How do chemical companies take advantage of innovation opportunities

by Jessica Jackson on Jan 14, 2021 Business 22 Views

To better understand how chemical companies take advantage of innovation opportunities in these rapidly evolving disruptions, Deloitte conducted a series of executive interviews with subject matter experts and developed a proprietary innovation benchmark framework. Based on the research results of these two methods, we put forward some opinions that chemical enterprises can consider creating higher value from innovation efforts.

Long term destructive forces have a great impact on the innovation of chemicals

Our 2010 paper, entitled "the next decade: preparing for the unpredictable future of global chemical industry", lists several scenarios for the development of global chemical industry according to several major trends. "Energy efficiency" and "government directives" were the major trends at that time. What was not expected, however, was the rise of the United States as a producer of low-cost raw materials and its competition with China. These changes redefine the nature and intensity of these trends in recent years.

As in 2010, by 2020, the fate of the global chemical industry will inevitably be linked to the end market demand, price fluctuations of key raw materials, trade and regulatory barriers, and sustainability. Sustainability may lead to greater use of recycled and renewable materials in existing products (see sidebar, "riding the wave of sustainability: the growing role of innovative solutions"). Similarly, with the decline of automobile demand, electric vehicles are expected to compete for a considerable share in the automobile market. Although the energy transformation programme still predicts that the world will be dominated by oil, the use of renewable energy and natural gas is expected to increase significantly. In addition, demographic changes have exacerbated the skill gap in the industry. As many top R & D talents will retire in the next 10 years and immigration restrictions continue to exist, it is still an urgent problem for the chemical industry to recruit, develop and retain skilled talents.

Driving the wave of sustainable development: the role of innovative solutions is increasing

Given the one-off plastic and landfill bans and other regulatory burdens, plastic producers and plastic converters seem to be worried about future demand for raw plastic materials. Sustainable development remains at the heart of the problem, although its scope is still not limited to reducing environmental pollution, but extends to resource efficiency, water use and energy efficiency. In this context, new products, new technologies and new business models introduced by chemical enterprises can help to a great extent.

For example, there is a great interest in chemical recovery technology. More and more venture capital funds and large-scale chemical enterprises pay attention to the technology start-ups that try to commercialize various chemical recovery technologies such as dissolution, depolymerization, pyrolysis and gasification. Although chemical recycling technology is only a part of the solution to solve the problem of plastic waste, challenges such as high capital and operating costs, large-scale production and raw material procurement still exist, which is why more and more people adopt a joint approach to solve the problem of plastic waste. These technology start-ups are forming strategic alliances with interested partners, including large chemical companies, consumer goods companies and municipal companies, to achieve "recycling" through the manufacture of recyclable polymers, access to energy for the existing production environment and supply chain, or through monomer production.

All these developments indicate that it may not be enough to commercialize an advanced technology or product, but also need a supportive business model and the participation of stakeholders (such as government agencies and industry associations), so as to bring a win-win situation for companies and consumers. Although interest in chemical recycling may falter in view of the expected economic downturn caused by the cowid-19 pandemic, the fundamentals that drive the long-term development of these technologies remain unchanged.

These uncertainties require us to subdivide the chemical industry in different ways to extract the relevant insights needed for innovation. We have defined these different sectors of chemical companies that may drive the development of industries, including innovation, as follows:

Natural owner: a company that can acquire or own a strong position in raw materials and focus on achieving lower operating costs

Differentiated goods: companies involving different assets, products and markets, from small differentiation to large differentiation

Solution providers: companies that focus on selling solutions involving system level design and engineering

Article source: https://article-realm.com/article/Business/9610-How-do-chemical-companies-take-advantage-of-innovation-opportunities.html

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