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From Confusion to Action
Industry Week (Tokyo), September
By: John Teresko

Martha Collins fights “Nano confusion” by beginning discussions with a definition: “Nanotechnology is not a technology — nanotechnology is a dimension.” (a billionth of a measurement unit — as in nanometer).

As a technology manager helping to build a nano initiative at a materials company — Air Products and Chemicals Inc., Allentown, Pa. — Collins explains her habit of setting the nano record straight: “In the last decade, the explosion in nano knowledge and capability defies easy understanding and application.” Unfortunately the hype and confusion accompanying nano slows corporate decision-makers, even as their researchers start to flex newfound abilities to picture, analyze and model nano materials, Collins says.

“What’s confusing,” she says, “is that the nano knowledge explosion is a growing disruptive force through all kinds of diverse scientific disciplines. Thus while nano implications are running rampant through all the domains of science, corporate product developers are simply overwhelmed. They’re confronting an epochal technology challenge their R&D; strategies were never designed or equipped to handle.”

The solution? First, science has the conceptual challenge of organizing and compartmentalizing nano knowledge. Second, yesterday’s R&D; strategies need revisions if they are to handle the reality of the nano knowledge explosion. The rewards, says Collins, will be the emergence of products and processes that exploit the nano dimension in ways unthought of today. Every sector of the economy will be affected. For example, consider how nano scale sensors could revolutionize machine tool intelligence, says Paul Warndorf, vice president technology, the Association for Manufacturing Technology, McLean, Va. “Think of the benefits that could be derived from monitoring and reporting all aspects of a machine’s operating performance.”

Nano sensors could also be applied to such things as medical diagnostics, drug screening and environmental monitoring, report researchers at George Washington University, Washington, D.C.

Focusing On What Is Known:

For air products, as a $ 7.4 BILLION materials company, nano is deemed essential to growing existing markets as well as entering entirely new areas, says Ron Pierantozzi, director of new business development. “Properties of nano material can greatly enhance our product performance platform.”

Pierantozzi also is sensitive to the risks in a nano strategy. “Care must be taken not to over-invest,” he warns. “Because of all the hype in the marketplace, it’s easy to keep throwing money at nano ‘dry wells’ for a long time.” For example, if you decide to use investments in small nano startups as the mechanism to acquire technology, consider the rapidly growing numbers of startups that tout themselves as nanotechnology companies. (In 2002, in testimony before Congress, F. Mark Modzelewski, then executive director of the NanoBusiness Alliance, estimated that nano startups grew from 100 in 1999 to more than 1,000 in just three years.) Not only may some of them turn out to be “dry wells,” some very interesting processes for producing nano materials may not be commercially scalable. Laboratory feasibility by itself is not enough, adds Pierantozzi.

At Air Products, Pierantozzi’s approach is to cautiously consider where nano might impact a market that the company knows and understands. “By starting with incremental market opportunities, a company can build the necessary internal knowledge and capability. You can’t really climb a nano learning curve without first developing products and customers.”

Not developing a nano strategy is ultimately the biggest risk. The experts say one obligatory premise of the nano revolution is that today’s established companies will not be able to survive without a nano strategy, notes Thomas A. Cellucci, president, Zyvex Corp., Richardson, Texas (Zyvex designs, manufactures and distributes materials, tools and structures that enable molecularly precise manufacturing.)

It’s undeniable that customer value is enlarged by nanotechnology, says Air Products’ Jeffrey T. DePinto, business development manager. “For example, in time, materials in the nano dimension will produce batteries that enable your laptop computer or your cell phone to run for weeks, not hours, without recharging.” DePinto says the lure to the nano dimension is the expected rapid growth for products containing nanomaterials. Air Products is investigating three areas of high promise in nanomaterials:

Nanoclays — used in composite materials. This is already an established market for nanomaterials.

Nanoscale oxides and metals — hold a great deal of near-term potential. Air Products is focusing many of its efforts here.

Carbon nanotubes — offers applications in electronics with the potential of extending Moore’s law by 50 years. (The law postulates that about every two years, semiconductor performance doubles.)

Air Products first formally examined the potential of nano in 2000, following a variety of nano projects and experiments. The company spent six months analyzing underlying technologies, market opportunities and timelines to nano commercialization before initiating a corporate nano strategy. “What we think is robust about our strategy is first, our understanding of the exciting opportunities nanotechnology represents, plus our understanding that it will take five to seven years, maybe longer, to reach the marketplace,” says Pierantozzi. “To address these opportunities, we need to build the capabilities. To build those capabilities, we developed technology and applications for existing markets and customer channels to later springboard to adjacent markets.”

Air Products places nano development responsibility in its Corporate Science and Technology group. Commercialization of products that use nano materials is in the Chemicals Group within the Performance Materials Division — one of the four areas the company is focusing on for strong company growth. (Air Products defines “performance materials” as having exceptional properties that create a significant change in the economics or performance of a customer’s process or products.) Key industries for performance materials include automotive, textile, electronics, coatings and adhesives.

Today, the company is developing nano particles for more of its current businesses, such as industrial gas, electronics and chemicals as well as for new product categories. DePinto says Air Products asks clients what problems they want to solve then tries to find nano solutions.

Air Products is careful not to build its nano business model on yesterday’s strategies. Collins says the real catch in considering any nano business strategy is “how do you take advantage of the nano dimension and bring it over the economic goal line to deliver customer value.” She says the trick in exploiting the nano dimension is in recognizing and accepting that gaining any product and business edge will require organizational rethinking.

