Chemical companies are facing the problems of slowing global economic growth, trade interruption and weakening demand in key industries such as automobiles and construction. The general decline in demand, coupled with the continued oversupply of bulk chemicals, has pushed prices down, making organic growth more difficult.
For most of the past decade, many chemical companies have been working on investment costs and efficiency as the growth agenda has been left behind. After years of integration, commercialization of products, the rise of new competitors in economic growth, and increasing cost control programs, achieving organic growth has become increasingly challenging.
Despite the slow growth, data show that 64% of respondents in the chemical industry expect their income to grow in the next 12 months. The strategy and operation mode of high growth companies provide three core levers for companies to achieve sustainable growth: innovation, pricing strategy and customer-centered.
To focus on key growth levers in a balanced and integrated way, chemical companies need to embed these levers into their strategy, culture and thinking. But they also need to recognize that it takes time to achieve maximum benefits. One way is to determine what can change now, in the next three years or more.
Innovation in the chemical industry should not be limited to the development of new products. Participants in the chemical industry need to use the entire chemical ecosystem to develop new business models and discovery methods, explore new markets, and improve innovation efficiency. Companies can innovate in products, new discovery methods, and several other areas.
As businesses increasingly shift to data-driven innovation, they also need to focus on new applications and processes to maintain strong innovation channels. For example, cross category innovation can include:
Applications: new products with wide applications, such as human tissue repair, energy storage, aerospace, mobile future
Business model: close cooperation with customers, cross selling, channel integration; multi player participation in platform business
Products and discovery methods: recyclability, new chemistry, including green, quantum chemistry, multi-scale nanomaterials, 4D printing materials, artificial intelligence / ml material design and discovery
Process: process simulation; 3-D printing; carbon reduction process; conversion of carbon dioxide, coal and waste into chemicals; and use of biological raw materials
Companies should also consider their investment allocation. They can’t miss current trends, but at the same time, they need to be prepared for the big trends that are coming, to innovate faster than their competitors. Internally, management should promote the culture and environment of open innovation through rapid testing, rapid failure, and repeated model.
Externally, they need to be flexible to co create with different members of the ecosystem, from suppliers and technology partners to customer organizations and consumers. They should also seek crowd funding for new ideas and work with creative providers from concept to product scale.