Leveraging Partnerships: Innovation And Delivering Solutions With Gulay Serhatkulu Of BASF

Two heads are better than one. When building a business or providing service, having partners and leveraging their strengths is key to scaling your business. In this episode, Gulay Serhatkulu, Senior Vice President of Performance Materials North America at BASF, stresses the importance of partnership and teamwork when it comes to innovation and meeting specific client needs. She also talks about how generational differences play into managing expectations, innovation, and the quality and speed of delivering solutions. Tune in and learn more about BASF’s unique approach and strategy to improve the overall customer experience.

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Leveraging Partnerships: Innovation And Delivering Solutions With Gulay Serhatkulu Of BASF

I am speaking with Gulay Serhatkulu, who is the Senior Vice President of Performance Materials North America at BASF. The business that she leads includes plastics and materials that go into transportation, construction, industrial applications, and consumer goods markets. She holds a PhD in Polymer Science and Chemical Engineering, which is impressive. She is active in innovation, sustainability, and leadership across BASF’s businesses. Gulay, welcome to the show.

Thank you much for having me. I’m looking forward to our conversation.

Thanks for joining me. What is your origin story? How did you get interested in polymers? How did you get interested in BASF?

It is simple. I was in Chemical Engineering at a university for my Bachelor’s degree. I found the polymer world fascinating, so I started focusing on getting into polymers for my Master’s degree in Chemical Engineering. I decided to apply for a fellowship for doing my PhD which I choose, going into biodegradable plastics, believe it or not. That’s when my journey with sustainability was pretty much where I started. I still think that even after the PhD and two post-docs on top, maybe I will know a little bit about polymers for a few years. It’s a wide and large area. There is a lot to learn. The more you know, you realize that you know very little. I came to the US for my PhD and stayed in the polymer field for a long time.

The majority of your BASF career has been more in a commercial role versus technical, right?  You’ve got all this technical experience in your background, yet you’ve stayed commercially oriented.

I started from the technical services, exactly in the term of the plastic polyethylene group. In the technical service group, we had a smaller organization in the North American region. We also do a lot of modifications to make sure the products run well in our customers’ equipment. It also involves a lot of development projects with the customers. The main focus was solving the issues in the customer’s equipment with the products, doing new trials with the new materials, and sometimes for new applications.

It was a lot of fun. I have done it for a couple of years. From there, I have been moved to different locations. It’s more on the business side but on each side, you learn different things. I moved to product management to learn more about profitability. I moved more to marketing and learned more about strategy and M&A processes. I have to make your R&D portfolio suitable for your strategy.

 

From there, I moved to procurement, being on the other side of the table, which was quite fun in Europe. I’m running one of the most fun and exciting businesses in BASF, which is performance materials. It has two parts. One is engineering plastics. The other part is sugarcane and sugarcane chemistries.

What makes it fun and exciting?

With the variety of applications and products that we have is a business that is super customer-focused. A lot of innovation comes from our business globally, not only from the North American region but customized solutions for our partners are what we are skilled and good at. What makes it exciting is number 1) Working in close proximity with our partners and number 2) Being able to deliver what they need for the next generation of products and applications and being recognized by them as well.

That’s interesting. I’ve seen that when we look at press releases and other things. You can see that a lot of BASF’s work and innovation come from your partners. They are done through customers and partnerships. What’s important about that for you when you think about that innovation through partnership?

When it comes to challenges, whether it is sustainability or new materials in the value chain, everybody knows their part super well. Sometimes to make the big changes when it comes to making a change that is significant enough that will change your business model or your design, you need to work with the partners to understand what the material, the design, and the application can do. This is the key to making effective and also groundbreaking innovations.

We talk a lot about sustainability. We realize that on topics like end-of-life solutions, it is not only about finding a solution after the lifetime of the product is over. It is more about how you design it so that we can recycle it properly and how you can make it with less energy so that it has a lower CO2 footprint. Every partner in the value chain has a different value proposition. That’s why the partners need to work together.

