINABLE SOLUTIONS AND PRODUCTS

Timberlands Sustainable, scale production of timber & biomass Weyerhaeuser Solutions Bringing sustainable solutions to clients Wood Products Products for green building and energy efficiency WRECO Regional builders providing products to meet the emerging trends in home building Cellulose Fibers Sustainable products for convenience in global markets

RANGE OF OPPORTUNITIES IN BIOPRODUCTS AND BIOFUELS ValueChain

Biomass Chemical Feedstocks Chemical Intermediates Materials

Lignin & Lignin Fractions

Sugars Carbohydrates

Extractives

HOW DO WE ACHIEVE OUR VISION?

Evaluate E l t your Innovation I ti Quotient (IQ) Creating the right structure for OI E Employing l i g new models d l for innovation
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EVALUATING YOUR IQ THE FRAMEWORK FOR OI

Strategy gy

Culture

RoleofOI

Determines Optimum for OI: Organizational Structure Goals & Metrics Best Practices Innovation Models
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IQ EVALUATION 1: STRATEGIC INTENT What are the strategies of the corporation and business units? Is OI being driven at the corporate level or business unit level? What is the strategic intent of implementing OI? What type of strategic growth is desired? p goals g regarding g g OI? Are there corporate Is there a corporate or business champion?

St t Strategy

IQ EVALUATION 2: CULTURAL ACCEPTANCE Is there a strong Not Invented Here culture? Is both success and fast failure celebrated? Does the organization use centralized or decentralized functional groups? Are business units accepting of centralized functions or do they prefer them within the unit? Is there a formal product development process? How is innovation with external parties being managed today?

C lt Culture

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IQ EVALUATION 3: EXPECTATIONS OF OI What is expected from OI? What is the scope of OI activities? Where is OI expected to interface the most? Will OI be mostly applied to R&D or to i innovation i across the h enterprise? i ?

Roleof OI

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ATTRIBUTES OF DIFFERENT OI ORGANIZATION STRUCTURES

Business Unit BusinessUnit
BusinessUnit BusinessUnit

Business Unit

OI Organization g

Business Unit

Business Unit

OI Organization

BusinessUnit

OI Organization O i i

OI Organization

BusinessUnit Business Unit

Centralized
Viewofcompanywide needs&leverageacross businesses Bringsstrategicgrowth options ExpertsinOIskills&IP Centralcontactp point internal&externally Worktobeviewedasa businessunitteammember p requires q Acceptance supportfromthetop

Hybrid
OIgeneralistineach business LackOIexpertiseineach skill Viewofbusinessspecific needsandmarkets Someleverageacross businesses CommunityofPracticefor OIskilldevelopment Centralcontactpointby business Viewedasabusinessunit teammember

Decentralized
OIgeneralistineachbusiness LackOIexpertiseineachskill Viewofbusinessspecificneeds andmarkets Lackleverageacrossbusinesses DifferentOIpracticesby business difficulttodevelopa commmunity ofpractice Centralcontactpointby business Viewedasabusinessunitteam member
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USE THIS STRUCTURE WHEN.

Business Unit BusinessUnit
BusinessUnit BusinessUnit

Business Unit

OI Organization g

Business Unit

Business Unit

OI Organization

BusinessUnit

OI Organization O i i

OI Organization

BusinessUnit Business Unit

Centralized
EarlyinOIimplementation MultipletypesofOIskills& depthofskill Organizationaccepts centralizedfunctions Crossbusiness,new businessorgamechanging innovation

Hybrid
Successwithmatrix organizationmanagement MorethanonetypeOI discipline DesiresomedepthofOI skillsineachfunction Businessdesirefor ownership Innovationfocusatboth businesslevelandcross business/corporatelevel

Decentralized
MatureinOIadoption LimitedtypeOIfunction Organizationisbusinessunit driven Innovationrangeiswithin businesses(incremental radical venturing) Limitedcorporatelevelre invention

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DISCIPLINES OF OI

SelectthecomplementaryOIdisciplinestoexecuteyourstrategy
OrgFocus orOI Starting Point

OI Partnering In/M&A/Govt Licensing Out/Divest Intellectual AssetMgmt BusinessDev &Models

