Times are changing for the chemical companies

The era of chemical companies is changing

Their customers, with access to information, are given greater power and have greater expectations of their supply base. Customers want to have a direct say in when, where and how to buy products and services. Therefore, the market has evolved into an individual centered state, and chemical companies provide customized products and services.

In addition, rapid technological change enables the company to produce according to the fluctuation of customer demand. The popularity of connected devices and Internet of things (IOT) technology is creating new partnerships.

New distribution channels connect suppliers and customers.

Innovation is an important answer

These subversive forces require chemical companies to reshape their corporate image and change their competitive market. Innovation will be the key difference.

To understand the performance of chemical companies in the face of these changes, IBM Institute of business value and Oxford Institute of economics surveyed 350 chemical company leaders in 25 countries who were involved in defining or implementing their organization's innovation strategy.

Of the 350 chemical executives surveyed, 38% told us that innovation is critical to the success of their organizations today. This figure is expected to double to 77% within three years. Innovation is not just about creating different products. Innovation also needs to improve efficiency, labor skills and productivity, and brand reputation, according to the chemicals executives we surveyed. Over the next three years, they say, their organization will drive innovation to improve operational efficiency and optimize the availability and use of assets. They want these changes to enhance the bottom line and drive agility and responsiveness.

Innovation also needs to improve efficiency, labor skills and productivity, and brand reputation, according to the chemicals executives we surveyed.

But it may require a cultural change

While the focus on innovation is obvious, execution is not. Nearly two thirds of the chemical executives surveyed told us that their innovation activities can only be compared with other similar companies, or they are just followers of the market. Only slightly more than a third of respondents said they were implementing innovation strategies, which means there is a gap in the effectiveness of their most important value types.

These efficiency gaps can be attributed to potential organizational capabilities, which respondents said were not suitable for implementing and delivering the expected results.

It seems that the surveyed chemical companies not only lack the cultural environment to promote innovation, but also lack the process to translate ideas into results. Respondents told us that leadership (69% of respondents mentioned) and teamwork (64% of respondents mentioned) were the most critical success factors, but only about half of them (51% and 52% respectively) thought it was an ability advantage. These organizations also face the challenge of encouraging innovative behavior through knowledge sharing and measuring innovation.

In addition, companies are driving innovation in isolation. But this is not the case.

The latter actively encourages new ideas outside the organization and embraces open mechanisms such as crowdsourcing. 74% of leaders are involved in open innovation, compared with 40% of their peers. This openness is supported by leaders' participation in innovation through multiple channels.

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