Also, there is this speed of innovation part, all together as a separate value. Let’s say I’m a material provider. I can develop a material that can do ABC but maybe my customer or my partners will require only D, then what I provide may not be suitable. Innovation ties closely to the partners to deliver exactly what they need. I see the success with the shortening of the innovation cycle, bringing new products for the applications and also satisfying the needs of the customers, and bringing value to them.

End-of-life solutions are not only about finding a solution after the product's lifetime is over. It is more about how you design it so we can recycle properly or make it with less energy. Click To Tweet

You talk about the shortening of the innovation cycle. I saw a chart that showed these different waves of innovation. We are in something like the sixth wave of innovation over hundreds of years. It is amazing when you look at the acceleration of innovation. A lot of this, in terms of where we sit now, is driven by consumers. Consumers are wanting something new all the time, and they don’t understand why it can’t be delivered.

The new generation will be even further along than the current customer base because most of the new generation did not even know the times when there was no internet, smartphones or iPads. They grow up with everything and every information under their fingertips. They can access things fast, so their patience levels for new products and new things are much less. Delivering that expectation is an even bigger challenge for all the IT companies, not only for BASF but for everybody to be ready for them.

Ready for them to receive it and also ready to bring them into the workforce because their requirements or desires are often different.

I have a son who is going to turn twenty. He’s also an engineering student. We have to put into context why they are different. They grow up differently than we are. Their value system is accordingly a little bit different. The role of mothers and fathers is Generation X. They bring certain values but then also the society they live in brings different values to them. For example, cyberbullying was never an issue in our generation but they’ve seen the impact of it, and they learned being mean to a human being is a no-no.

It’s also the same thing for the environment. They also live in a generation of terrorist attacks in different countries. Security is a whole different thing. Even the communication is different. They have Tiktoks, Instagrams, Snapchats, and everything in between. Maybe human contact is not necessary for them or essential for them to connect. That’s the whole difference growing up. Their expectations of the value system are naturally different.

I have teenagers as well, and we have some interesting conversations about things like sustainability. I wonder, “Where are you getting your information?” They don’t know. It’s TikTok or Snapchat. That’s the honest answer. They are concerned. They’re like, “What are you doing for our planet?” One of my daughters is passionate about water, not plastics but what’s the effect of water. Our next generation is going to keep pushing us to be faster at delivering solutions.

I agree, but also, while we are talking about the generation and their value system being different, the studies indicate that they are most willing to pay for sustainable products compared to the generations before them or the much older generations. The silent generation is Baby Boomers when you compare the new generations.

 

The one other thing that is different is that the psychology of ownership is changing with the new generation. Rather than having more stuff or dissatisfaction with what we have now to pursue as we need better, meager or extra products in our lives. They have maybe more simple living and not owning but maybe renting what is needed for luxury items. That is a whole different lifestyle than Generation X, for sure.

You mentioned the Sustainability by Design event that we met at, which was amazing. Let’s talk about the importance of sustainability to BASF. What are you doing as it relates to that? Every company has these big ambitious goals, and everybody is taking a slightly different approach to those big ambitious goals. How are you and BASF approaching it?

Like any other company out there that thinks about its future, BASF also has its ambitious goals. The goals are one thing, and the actions are another whole. We are vocal about what we are doing in every aspect of our targets and how we are going to come to carbon-neutral growth by 2050. Malls are using green electricity, for example.

On our side also, we have a recent announcement for the North American region to accomplish that but also innovating ways to electrifying our main production. We are adding lots of CO2 in our own production steps, that we are working towards developing solution partners who have maybe much knowledge on electrification of certain parts in the production processes to come up with a solution.

We published those frequently to show the industry that we are not only talking but we are walking our talk. We do a lot of investment as well, whether it’s the R&D for our portfolio, whether it’s the green electricity, especially in Europe, a lot of efforts and also on our innovation and with our partnerships. We have concrete plans and measures in place. That’s what’s more important to me, not only the ambitious targets but what we have to back that up.

