Devan Chemicals

 

 

Devan, founded in 1977 by the De Keyzer and Vandendaele families, began as a family-owned business that produced textile chemicals. Today, the company is a manufacturer of textile and dyeing auxiliaries such as flame retardants, coatings, and specialty chemicals. Initially, the company was led by Patrice Vandendaele’s father, consisted of seven employees, and had an annual turnover of €2 million. In 1991, Patrice Vandendaele took over his father’s position in the business. For the next 19 years, he managed two full-time jobs: research and development (R&D) manager and chief executive officer (CEO). In 2010, however, he handed over the command to Dr. John Ellis who joined Devan in 2005 as a result of Devan’s acquisition of a British company named PPT Chemicals. It was Devan’s first acquisition in order to expand its business. The acquired company was later named as Devan-PPT Chemicals Limited. Devan was still family owned at that time but no longer remained a family managed company.

 

When Patrice Vandendaele began leading the company in 1991, Devan produced and sold chemicals for textiles, but depended completely on its suppliers. Devan could only produce and sell a limited number of products within the Benelux countries. Vandendaele realized this situation was detrimental for the long-term success of the company; therefore, he led the company into developing its own fire retardants. Thereafter, Devan expanded into antimicrobial technology and reactive polymers. The company continued to introduce new products, which earned them a reputation as a highly innovative company. Devan continued to grow and today employs 50 people in 2013. Headquartered in Ronse (Belgium), Devan has R&D centers in the UK and Portugal and an additional office in the US.

 

Devan was one of the first companies to develop halogen-free and thus environmentally friendly fire retardants. The company’s second innovative product, based on antimicrobial technology, was revolutionary in another sense: It is non-migrating. This means that once it is applied to a textile, a consumer can wash the item as much as desired, but the molecules will not leach into the water. Moreover, the chemicals do not migrate to the skin. This innovation made Devan the number one manufacturer in Europe of antimicrobial treatments for textiles. After these two success stories, Devan acquired an English company that had an interesting patent on reactive polymers. Reactive polymers cause moisture in treated textiles to spread and evaporate more quickly than in untreated textiles. Such treated textiles are more energy efficient; for example, the polymer causes sweat to evaporate more quickly from sportswear.

 

The next step for the company was to develop the application of  micro-encapsules on textile. Capsules about 8 microns in size are filled with an element such as perfume, a skin care product, or insect repellent. These capsules are then glued to the textile. With friction, the contents of the capsules are released and perform their intended function. The latest application of this technology is probiotic bacteria micro-encapsulation. These bacteria grow on textiles and prevent pathogen bacteria from spreading. They also dispose of dust mite excrement, making the textile anti-allergenic. To further enhance this technology, Devan acquired Micropolis, a spin-off from the University of Minho in Portugal. Micropolis held the patent that causes these microcapsules to be reactive, such that molecules on the surface of the capsules attach to the textile without the need for additional adhesive.

 

According to Vandendaele, Devan is driven by innovation. By constantly developing new products, the company kept growing. Research and development was the engine that drove the company. As of 2011, Devan was pursuing a strategy to add fewer chemicals, particularly fewer toxic chemicals, to textiles. Although the volumes of chemicals needed were reduced, the added value rose considerably. The company commercialised high-tech and ecologically sound specialty chemicals and processes with added value for the worldwide textile markets.

 

By focusing on R&D, Devan has chosen not to devote significant time or money to production. Capsules and reactive polymers were produced elsewhere, even though they were patented. Patents offered some protection against competitors seeking to copy their products: to avoid imitation, Devan managers controlled the final mix of the products as a trade secret. The company worked in an asset-light way, selling about 4,000 tons of chemicals annually with just five workers on its payroll.

 

As Devan limited internal production, its strategy relied heavily on its sales and marketing philosophy. When Devan first created an innovative product, it started from technical opportunities. Customers were not sufficiently aware of the value of these chemicals in their markets. Since these were expensive products, customers were not that eager to buy them. Devan thus decided to move away from this push-model and evolved to a pull-model. They talked to their clients and other actors downstream value chain to identify specific market needs. By doing so, they developed a strong reputation and clients began visiting the firm asking for new products that they could offer to their customers. In 2012, 70 to 80% of Devan’s products were developed using a pull-through strategy. According to Vandendaele, market feedback was very influential in determining the company’s R&D strategy.

 

In addition to responding to market needs, Devan also worked to translate technological information about products into unique value propositions that would appeal to clients. Essentially, the firm created a positive, application-focused story that clients could tell their customers. For example, instead of talking about “killing bacteria”, Devan developed a story about “active freshness” and “active hygiene”. Folders and tags were handed out to clients to give them ideas about how to market the products to consumers.

 

Devan also applied a strategy to engage a single strategic partner for every new product developed. This strategic partner was typically a client who further developed the product side by side with Devan and was the first to market that product. The partner earned about a year of exclusivity under the condition that it would sell a predetermined minimum amount of the new chemical. After the exclusivity period, the product would become available to Devan’s other clients.

