In his informative and insightful book The Innovator's Solution, Clayton Christensen devotes an entire chapter to explaining how companies can "decommoditize" their products. The key, Christensen argues, is to have a product positioned in a spot in the value chain "where performance is not yet good enough" and improve that product with a new technological advancement, thereby adding new value.
This is precisely what Dow Corning, a venture between Dow Chemical
The technology will allow Dow Corning's customers, including leading automotive, electronics, and plastics companies such as Visteon
PlasmaStream will allow these companies to improve their performance, as well as create competitive differentiation, by making their products more temperature- or scratch-resistant, or by enhancing such characteristics as waterproofing, adhesion, or anti-microbial properties.
Equally important, Dow Corning's new process is reported to reduce manufacturing costs by eliminating or minimizing costly steps, such as the drying and curing processes at automotive component manufacturers.
Furthermore, because the PlasmaStream process operates at room temperatures and uses little water and no solvents, manufacturers are freed from having to deal with a number of expensive and time-consuming environmental and regulatory processes.
Dow Corning isn't the only company working on these new coating processes. Earlier this year, DuPont
That will most likely happen in this case, but in the meantime, Dow and Corning will benefit because they have located that sweet spot "where performance is not yet good enough" and found a way to make it better than its competitors -- at least for a time.
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Jack Uldrich is the author of two books on nanotechnology, including Investing in Nanotechnology: Think Small, Win Big. He does not own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.