Innovation: Look at Facts, not Hype

Monday, March 31, 2014 @ 01:03 PM gHale


By Gregory Hale
There have been innovations, and technology shifts and new ways to conduct business, but no matter what “safety is what you have to start with.”

On top of safety, the cost scenario is proving to be major factor moving forward – especially with the new wave of sustainability. There is hype and then there is reality, and when it comes to things like green fuels, chemicals and technologies, you have to dig beneath the surface for the real answers.

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“If the chemical engineering principals were applied to businesses, they would have saved billions of dollars,” said William Banholzer, retired chief technical officer at Dow Chemical during his Monday keynote address at the AIChE Spring Meeting and 10th Global Congress on Process Safety in New Orleans. “Engineering takes something and makes it practical.”

There was a time in the early 1900s when companies focused on innovation, and that is always the base point where a company should begin, but later on other aspects of a business came into play. Companies had to understand more of the cost structure it would take to make the product in addition scale of production.

“Innovation was important,” Banholzer said, “but it came into feedstocks and scale costs being vital for a business.” After then the four cores to a business were operations, scale, feedstock and new products.

He went on to say there are three aspects to a business:
• What people want
• What people will pay for it
• What people can afford

“Inventing something is great, but if people have a limited amount to pay, then you have to think about it. I can afford to pay 99 cents for a calculator app on my phone, but I won’t pay for that app. My son wants to buy a Porche, but he can’t afford one,” he said. ‘People don’t really make the right decisions.”

One area Banholzer talked about is doing a cost benefit analysis, but not just on the immediate cost. You have to look at the longer range costs.

One thing he talked about was areas like biofuel plants. Biofuels have a great promise according to the Department of Energy, but when you look at the overall costs, you have to wonder how that will happen, he said.

He talked about the “Nth” plant theory. That is where the first plant is built and it may or may not make money, but the next plant is more efficient, and the next plant after that is even more efficient and the efficiencies keep growing with ensuing plants.

“The reality is if one plant is not cost effective, you will not be able to build a second plant,” he said.

Algae oil, he said, gained quite a bit of notoriety over the past five years, but just looking at the high level costs, “it just doesn’t make sense. After you do all the calculations, you end up saying this is just not going to work. You can’t have a business where you just don’t get the returns.”

With all the new ideas and innovations coming out, Banholzer just wants everyone to look at the basics.

“In reality, the costs and the benefits are not living up to the hype,” he said. “Where is the engineering that is going into those claims?”

That is why Banholzer said this is the best time to be a chemical engineer.

“Chemical engineers have the discipline and skills to move forward,” he said. “I have never been more optimistic about the future of chemical engineers. Those skills are more needed now than ever.”



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