Name: Why Dow Chemical is trying to run itself like a startup?
Uploaded: 2015-07-15
Duration: 4 min 26 s
Description: At this year's Fortune Brainstorm Tech conference, CEO Andrew N. Liveris sits down with Fortune Editor Alan Murray to talk about how the chemical industry needs to reinvent itself.

Dow Chemical is the exact opposite of a startup. 118 years old. You've got 50 thousand employees. You're operating in so many different markets. And you want to make it operate like a startup. How in the world do you do that? I mean, that's a very provocative start. Thank you, Alan. We call the company 118 years young. And the last 10 years. That's a good talking point, but you've got to give us the details behind that. Yeah, I mean, I think the chemical industry. Those are two very bad words, chemical and industry, needed to be rebranded. This audience here and the whole conference, the technology sector and what it's done to innovate and to allow us all to be more productive, more efficient, more communicative. The chemistry behind all that is embedded in our science, yet we're the greatest story never told. So one of the things that we did ten years ago that the company was very, very committed to doing, Was to rediscover innovation. And I'm in my 11th year as CEO, I will tell you it's a very difficult journey to change the culture of a large enterprise. I just heard Dion speak about Hewlett- Packard. We are on our fourth reinvention in my tenure. Because it's all about culture. And we're calling this current reinvention Dow10. 0, which means it's our tenth reinvention as a company. Now do the math. I gave you the math already, right? Four reinventions in ten years. 6 in 108 years. So the pace that you're all living with, is the pace I'm living with. And our chemical industry's been decimated, cuz they've never innovated at that pace. To have to. Didn't have to until 20 years ago and if you do the top 20 chemical companies in 1990, top 20 in 2010, only three have survived, and those are the three that are innovating. These are top 20 in terms of revenue, so they are off scale. They are the Hewlett Packet scale. And we're one of only two in the US who are still a fortune 50. But to do that, and to do the reinvention of it, you had to rediscover innovation, rebuild the culture of the company, four times, as I said to you. And I would tell you, and I use the term all the time inside the company. Innovation is fickle, commoditization is a constant. So if you're not innovating faster than commoditization in your sector, You'll go the way of being owned by private equity and run for cash. You'll go the way of being owned by state- owned enterprises who want jobs. These are great industries for employment cuz they bring supply chains. So putting the small entrepreneurial culture into our company over these 10 or 11 years has been our mission. So that's why I would say the starting point of your question We're 118 years young because we've rebuilt the company's culture basically. And so we want to talk about that, about how you do that. Because what's so interesting about what you just said is you never once used the word technology. We know technology is driving the change, but dealing with the change is about people, it's about culture. And we just heard Tom Farley say big companies have a tendency to Quickly become inward looking. Absoutely. How did you do that. How do you do that. [ CROSSTALK ] I'll go even further than what he said. I will tell you that I learned how to operate out there in the field. In an entrepreneurial fashion. Coming back to headquarters which I resisted a great. I was pulled back to headquarters. To be a candidate to the job I eventually got. My observations of the internally oriented processes that we all as large companies get to is, of course, your point that you are internally and inward focused and you start to believe your own rhetoric and you drink your own juice and it happens to everyone. It happens to everyone and it happens especially, I remember Luke Gusta when he came and talked To my management team in the early days of our transformation. He got a question. What was the hardest thing about your change at IBM, you know his famous book. And he said, when we started making money again. When we started making money again. And we were making tons of money in the old model. Why change? Yeah. Why change? So you know, obviously I mentioned of what happened to the industry. We were in the last round of becoming a pure commodity cyclical company and deserved to go the way that all those companies went. So we intervened and I gotta tell you, 11 years later, it's not over because of the pace of rate of change of technology. And underpinning that, the changes you need to make in people and how they're wired. [ MUSIC ]

At this year's Fortune Brainstorm Tech conference, CEO Andrew N. Liveris sits down with Fortune Editor Alan Murray to talk about how the chemical industry needs to reinvent itself.