R&D/innovation at Saint-Gobain:

reaching out

Armand AJDARI

Deputy R&D Vice President

Saint-Gobain

1. Saint-Gobain at a glance

2. R&D at a glance

3. R&D: Reaching out

1

Saint-Gobain: an ancient company1665: Versailles: Louis XIV

Saint-Gobain today (2006)

206,000 employees

1.6

3.3

2.2

41.6

2006

Plus de 1 400 sociétés consolidées

Capital expenditure

Cash flow

Net income

Sales

€ bn

More than 1,400 companies consolidated

Industrial presence worldwide

Sales

Saint-Gobain: 5 sectorsFlat Glass (12%)

Packaging

(10%)

Construction

Products (25%)

High Performance

Materials (12%)

Building

Distribution (41%)

Historically, materials fabrication based B to B:

- a huge number of Business Units, a great variety of markets,

an immense number of products and technologies

- traditionnaly: great autonomy of businesses

- a recent innovation: distribution of construction materials

Flat GlassBase product Building Automotive Specialties

High Performance MaterialsGrains& Powders Ceramics AbrasivesCrystals Glass textilesPlastics

Building ProductsInsulation Pipes Exter. productsMortars Gypsum

Saint-Gobain’s strategy« worldwide leadership in the construction market, offering innovative solutions

to meet the challenges of our time: growth, energy, environment. »

1. Saint-Gobain at a glance

2. R&D at a glance

3. R&D: Reaching out

2

R&D : figuresUSA Europe Asia

Northboro

BluebellJackson

Stow

Milford

Pont-à-Mousson

Aviles

Chalon/Saône

Chantereine

Rantigny

Aubervilliers

Cavaillon

Herzogenrath

Shanghai

East Leake

Gunsan

Ladenburg

> 3 500 employees

> 390 millions euros in 2007 (growing)

> 15 research centers + 101 development teams

> 300 new patents filed each year

R&D’s missionSAINT-GOBAIN’S MISSION STATEMENT

« worldwide leadership in the construction market, offering innovative solutionsto meet the challenges of our time: growth, energy, environment. »

Support businesses by product and process innovation on our existing markets (incremental innovation)

Generate and support strategic moves and penetration of new markets (radical innovation)

Organization designed to make sure first mission fulfilled: deeply integrated in the businesses (each has its R&D organization)

Challenge: how to succeed in second mission in parallel ?

1. Saint-Gobain at a glance

2. R&D at a glance

3. R&D: Reaching out

3

Actions: recent moves

A- Projects organization: drive from corporate R&D

Strategic Projects (reaching out towards new markets)

Transversal programs (reaching out internally)

B- Centers organization:

Transversal Research Centers

Moving towards Asia

C- Reaching out externally

Partnerships

Techno-Marketing

External venturing

Academic contacts

A- Strategic projects

Market-oriented

Already existing market SG wants to enter

Emerging markets

Innovation means of penetrating these markets

Validated by the board of the company

Strong support from corporate R&D

Harbored by a business

Innovative, expensive, risky projects

with high technical content

Transversal programs

reaching out internally …

Multi-sector/multi-center programs

on technology topics of strategic interests

shared by different businesses

Objectives :

Leverage our cross-disciplinary expertise

Identify and satisfy common needs

Upstream competencies (academia, consultants)

Downstream (market knowledge + contacts)

Remember:

>1400 companies consolidated

.. to better reach out externally

Aubervilliers, FranceNorthboro, USA

Main competencies :

Glass, coatings, materials

Number :

320 employees

Budget 2006 :

40 M€

Main competencies :

Ceramics, Abrasives, Plastics

Number :

410 employees

Budget 2006 :

50 M€

B- Strengthening transversal R&D centers : Cavaillon, France

Main competencies :

Ceramics, catalysis

Number :

240 employees

Budget 2006 :

35 M€

• In charge of developing our key competencies

• Critical mass to carry out breakthrough work

home of our strategic projects

• Hubs for academic contacts (reaching out)

• Attractive place for talented young scientists

Most of the (important) growth of our R&D population

A new transversal R&D center: SGR Shanghaï

Architecte: Arte Charpentier & associés

Grand opening in September 2007A center to serve the specific needs of Asian markets

A window to reach customers, innovation partners, academic contacts

C- Anticipate, move fast:

-> Reach out (more than before)

1. Develop partnerships

2. A Techno-Marketing Team

3. An External Venturing team

4. SUN: Upstream contacts with Academia

This is a cultural change

in a secrecy prone industrial R&D

1- Partnerships as part of the R&D projects:

Strong push to exchange with potential customers: NDAs

essential for new markets

not traditional for R&D people (secrecy)

eased if proper IP position (beyond defensive)

Aim at co-developments: JDAs, JVs

Provides better understanding of market/techno

Reduces time to market

Lighting: start-ups + big players

Photovoltaics: JV Avancis (Shell)

Acquisitions combined with R&D

to get access to new markets

(combined with R&D)

2- A Techno-Marketing Team

Identify new applications for existing technologies

Assess emerging markets and technologies

Propose new approaches for new/existing markets

Cross-fertilizing core strengths

Beyond what current BUs already do well

For large market & application potentials

20 dedicated persons: Europe, US, Asia, mix of marketing and engineers

3- An External Venturing initiative

Started 22 months ago by establishment of a dedicated teamin Europe, US and Asia

Combine ideas stemming from Innovative start ups with the industrial strength and assets of Saint-Gobain

Variety of working methods: licenses, partnerships, equity investments and joint ventures

~400 companies reviewed, 4 partnerships agreed and 20 under active due diligences or discussion

Focused area: Construction Products, Energy and Environment

Can lead to acquisitions providing access to new markets,

to codevelopment partnerships, or simply stimulates our R&D !

Input: from Venture Capital funds + internal (marketing, R&D)

Output: transfer to Businesses (sponsors identified early on)

To develop long-term interactions with the best research teams in our domains

To keep an eye on technological developments

To hire of students from top universities in countries of strategic importance for Saint-Gobain by making our technologies better known

Saint-Gobain University Network:

SUN

4- An academic network

Specific links with the French System

Many contracts (50 per year) with CNRS in France:

A framework agreement signed between CNRS and Saint-Gobain 2007

Two joint labs with CNRS within our centers

(CNRS and Saint-Gobain researchers)

A lab in Saint-Gobain Recherche, Aubervilliers.

A lab in CREE research center, Cavaillon.

Efficient links to the academic world

SUN : Saint-Gobain University Network

signed 2007, under way 2008

Wide line

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Lomonosov

University

Harvard

University of

California at SB

NIMS

University of

Sao Paolo

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IIT Madras

.

CNRS

Chair X/ESPCI

MIT

Aachen

Mûnchen

◘

Reaching out to innovate:

for efficiency, anticipation and strategic moves

Leverage transversality internally to reach critical mass

Some specific dedicated structures

A cultural change: systematic support + incentives

.. while remaining focused on serving efficiently existing businesses

343 years of innovation