Innovate or Perish: Managing the Enduring Technology Company in the Global Market

Lummus Process Technology

ABB Lummus Global, historically, had been viewed primarily as an engineering contracting company that happened to have a good ethylene process technology. That all changed in 1987 when a decision was made to dedicate a part of the company to developing a process technology business. The seeds of Lummus Process Technology (LPT) were planted.

LPT’s business is the development and licensing of process technology to the HPI, which includes gas processing, petroleum refining, and petrochemical and polymer production.

Its parent corporation, ABB, is a leading power and automation technology company with approximately 103,000 employees in 100 countries and 2005 annual revenues in excess of $22 billion. LPT has approximately 600 people dedicated to the development and licensing of technology for the HPI. It is a profit center with four research and development facilities in the United States, three of these in alliances. Of its roughly 30 alliances, 10 are major contributors to the business. Thus, LPT is itself a technology-based SBU.

LPT’s Strategy for Growth

Think of the iceberg analogy. The annual market size in the HPI for the licensing business is approximately $5 billion; however, we estimate that the associated market, which includes catalysts, proprietary equipment, and technical services, is around $22 billion annually. The strategy: Capture the iceberg! Or as much of it as possible. Through offerings of value-added products and services, LPT tries to ...