At Air Products the change process began with the concept of Open Innovation, as popularized by Harvard professor Henry Chesbrough in his book of the same name (2003, Harvard Business School Publishing Corp.). Chesbrough focuses on the dynamic and perplexing problem of how a company should innovate. The author early on recognized the importance of leveraging ideas both internal and external to the corporation. In Chesbrough’s words: “Rather than restricting innovations to a single path to market, open innovation inspires companies to find the most appropriate business model to commercialize a new offering — whether that model exists within the firm or must be sought through external licensing, partnering or venturing.”

Partnering For Nano:

As part of its open innovation practices, Air Products invests in venture capital funds to gain technology access. “Part of our strategy is not to invent everything ourselves,” says DePinto. “We stand to grow faster by taking advantage of technologies that are already there.”

Examples are the company’s alliances with Nanogate Technologies GmbH, Nanotechnologies Inc. and Du Pont. In May 2004, Air Products connected with Nanogate, a leading chemical nano firm in Europe and formed a joint venture named Nanogate Advanced Materials. The joint venture, based in Saarbrucken, Germany, is developing tiny powder that can be mixed into paints and coatings to make them rock hard, fireproof or electrically conductive. The focus is on market opportunities in functional films, coatings and electronic displays.

Earlier, in June 2003, Air Products entered into a joint development agreement with Austin, Texas-based Nanotechnologies Inc., a technology leader in high-performance nanoparticles and concluded an equity investment. “Nanoparticles are a key enabling technology to many current and future product platforms,” says DePinto. “We chose to work with the company because of its unique process, which produces outstanding metal and metal oxide nanoparticles. Their technology is scalable and economical and provides great potential value for Air Products’ targeted high growth markets in our Performance Materials Division.”

Nanotechnologies’ proprietary pulse plasma technology produces high-performance nanoparticles for applications such as transparent coatings, anti-microbials and electronic materials. DePinto says one of Nanotechnologies’ key strengths is its ability to create particles that disperse more uniformly and are more consistently sized — characteristics that make it easier to produce the kinds of transparent and anti-scratch coatings that industry partners desire. Typical compositions: silver, aluminum and copper.

The company’s earliest nano alliance is a 2001 joint venture with Du Pont called DA Nano Materials. Focusing solely on nano materials for semiconductor processing, the joint venture looks to enable the size reductions of future generations of computer chips, says DePinto.

A Startup, 20 Years Later:

Why do some call Scott Rickert a role model nano entrepreneur? For starters, his company’s history is measured in decades, not months, and his company makes a profit on real products. (Check the coating on your eyeglasses.) Plus he can lay claim to double-digit revenue increases for three years running. Rickert’s now planning the third decade of strategy for Nanofilm Ltd., the Cleveland-based nano coatings startup he co-founded in 1985. Nanofilm’s business model hinges on leveraging recipes, formulas and coatings for surface treatment. “If NanoTex [of stain-resistant textile fame] were to adopt the motto of ‘coating all the textiles of the world,’ ours would be to ‘coat all the surfaces of the world.'”

Rickert says partnering is a critical factor in building and sustaining Nanofilm’s success. For example, Rickert’s business partners provide Nanofilm-designed application equipment that use Nanofilm’s consumables. “We give away the design by letting them use it for our benefit.” He says learning to farm out the equipment and concentrate on supplying the coating technology was a tough, valuable business lesson. (The company also has hand-applied versions of the material.) “The value of partnering and alliances is even more vital for companies seeking to enhance existing products with nano,” adds Rickert. “Partnering can accelerate product development enough to be first to market.”

Nanofilm’s new marketing target: automotive and transportation, says Rickert, now president and CEO. He says he doesn’t see a vehicle surface where nano coatings could not bring valuable differentiation for the decisions of both the manufacturer and the ultimate customer. He feels the timing is right. For example, he discovered that one automaker allocates 30% of its R&D; budget to manipulating materials at the nano scale. Market researcher Frost & Sullivan seems to support Rickert’s optimism. In one study, it reports that automakers are seeking nano-based enablers for improvements in part functionality, emissions control, process efficiency, fuel cell operation, electronic applications, weight reduction and fuel additive ingredients.

By 2015, Frost & Sullivan estimates, automotive-related nano revenues will reach $ 6.5 billion. That will come only as benefit awareness improves. Frost & Sullivan says nano applications can directly influence such things as aesthetics, functionality, and the range of product features and cost.

Rickert’s interest in nano began at a time devoid of any nano knowledge explosion. Back in the 1980s Rickert was a professor of polymers — “a time when the experts reported that no new plastic was going to be commercialized.” It left him wondering if he had selected the right career. “Even if you came up with a new material, the experts were saying that it would be too expensive to introduce. They presumed it would be easier to formulate existing materials than it would be to introduce a new plastic or polymer.”

Rickert’s brainstorm that launched his graduate work — and Nanofilm — was to transform ordinary plastics with extraordinary coatings on the nano scale. He ascribes nano performance in terms of physics rather than chemistry. “I like to tell people that I have coatings that are more repellent than Teflon, yet do not have any fluorine in them. If performance properties are size dependent, then physics, not chemistry is the determining factor.”

Cincinnati-based LensCrafters became Rickert’s first customer less than nine months after the company’s last round of financing. In addition to coating lenses, Nanofilm also coats sunglasses, binoculars, camera lenses and rifle scopes.

Vehicle window coatings are Rickert’s first efforts for the automotive market. Targeting the professional driver after-market, the Nanofilm coating is designed to greatly improve visibility by cutting down on glare, scatter and windshield wiper distraction. At highway speeds, water rapidly beads up and rapidly slips away, says Rickert. He says an application lasts a year.
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