This whole idea of sustainability by design was enlightening to me in some of the conversations that your customers had about how they are approaching it and how the end of life needs to be considered upfront in the design process the whole way through that value chain. Also, what it means in terms of automobile electrification and to BASF and having to have different products or innovations in your portfolio to be able to support that.

Not every sustainability concept is identical. Sometimes you can offer products that are sustainable. Sometimes you have to offer products that make the application sustainable. If you are making solar panels, the application by itself is sustainable. Maybe the product that you put in the design of it may not be 100% green. However, the application requires that, and it still helps in the application as long as it is recyclable or has a longer life cycle.

Gen Z's value system is very different, and studies indicate that they are more willing to pay for sustainable products than the generations before them. Click To Tweet

It’s similar to the electrification of the transportation industry. Not every single product may not be green. We do have a lot of products that are coming from recycled materials. However, still making that transformation happen with the products that we have that will perform under those different requirements is still the right way to move.

It’s the whole life cycle analysis of the value chain of the product in use and the impact of that. McKinsey published a report about that as it related to plastics and particularly plastics packaging. I’ve spoken with some other folks who have said, “You have to look at that whole life cycle aspect. You can’t take one piece in isolation.”

It’s an excellent report. We have to be moving away from the emotion and look at the data scientifically. The most critical part of that report is when you compare different applications and alternatives to plastics, you see that from the greenhouse gas emissions standpoint, you have a favorite resource for plastics. Plastics should be where they belong. They do not belong in oceans or in landfills. Trying to solve the problem from the wrong angle is also not defining the problem correctly.

You talk about emotions, and yet people will also say, “Decisions are more on emotions than facts,” many times. As much as we, as engineers, want to believe that it’s all about the data, we know that a lot of things are driven by emotion. That’s a challenge that the chemical industry has. The chemical and the plastics industry is figuring out how to connect to some of those emotions and bring them back.

There are all the images, whether it be a turtle with a straw or the plastics in the ocean, that has drawn an emotional effect. We can all agree that we shouldn’t have plastics in the ocean. That doesn’t mean plastics are bad. We have to figure out how to change the conclusion of that, not just the impact. It’s that whole aspect.

The positive impact of the internet is we see these pictures, and we admit there’s a problem. The negative is sometimes we define the problem wrong and maybe sometimes politicize the entire topic, which needs to be handled scientifically. That’s where things get a little bit more emotional than scientific. In the end, we have to live with all that and the good of accessible information or providing a voice to everyone to their opinions. Every opinion doesn’t mean that it comes from education or from an understanding of different technologies. We must always listen but take it with a grain of salt to educate ourselves and not believe in everything that we hear on the internet.

There’s a saying: “Trust but verify.” We should take that all into consideration a lot more. You talk about your customers, and I have been talking with different people across the industry about the customer experience. Often, inside the chemical industry, what the customer experience means is undervalued.

 

Sometimes, we think of a bit more product-centric positioning versus customer experience and value-driven. It seems like you and BASF are trying to change some of that dynamic in terms of being much more customer-centric and value-driven. Is this new? What’s the approach? What’s the impact on BASF? How are you thinking about that customer experience, and how do you create value with that?

A lot of credit goes, in this case, to our CEO, Martin Brudermüller, when he started implementing a new strategy with acquired a large team of people and logo for the strategy customers at the center of everything we do. The simple strategy is simple messaging, but for the chemical industry, it’s a big shift from product to maybe more customer-centric.

I can give you an example from my own organization in performance materials. We don’t run our businesses based on our product works. We run our businesses based on the industries we serve, which is unusual for most of the chemical companies that you have, for example, the plastics division. We don’t have plastic.

