R&D/innovation at Saint-Gobain: reaching out

R&D/innovation at Saint-Gobain: reaching out Armand AJDARI Deputy R&D Vice President Saint-Gobain

1. Saint-Gobain at a glance 1 2. R&D at a glance 3. R&D: Reaching out

Saint-Gobain: an ancient company 1665: Versailles: Louis XIV

Saint-Gobain today (2006) Plus More de than 1 1,400 sociétés companies consolidées consolidated 206,000 employees 2006 Sales Net income Cash flow Capital expenditure bn 41.6 1.6 3.3 2.2

Industrial presence worldwide

Saint-Gobain: 5 sectors Flat Glass (12%) Building Distribution (41%) Sales Packaging (10%) High Performance Materials (12%) Construction Products (25%) 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 Glass Base product Building Automotive Specialties High Performance Materials rains& Powders Ceramics Crystals Plastics Abrasives Glass textiles Building Products Insulation Pipes Exter. products Mortars 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 2. R&D at a glance 3. R&D: Reaching out

R&D : figures USA Europe Asia Milford Stow Northboro East Leake Jackson Bluebell Chantereine Rantigny Herzogenrath Ladenburg Pont-à-Mousson Aubervilliers Chalon/Saône Aviles Cavaillon Gunsan > 3 500 employees > 390 millions euros in 2007 (growing) > 15 research centers + 101 development teams > 300 new patents filed each year Shanghai

R&D s mission SAINT-GOBAIN S MISSION STATEMENT «worldwide leadership in the construction market, offering innovative solutions to 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 3 2. R&D at a glance 3. R&D: Reaching out

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

B- Strengthening transversal R&D centers : Northboro, USA Aubervilliers, France Cavaillon, France Main competencies : Ceramics, Abrasives, Plastics Number : 410 employees Budget 2006 : 50 M Main competencies : Glass, coatings, materials Number : 320 employees Budget 2006 : 40 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 Main competencies : Ceramics, catalysis Number : 240 employees Budget 2006 : 35 M Most of the (important) growth of our R&D population

A new transversal R&D center: SGR Shanghaï Grand opening in September 2007 A center to serve the specific needs of Asian markets A window to reach customers, innovation partners, academic contacts Architecte: Arte Charpentier & associés

C- Anticipate, move fast: -> Reach out (more than before) This is a cultural change in a secrecy prone industrial R&D 1. Develop partnerships 2. A Techno-Marketing Team 3. An External Venturing team 4. SUN: Upstream contacts with Academia

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

3- An External Venturing initiative Started 22 months ago by establishment of a dedicated team in 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 Input: from Venture Capital funds + internal (marketing, R&D) Output: transfer to Businesses (sponsors identified early on) Can lead to acquisitions providing access to new markets, to codevelopment partnerships, or simply stimulates our R&D!

4- An academic network Saint-Gobain University Network: SUN 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

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 CNRS Chair X/ESPCI University of California at SB Harvard MIT Wide line Aachen Mûnchen Lomonosov University NIMS IIT Madras University of Sao Paolo.

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