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MAXIMIZING OI EFFECTIVENESS BY UNDERSTANDING YOUR IQ(INNOVATION QUOTIENT)

European Open Innovation SummitMay 23, 2012

Linda A. Beltz, Ph.D., NPDP

Director, Technology Partnerships

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AGENDA

Context Weyerhaeuser Overview

Using your IQ: OI Structure & Start up Determining what is right for your company

OI Success Stories Examples from Weyerhaeusers Journey

AGENDAConclusions

AGENDA2

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WEYERHAEUSER: FOREST PRODUCTS LEADERSHIP

FOUNDED: 1900

2011 REVENUES: $6.2 Billion

FORTUNE 500 RANK: 147

NUMBER OF EMPLOYEES: 12,800 in 10 countries

FORESTLAND OWNED OR MANAGED: 20.5 million acres

HOME OFFICES: Federal Way, WA

OPERATIONAL EXPERIENCE:Australia, Brazil, Canada, China, France,Indonesia, Ireland, Japan, Malaysia, Mexico,New Zealand, Philippines, Uruguay, USA

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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

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RANGE OF OPPORTUNITIES IN BIOPRODUCTS AND BIOFUELS

ValueChain

BiomassChemical

Intermediates MaterialsChemicalFeedstocks

Lignin &

Lignin Fractions

Sugars

Carboh drates

Extractives

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HOW DO WE ACHIEVE OUR VISION?

va uate your nnovat on

Quotient (IQ)

Creating the right

mp oy n new mo e s

for innovation

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EVALUATING YOUR IQ THE FRAMEWORK FOR OI

Strate

RoleofOIDetermines Optimum for OI:

Organizational Structure

Goals & Metrics

Best Practices

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Innovation Models

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IQ EVALUATION 1: STRATEGIC INTENT

What are the strategies of the corporation and

business units?

ra egy Is OI being driven at the corporate level or

business unit level?

What type of strategic growth is desired?

Are there cor orate oals re ardin OI?

Is there a corporate or business champion?

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IQ EVALUATION 2: CULTURAL ACCEPTANCE

Is there a strong Not Invented Here culture?

Is both success and fast failure celebrated?u ure

Does the organization use centralized ordecentralized functional groups?

functions or do they prefer them within the

unit?

Is there a formal product development

process?

managed today?

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IQ EVALUATION 3: EXPECTATIONS OF OI

Roleof

What is expected from OI?

What is the scope of OI activities?

OI

Where is OI expected to interface the most? Will OI be mostly applied to R&D or to

innovation across the enterprise?

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ATTRIBUTES OF DIFFERENT OI ORGANIZATION STRUCTURES

OI

Organization

BusinessUnit

BusinessUnitBusinessUnit

OI

Organization

BusinessUnit

BusinessUnit

BusinessUnit

BusinessUnit

OI

BusinessUnit

OI

BusinessUnitBusiness

Unit

rgan zat on Organization

Viewofcompanywide

needs

&

leverage

across

businesses

OIgeneralistineach

business Lack OI ex ertise in each

OIgeneralistineachbusiness

LackOI

expertise

in

each

skill

HybridCentralized Decentralized

Bringsstrategicgrowth

options

ExpertsinOIskills&IP

Centralcontactpoint

skill

Viewofbusinessspecific

needsandmarkets

Some levera e across

andmarkets

Lackleverageacrossbusinesses

DifferentOIpracticesby

internal&

externally

Worktobeviewedasa

businessunitteammember

Acceptancerequires

businesses CommunityofPracticefor

OIskilldevelopment

Central contact oint b

commmunity ofpractice

Centralcontactpointby

business

supportfromthetop

business

Viewedasabusinessunit

teammember

member

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USE THIS STRUCTURE WHEN.

