Stampypor Case Analysis - Marketing

Stamypor Executive Summary

Problem Definition: DSM is a chemicals company that has diverse business interests. It sought to transform itself from a company primarily catering to the highly cyclic petrochemical space to one that catered to stable segments like life sciences and performance materials that required innovative products delivering high value. Its NBD division, tasked with developing revolutionary products, is faced with a decision on if DSM should continue pursuing the development of the Stamypor resin. NBD uses a three-stage gate process to evaluate its products. Since the Stamypor technology was bought from another company, it was directly considered in the 2nd stage and has been in this evaluation phase for 4 years. Continuing the project would require an investment of up to €16 Million with an uncertain chance of success due to numerous problems.

Decision Point: NBD should recommend that DSM immediately halt development of Stamypor and try to acquire any residual value of the technology by selling it off if doing so would not harm DSM’s competitive advantages in any way. There are numerous issues plaguing the project which have led to this recommendation. First, Stampypor seems to have no decisive cost or performance advantage over all the available alternatives and instead has certain different advantages and disadvantages compared to the numerous direct and indirect competitors. Second, Stampypor will probably face patent battles and struggle to put up any barriers to entry. Third, trying to force the product through in this environment will require even greater investments which haven’t been accounted for.

Analysis: NBD has really dropped the ball with Stamypor. Most of the problems seem to have started from the decision to skip the first ‘New Business Creation’ stage of the gate process. They decided to skip the process just because they acquired the patent from some other company and believed that the limited screening they did and the projected returns calculations were sufficient as a replacement for this stage. As a result, by the time the project team had finally gone about investigating actual market need and competitor analysis, significant investment in time, money and effort had already been undertaken. As we saw in the HBR article “Why Bad Projects are so Hard to Kill”, projects acquire a momentum of their