DevelopanorganizationofOIexperts Start St twith ithanOIl leader d HardtofindOIskills developthem Employeeswithexcellenttechnical,business,communication skillsandpassion Internalconnectionsestablished Careerdevelopment p opportunities pp
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LAUNCHING THE ORGANIZATION

Clearlydefinetheroles Mechanisms h for f knowledge k l d and dactivitytransfer f Teammeetings/CommunitiesofPractice BestPractices OI Sharecurrentwork
Partnering In/M&A/Govt

gtheskills Building Designateamentor Suggestappropriatereading Gotoconferencesandnetworkmeetings Learnbydoing

LicensingOut /Divest

Intellectual AssetMgmt

BusinessDev &Models

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POSITION OI TO SUPPORT THE ORGANIZATION

SelecttheOIorganizationmodel&disciplinestofittheculture
Central Central,outsidebusinessunits (R&D,Corporate) Withinbusinessunits Communityofpractice Changewithmaturity
Business Unit

Business Unit

OI Organization

Business Unit

Sr Mgmtsupport
OI Partnering LicensingOut /Divest Intellectual AssetMgmt BusinessDev &Models

Business Unit

BusinessUnit

OI Business BusinessUnit Unit Organization

Fundforsuccess

In/M&A/Govt

Business Unit

Measurewhatyouwant toachieve,simply Buildstrategicallyalignedgoals Allowrampuptime

BusinessUnit

BusinessUnit

OI Organization

OI Organization

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NEW MODELS OF INNOVATION - SUCCESS AT WEYERHAEUSER

Joint Development for a new product leads to government funding Joint Venture for biofuels full supply chain approach Government grant for new supply chain and products Licensing of technology enhanced returns with Joint Development New business models providing services and technology products

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LOW COST CARBON FIBER

LIGNIN AS LOW COST COMPONENT FOR light-weighting autos and large scale wind t bi bl turbine blades d

15 August 2011 Zoltek receives DOE award for low cost t carbon b fibre fib development d l t Weyerhaeuser is Zoltek's joint development partner in the project.

2011 Weyerhaeuser NR Company

CATCHLIGHT ENERGY VALUE CHAIN: FOREST TO FUEL

END-TO-END VALUE CHAIN SOLUTION

Leverages the strengths of two natural resource leaders

Weyerhaeuser y Feedstocks at Scale

Catchlight Energy Conversion Technology

Ch Chevron High Quality Fuel to Customers

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PARTNERING FOR BIOFUELS & BIOPRODUCTS

$40 MM Grant over 5 yr from the US Dept of Agriculture Produce jet biofuel and bioproducts from woody feedstocks Led by Washington State University Weyerhaeuser focus in three areas: Sustainable Feedstock Production Feedstock Logistics Conversion of Lignin to High Value Products

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LICENSING OF FERTILIZER TECHNOLOGY

Whatisit?ArboriteAGisapatentedinnovativeliquid additiveforureafertilizersdesignedtoreducetherateof nitrogenlossafterapplication.NBPT,akeycomponentof ArboriteAG,iscapableofslowingtheconversionofureato ammonia i which hi hi isacommonmechanism h i f fornitrogen i l lossin i thefield. Weyerhaeuserhasconsiderableinterestinmaximizingtheyield offorestland. forestland WeenteredaJDAgivingusexclusivemarketing rightstofertilizersdeveloped.Wehavetrialedfertilizerson 2MMacresover10yearsonourU.S.Southernforestland. 2007 Signedlicensestoearlytechnology. 3partydevelopmentofNBPTtechnology. 2009 Signedlicensetoimprovedproductyettobe commerciallyproven. Productmovesthroughlimitedcommerciallaunch: 2011 licenseerequeststerritoryexpansion. 2012workingwithLicenseeoninternationalterritory. Somethingthatstartedsmallgrowingnicelylikeatree!
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Product

NEW BUSINESS MODELS

New business launch Sustainable solutions to meet the needs of our changing world Leverage our expertise & technology Domestic & international experience Services and client-specific business models Technology-based T h l b d products d t

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CONCLUSION EvaluateyourIQandtodeterminethebestOIapproach OIstructuresmaychangewiththeorganizationalneed AsatWeyerhaeuser Weyerhaeuser,OIcanbeappliedinmanywaystobring valuetotheorganization: Technologydevelopment Governmentcontracts Licensing Newbusinessmodels

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THANK YOU!

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