I have four different industries that we serve, whether we serve them with engineering plastic solutions or European solutions. We look at the industry holistically, for example, which helps quite a bit because sometimes the solution can come from an A or B product. Understanding the trends of the industry, the players, and what matters to them is a whole different mindset. It starts with the new strategy. Most are even service groups. Not only do our operational divisions have the same mindset to make the service, connect with the customer better, and make things easier for the customer. We have been putting a lot of effort since our last strategy in place to improve our experience.

It is good for your customers and employees at the end of the day.

I have lots of plans. I start seeing the most amazing part when you go into a manufacturing site. The people working the line know what product they are making and, at this point, goes to which application and which customer. I see that connection. It is amazing that they know the requirements of the customer. They are aware of the application.

They understand the importance of that customer’s ABC requirements. This is what you want in an organization. Everybody is aware of what we do and what is important for the customer. Maybe if we went back a few years ago, it wouldn’t be the case but with the new strategy, we are getting better and stronger in our focus on the customer.

We have to move away from emotion and look at data scientifically. Click To Tweet

That is impactful that you can connect it all the way back to manufacturing. Your manufacturing employees understand the importance of product X because it affects this customer, that customer’s application, and ultimately, the individual company, whoever is consuming it.

For the employees, there’s pride that they have been making that product for ABC application for the customers when they go out shopping, showing their kids, “I’m manufacturing this product for this customer.” There’s also some pride in it, some connectedness to the customer and the business. It’s a different satisfaction in the end for employees.

In fact, personally, when I was in the industry or working inside of a company itself when I worked for Shell, I would often try to make that connection. Shell is starting up their polyethylene plant. I was involved in that business at the beginning, getting it restarted. They are like, “We don’t even know what this is.” I’m like, “Do you have a shampoo bottle?” That’s what this is. Helping to create a tangible connection for your employees and your team with products that they interact with on a daily basis is super helpful.

It’s a different engagement. You are right. We were all trying to do that on a tough basis, maybe with examples. When I talk with the employees, now I’m hearing, “What are you producing?” They are saying, “A product for this customer,” which is exciting.

It starts to transform your business, what you do, and how you value what’s important.

That’s when you understand your organization is customer focused. I have been here for a while now. It is going into the deeper levels in the organization at the grassroots. It clicks with people. We are here in the right direction to be truly customer-centric.

Another topic that has been a big concern all across the industry and has become a household word is “supply chain.” Everybody knows about the supply chain. First, we started with the pandemic, and now we’ve got the inflationary effects and the fact that COVID is still occurring. We’ve had recent shutdowns in China. The Russia-Ukraine conflict has its own set of challenges to the global supply chain. What do you see? What effect is it having on your business? You are North America-centric but how has your supply chain been affected? What are you doing differently to manage that than you might have done a few years ago?

 

I have been in this business for a few years. I would say that for only six months, it was pretty normal. After that, every year, another crisis. You are right.

We have the drought which nobody is talking about from an industry perspective per se. It’s amazing.

We are not naive when it comes to going through obstacles. Whether it’s a supply chain, shortages or the chemical industry, there’s always something unexpected. What is unique in this situation is before one ends, the other one starts. It strained the entire value chain. In the past, we were prepared to stay. Before the hurricane, everybody will store here a little bit, and then you will pass on the hurricane season. We, in the chemical industry, are prepared for these things. What we were not maybe truly prepared for is when you do not have any buffer in the chain that you hit another issue.

Maybe we rely on the supply chains working between the regions too much, especially when it comes to commodities. We rely a little bit too much that every port is going to deliver on time. We rely too much on truck drivers everywhere. We are learning from our little mistakes. We are taking action to not repeat them again. There will always be geopolitical issues that will not be resolved. That is only from the human aspect of it the saddest part of all that is to watch what happens in Ukraine.

When it comes to businesses, corrective actions will be taken but one thing is clear. BASF is vocal about the topic that chemistry goes to your medications, household products, clothing, and everywhere. Once it’s breaking, a lot of the other industries are also going to be impacted by that. Sometimes people look at all the chemical industries as not important but this is not only about chemical industries. It’s about everything in our daily life that we use, from shampoo, soap, medications, and even dialysis machines. It’s pretty much everything.