OI

Organization

BusinessUnit

BusinessUnitBusinessUnit

OI

Organization

BusinessUnit

BusinessUnit

BusinessUnit

BusinessUnit

OI

BusinessUnit

OI

BusinessUnitBusiness

Unit

rgan zat on Organization

Successwithmatrix

organizationmanagement

More than one t e OI

MatureinOIadoption

Limitedtype

OI

function

HybridCentralized Decentralized EarlyinOIimplementation

Multiple

types

of

OI

skills

&

discipline

DesiresomedepthofOI

skillsineachfunction

Business desire for

driven

Innovationrangeiswithin

businesses(incremental

Organizationaccepts

centralizedfunctions

Crossbusiness,new

ownership Innovationfocusatboth

businesslevelandcross

business cor orate level

Limitedcorporate

level

re

invention

innovation

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DISCIPLINES OF OI

SelectthecomplementaryOIdisciplinestoexecuteyourstrategy

OI

Partnering Licensing Intellectual BusinessDev

OrgFocus

orOI

Starting

Point

Develop

an

organization

of

OI

experts

In/M&A/Govt Out/Divest AssetMgmt &Models

ar w an ea er

HardtofindOIskills developthem

Employeeswithexcellenttechnical,business,communication

skillsand

passion

Internalconnectionsestablished

Careerdevelopmentopportunities

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LAUNCHING THE ORGANIZATION

Clearlydefinetheroles

Mechanismsforknowledgeandactivitytransfer

Teammeetings

/Communities

of

Practice

BestPractices

Sharecurrentwork

Buildin

theskills

Partnering

In/M&A

/Govt

LicensingOut

/Divest

Intellectual

AssetMgmt

BusinessDev

&Models

Designateamentor

Suggestappropriatereading

Learnbydoing

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POSITION OI TO SUPPORT THE ORGANIZATION

SelecttheOIorganizationmodel&disciplinestofittheculture ,

(R&D,Corporate)

Withinbusinessunits

CommunityofpracticeOI

BusinessUnit

BusinessBusiness

OI

Changewithmaturity

Sr Mgmtsupport

Organization Unit

BusinessUnit

Unit

BusinessUnit

Partnering

In/M&A/Govt LicensingOut/Divest IntellectualAssetMgmt BusinessDev&ModelsFundforsuccessOrganization

BusinessUnit

BusinessUnit

BusinessUnit

toachieve,simplyBusinessUnit

OIOrganization

BusinessUnit

OIOrganization

Allowramp

up

time 16

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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

15 August 2011

Zoltek receives DOE award for lowt b fib d l t

light-weighting autosand large scale wind

cost carbon fibre developmentWeyerhaeuser is Zoltek's joint

development partner in the

ur ne a es project.

2011 Weyerhaeuser NR Company

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CATCHLIGHT ENERGY VALUE CHAIN: FOREST TO FUEL

END-TO-END VALUE CHAIN SOLUTION

Leverages the strengths of two natural resource leaders

We erhaeuser Catchli ht Ener

Feedstocksat Scale

ConversionTechnology

evronHigh 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

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?ArboriteAGisapatentedinnovativeliquidadditiveforureafertilizersdesignedtoreducetherateofnitrogenlossafterapplication. NBPT,akeycomponentof

ArboriteAG,iscapableofslowingtheconversionofureatoProduct

ammon aw c sacommonmec an sm orn trogen oss nthefield.Weyerhaeuserhasconsiderableinterestinmaximizingtheyield

.rightstofertilizersdeveloped. Wehavetrialedfertilizerson2MMacresover10yearsonourU.S.Southernforestland.

3partydevelopmentofNBPTtechnology.

2009 Signedlicensetoimprovedproduct yettobecommerciallyproven.

Product moves throu h limited commercial launch:

2011

licenseerequests

territory

expansion.

2012workingwithLicenseeoninternationalterritory.

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NEW BUSINESS MODELS

New business launch

needs of our changing world Leverage our expertise & technology

Services and client-specific business

models ec no ogy- ase pro uc s

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CONCLUSION

EvaluateyourIQandtodeterminethebestOIapproach

OIstructuresmaychangewiththeorganizationalneed

,

valueto

the

organization:

Technologydevelopment

Governmentcontracts

Licensing

Newbusiness

models

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THANK YOU!

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