Plastic's Second Act

By Arthur Daemmrich, adapted by Margo Bresnen

Today Ecoflex is used to produce compost bags for organic waste (as originally envisioned), mulch films, transparent or cling films for food wrapping, and coatings for paper plates and other products. And the product showcases a long-term strategy at BASF: even if the specific uses BASF currently advocates for Ecoflex fail to develop into major markets, the company is laying the groundwork for a future competitive position when polyethylene plastic bags are restricted or banned more widely than at present.

Ecoflex also offer insights into the green-product innovation process. Without regulations that put a cost on such behaviors as discarding plastics into landfills, a critical market-pull feature is absent. Likewise, without standards and certification schemes that verify to consumers that products meet the claims of manufacturers, plastics with very different environmental life-cycle and consumer lifestyle features are compared solely on the basis of price.

Consumers can now learn about the source, manufacturing chain, and fate of products and packaging. The long-standing invisibility of the chemical industry to most consumers has been superseded by traceable production chains and consumer interest in the environment. To chemical companies, innovation historically was about the molecules and the diversity of uses that downstream purchasers developed for new materials. Now firms like BASF must add consideration of diverse product uses and the environmental fate of their materials to the innovation process.

Neither mandates for composting, nor standards defining biodegradation, nor the advances in chemistry that produced polybutylene adipate-co-butylene terephthalate account fully for the existence of Ecoflex. Its development instead illustrates the coevolution of a product, standards, and the market. None of the three is static, and the successful innovation pathway forged by BASF proves that actively creating markets rather than waiting for consumer demand to attract new products has become integral to product innovation in a wide array of business sectors. BASF has also shown that the chemical industry—with its scientific expertise, laboratories, and test facilities—can play an active role in developing new systems for recycling and product life-cycle management.

Arthur Daemmrich is an assistant professor of business administration at theHarvard Business School. He is currently researching chemicals management and product testing for a comparative study of regulation in the United States and the European Union.

Margo Bresnen is a communications specialist at CHF.