Everything is about chemistry. The impact is larger than people or politicians understand and appreciate. People and politicians understand the importance of the chemical industry in the total daily life perspective and what it means to shut down the chemical industry for our daily lives. That is all the importance of it in our daily lives.

Coming from North America, the last Ukraine-Russia war impacted some of our customers because of how their value chains are set up. We are vouching carefully. In our company, our board members are quite active to resolve the solutions with the government representatives. I trust that a solution will come sooner than later, hopefully, with no further damage to many lives.

Trying to solve the problem from the wrong angle is also not defining the problem correctly. Click To Tweet

It’s been a rough situation for everybody that’s affected.

There is not much right in that situation. I hope a resolution will come quickly.

This has been a good conversation. I have one more question for you. I’m debating whether I was going to bring this one in but let’s talk about leadership. You’ve progressed quickly at BASF. As a business that has a significant impact on BASF, its employees, and its customers, what’s most critical to you when you think about your leadership style and your effect on your team?

They say, “The fish smiles from the head.” It’s a saying. It’s a lot to do with leadership. That’s a responsibility that I have to carry every day on my shoulders because whatever goes wrong in the business doesn’t matter. It is with me. I take accountability for what happens in my business. I have to admit, I have an extremely strong team of individuals. I practice what I learned, which is democratic leadership throughout the years. I’m getting better and better with every team.

It doesn’t matter what title or level the people are as long as they fit on the leadership team. They have an equal voice to bring their commentaries. On any topic that we are discussing, we make decisions together. We vote in some cases when there are different ideas but once we agree, we go for it. To create that environment, you need to have trust in the team, not only me and the people reporting to me but also between the peer groups.

Create that trust for the environment where it can be your staff. It can raise your voice on any topic. You can be vocal. It is something that creates a little bit of pre-work to bring the team over to that point. We are there. We are performing. It’s a high-performing team. All I have to do when we have newcomers or people going is keep that dynamic and the leadership intact.

The good thing is that BASF also does feedback and feet forward every year that the employees will have direct reports. For example, we will give a lot of commentaries on what I should be doing more or less, stop doing or have MI for our values that we define in BASF. I get concrete feedback, and we do have discussions and improve.

 

There’s always an improvement for everybody but having these conversations continue also makes me a better leader. I’m sure like sustainability in leadership, there is so much to learn and to do better as well. We will go through the same expectations that anything can happen. Between the start of the journey with this job and now, everything that I thought would never happen happened so far, except the aliens, maybe. They didn’t come.

Let’s not say that too soon.

From my experience so far in the last few years, maybe we should always be ready for the unexpected. The rest of it goes like that. It is going to be a tough year because of the inflation and economic factors. We will stay strong with our partners and customers to deliver what they need from us and maybe more.

Gulay, thanks for joining us. I appreciate you taking the time to have this conversation.

Thank you for having me.

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Important Links

• BASF
• McKinsey – Article

 

About Gulay Serhatkulu

Gulay Serhatkulu is Senior Vice President responsible for the Performance Materials
business for BASF Corporation in North America. This business encompasses the entire
materials know-how of BASF regarding innovative, customized plastics under one roof and is
globally active in four major industry sectors – transportation, construction, industrial
applications and consumer goods.

Gulay joined BASF in 2006 as a technical service representative. She has held a variety of
roles with increasing responsibility within BASF including product management, marketing,
sales, strategy and most recently procurement. Prior to BASF, she earned two postdoctoral
appointments at the University of Nottingham, UK and Wayne State University in Detroit,
Michigan respectively.

Gulay earned and/or did her studies for a PhD, MSc, and a BSc degree from the University of
Akron, OH and Hacettepe University, Ankara, Turkey in the fields of polymer science and
engineering, and chemical engineering.

Gulay was born in Istanbul, Turkey. She is married and has one son.

 

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