ICIS Kavaler Award Acceptance Speech
Andrew N. Liveris, Dow Chairman and CEO
Tuesday, October 27, 2015
New York Public Library, New York
Thank you Joe [Chang] and Dr. Stefandl for your kind words.
Ladies & Gentleman, I would also like to thank all of you… the sponsors of this dinner, the co-chairs from the Chemists’ Club and the organizers from ICIS, and my friends in the industry and all of the Dow people here tonight.
I am truly honored to receive this award, the Arthur Kavaler Award, on behalf of the people of Dow. This amazing man, who passed away a few years ago at age 91, practiced “you can do better” journalism versus “gotcha” journalism.
In this day of an ADD society… where all news is breaking news… where we are now anticipating and relishing the tearing down and vilification of leaders versus celebrating and acknowledging their courage… where fiction and fantasy are our new reality, Arthur set a standard we should all emulate.
And tonight, as I stand here before you receiving this award, with my peers and many people in the audience immersed in the world of chemistry, I would like to report an obvious fact to you: Outside this room on Library Way, a quote from a poet says “The universe is made of stories, not atoms.” (The poet’s name is Muriel Rukeyser).
Sorry, Muriel, you’re wrong. The world is indeed made up of atoms. And our business is to marshal those atoms to improve life for all humans on our planet.
This is the business of chemistry… and today, our industry has been transformed.
The names we have been given, and those we gave to ourselves: Basics, Commodities, Petrochemicals, Specialty Chemicals, etc. etc. have become irrelevant. They have transformed as well.
But what is transformation? Let me spend my time with you describing the key elements of this over-used term.
We at Dow know about transformation. I like to say to young people who are enamored by the Googles and Facebooks of the new Technology era, “Wait until they work on version 2.0 of their company, or see if they even get to version 3.0.”
Dow is at version 6.0. We are 118 years young.
Our founder started with chlorine and bleach. He exited bleach 16 years after he commercialized it. He transformed Dow from 1.0 to 2.0. At the heart of his transformation was taking the company from an inorganic chemical company to an organic and inorganic chemical company.
What he did, and why he did it, remains core to all of us who are still transforming Dow 100 years later. He bet the company on the premise of that most essential business strategy of all: “Innovate or Die.”
Clay Christensen’s book, “The Innovator’s Dilemma,” fully describes this concept.
Our industry has risen and fallen through the decades by its successive waves of innovation, success, complacency, failures and then phoenix-like resurrection to its next phase of innovation.
Many don’t make it.
Dow has embraced this challenge and over the last ten years we have re-built our innovation engine and changed our business model.
We have Transformed.
We have exited over $15 B in revenues in commodities where we had no competitive advantage, and invested in R&D and technology. With a new workforce that has a solutions mindset, a new business model, that last week announced its 12th quarter in a row of earning’s growth through some of the most turbulent and volatile economic cycles of our generation.
Transforming a business of scale is hard in the best of times. Transforming a large enterprise in this economy – in this era of interconnectivity where we are truly traveling at the speed of “Live” and in a zero interest environment where the need for short term returns is acute – can only be done if you change the culture of your enterprise.
To change Dow’s culture we needed a case for change to drive our transformation.
Our wake-up call was losing our competitiveness in feedstocks. We realized that selling products with no technology or low cost advantage was a recipe for getting/going out of business.
Then we had 08/09, and like the rest of us, our need to accelerate our case for change was clear. But our real crisis was when we started to recover – how not to lapse into complacency again?
As Lou Gerstner, the former CEO of IBM, said when he spoke to the top leaders in our company a couple of years back, "The hardest moment for a company is when you start making a lot of money. That is when things slip up and you get into trouble.”
But how to transform?
For us, as is often quoted, it became a matter of realizing that “The hard stuff is easy, and the soft stuff is hard.”
Transformation was, is and needs to always be about culture and people. I think that has always been true. So what’s different this time?
Well, we had to rewire our work force, as we continue to do today, hiring the best talent our world has to offer.
We had to re-invent our mission and values so that the bright young minds of today could fulfill their aspirations of making the world a better place, literally transforming the world.
We had to develop a social consciousness… a sense of citizenship and community.
The 12,000 recruits under the age of 32 that we have hired in the past 5 years have joined a company that is providing sustainable solutions to society:
- From energy efficient housing in China and Germany.
- To improved food production and hygiene in India and the U.S.
- To affordable, pure water in Africa and Saudi Arabia.
- To light weight, eco-friendly transportation in Europe and the U.S., and so on.
The more than 5,000 new products we launched in the last 12 months will help to solve these problems while providing sustainable earnings growth for our shareholders.
This attracts the Millennial generation and gets them excited.
Dow’s 2025 Sustainability Goals are taking this effort to the next level… integrating economic and social concerns into metrics that provide a blueprint for the planet and eventually its 9 billion people by 2050. But this is not just a sustainability effort… this is a business effort as well. We will invest $1B over the next decade and seek a $2B return.
It’s a truism that each generation has different wants and needs.
Maslow’s hierarchy of needs shows that our industry provides essential goods at the bottom of his pyramid… Food, Water, Shelter.
Our parents’ generation and my generation built a chemical industry that enabled modern like, lifted people out of poverty, and created a society that could aspirationally show the attributes at the pinnacle of his pyramid – self-actualization and esteem.
But our industry did not keep pace.
Our Children see a very different industry… One that does not care about society.
The culture transformation of our industry is synonymous therefore with the actual transformation of our industry.
It really is all about chemistry: The chemistry of our next generation… The new generation of scientists and business leaders.
Maybe Muriel Rukeyser had a point: it’s not our atoms that define us, it’s our stories… And how and by whom they’re told.
Please tell our story just like Arthur did.
Thank you for this great honor.