 

Devan’s success is to a large extent driven by open innovation. The company benefited from working closely with universities and other knowledge partners for three reasons. First, Devan is too small to buy expensive research equipment and facilities. Second, knowledge partners have leading-edge technological competencies in specific technological domains. Third, knowledge partners employ many good researchers with whom Devan could work. In Belgium, Devan has worked with Ghent University, Centexbel, and Hogeschool Gent. In France, the company established connections with Ensait in Lille, and in Germany it partnered with DWI (Aachen). This network of knowledge partners created a snowball effect in that they keep proposing new scientific and technological ideas again and again. In fact, Devan has frequently had to turn down some offers for cooperative partnerships because, if they were not selective in developing partnerships, they would be enmeshed in a system of continuous, fundamental research where nothing would advance to the production phase. Devan’s strategy was to divide their researchers in two teams: one team worked with current customers and developed applications for the short term, whereas another team did fundamental research to develop breakthrough innovations for the long term.

 

To promote sustainable cooperation with innovation partners, Devan was always looking for a win-win situation. On the one hand, partnerships allowed Devan to innovate at an accelerated pace, thereby guaranteeing future revenues for the company. On the other hand, knowledge partners got market access via Devan, enabling them to move beyond research into the development of specific applications. Moreover, with the budget Devan provided to its partners, universities and research labs could fund new PhD researchers.

 

According to Vandendaele, the Flemish government was active in promoting open innovation, as its IWT (Agency for Innovation by Science and Technology) was an important source of financing for Devan’s research. Devan also participated in several projects supported by the European Union. One such project was called “For the Benefit of SMEs”, which provided money for small and medium-sized businesses (SMEs) to spend on research collaborations with universities. In another European project, called “Collaborative Projects for SMEs”, SMEs cooperated with several universities focusing on one central research theme.

 

In addition to financial support, the European government also protected SMEs from unfair competition via legislation. Filing for REACH and BPD legislations is a considerable expense, but the Regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH)[i] and the Biocidal Product Directive (BPD)[ii] are valuable to the industry, and especially to SMEs, as they prohibit illegal copies of products. REACH regulations were established to protect human health and the environment from the risks that chemicals can pose, promote alternative test methods, circulate substances on the internal market free of charge, and enhance competitiveness and innovation.

 

By focusing on R&D, creating a specific sales and marketing strategy, and making use open innovation, Devan achieved a stable market position. To maintain this position for many years, the company strictly followed several principles. First, the company focused on its core competence. Some technologies could be applied in other areas, but Devan operated on the premise that “we know the textile market, we know the client and we know the end product”. Second, Vandendaele followed a strategy of continuous innovation, uniquely positioning the company and avoiding commoditization pressures in that way. Whenever margins on a product were falling too low, Devan no longer had interest in it because it could no longer sustain a competitive advantage in that market. Instead, the company continually looked for niche markets of highly innovative products. As a consequence, Vandendaele wanted Devan to stay small because this allowed fast and flexible decision-making.

 

After a series of discussions and negotiations, Devan Chemicals NV was sold in a management buyout to a consortium of its managers and a private equity investor, Ghent-based Pentahold NV in September 2013. The completion of the sale marked a new phase in the growth for the company. Most of the management team continued to run the company but Patrice Vandendaele left the company.

 

The earlier change in the management and the acquisition of the company by a private equity investor changed Devan’s corporate culture and strategy. The new management initiated a number of changes to the business strategy and operations of the company to bring more professionalization and to operate it in a different way than how small family owned companies’ usually work. The main emphasis was on making company more structured and to integrate R&D more fully into rest of the business with mechanisms in place to bring the projects to a commercial output. However, the integrations of R&D into the rest of business may give less freedom for exploration of completely new technologies.

 

The management chose Pentahold NV as an investor because of its long-term strategic approach. Traditional private equity companies typically optimize the value of the company in the short term with the intention of selling it after a few years with a profit. However, Pentahold NV was focused on long-term goals and growth of the company, which allowed Devan to continue an innovation driven strategy.

 

After leaving Devan, Patrice Vandendaele became involved in a European R&D project with eleven partners, including Devan, to develop techniques for large-scale seaweed farming. As the R&D efforts resulted in excellent prospects for the business, Vandendaele was appointed in 2015 to set up a joint venture with the five partners and to develop mechanisms to make joint decision making effective.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure‑1: A sample of Devan’s wide product range

 

 

 

For more information about Devan, See: www.devan.net  

 

For a company video, see http://www.devan.net/files/clips/clip.htm

 

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i. For more information about REACH, see http://echa.europa.eu/regulations/reach 

 

ii. For more information about DBC, see http://echa.europa.eu/regulations/biocidal-products-regulation 

Contact

w.vanhaverbeke AT surrey.ac.uk

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