Six failure modes bedevil chemical manufacturer

When it comes to the commercialization of new products and new materials, there are six failure modes perplexing chemical manufacturer. Chemical manufacturers with the right capabilities can significantly accelerate release times and generate meaningful revenue.

Chemical and materials companies invest a large part of their R & D: in general, commodity companies account for 2% to 3% of total sales, while some professional companies account for as much as 10%. However, it takes a long time for new materials to achieve meaningful revenue, which is the main reason for executives' frustration. In some cases, the time interval between a product's launch and its revenue generation can be as long as 20 years. In view of this history, many investors and executives have lost confidence in the introduction of new chemical or material products, believing that they can generate revenue in the short term; in contrast, products launched by other industries perform better.

That's one of the reasons why more and more chemical manufacturers are investing in line expansion or incremental product improvement. The introduction of new categories of chemicals and materials is expected to open up new markets, but the investment is not attractive because the process is long and involves a lot of uncertainty.

However, not all of these new products are destined to lead to slow revenue growth. Although we haven't found many companies continuously, rapidly and successfully launch new materials, we have observed some successful launches. By comparing success and failure, we identified the important failure modes related to value proposition and market segmentation issues encountered by the company, and the ability of the company to deploy to successful commercialization. Understanding and avoiding these failure modes can reduce the time by up to 50% to obtain considerable benefits.

Value proposition related failure mode

The value proposition of most materials is only performance or cost improvement for specific market demand. Usually, the market demand is inconsistent with the value proposition of new materials, which inevitably leads to disappointing market share and long-term adoption. This deviation has three aspects.

Value chain related failure mode

Our research shows that value chain barriers can have a huge impact on the adoption time of new materials. We have identified three failure modes associated with the value chain.

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