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Chemical Industry Vision 2016

New realities, new opportunities: Insights and actions for chemical industry executives

Overview

Chemical companies face a range of disruptive forces, from dwindling resources and changing populations to advancing technology and ongoing volatility—all taking place at an increasing pace. Some of these present serious challenges but others offer new opportunities.

To win in the coming years, chemical companies will need to consider new approaches to technology, customers, business models, innovation, operations and the workforce—and chart a clear course forward. Implementing these new approaches will take time, which means chemical companies should begin sooner rather than later. Those that do will be in position to build a more resilient business, forging a bright future for themselves, for the industry and for the world.

Accenture’s Chemical Industry Vision 2016 is a forward-looking report that examines several key megatrends that will change business and society in the coming years. Building on those insights, the report discusses how those changes will reshape the chemical industry landscape and outlines six CEO agenda action items that can help reduce risk and exploit opportunities.

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MEGATRENDS THAT MATTER

To chart a course for the future, it is important for chemical executives to understand the megatrends that are profoundly reshaping the world and the industry. Our analysis points to the following five megatrends that will drive new challenges and opportunities in chemicals over the next fifteen years:

 

Megatrend 1
Resource availability

Having the right resources available at the right time is increasingly critical. Chemical companies will feel the impact of some resources being abundant while others are increasingly difficult to extract. And, resource availability will likely lead to heightened interest in the circular economy.

Megatrend 2
Changing populations, changing societies

Chemical executives need to consider population trends when planning for the future. For example, Europe's flat population growth could mean a fixed overall market. Yet, the powerful force of the millennial generation is demanding good service, rapid innovation and environmental responsibility.

Megatrend 3
Emerging and opening markets

A growing middle class in countries like China, India and Mexico will lead to an increase in demand for chemicals, particularly in industries like construction and manufacturing. As such, chemical companies are likely to realize significant growth opportunities in these emerging markets.

Megatrend 4
Greater operational efficiency

While always important, efficiency has the potential to reach even higher levels with the convergence of new software, hardware and communications technologies. In the chemical plant in particular, the increased use of robotics and technology will help improve both efficiency and safety.

Megatrend 5
The opening of new frontiers

Advancing technology is enabling people to move into and operate in extreme environments, and that is opening up a range of possibilities for the chemical industry. From down in the deep seabed to up in space, high-performance materials will increasingly be needed for exploration.

CEO AGENDA ITEMS

As the five megatrends reshape the landscape—and disrupt economies, businesses and people—chemical companies will face risks. But they will also uncover new possibilities. To help executives navigate through it all, there are six CEO agenda action items to consider.

As the five megatrends reshape the landscape—and disrupt economies, businesses and people—chemical companies will face risks. But they will also uncover new possibilities. To help executives navigate through it all, there are six CEO agenda action items to consider.


THE CEO AGENDA: TECHNOLOGY


Join the Digital Revolution


Digital technology is a critical enabler of the changes that will help chemical companies adapt to the five megatrends. It is advancing rapidly across all aspects of business, serving as a vital thread that pervades the CEO agenda. While digital technology is a disruptive force, it is one that is creating new opportunities for the chemical industry.


Key Questions


  1. Do you do enough to factor digital technology into business strategies?

  2. What types of outcomes can you sell instead of molecules/compounds?

  3. How can digital fuel your growth and improve your business performance?

THE CEO AGENDA: TECHNOLOGY


Join the Digital Revolution


Digital technology is a critical enabler of the changes that will help chemical companies adapt to the five megatrends. It is advancing rapidly across all aspects of business, serving as a vital thread that pervades the CEO agenda. While digital technology is a disruptive force, it is one that is creating new opportunities for the chemical industry.


Key Questions


  1. Do you do enough to factor digital technology into business strategies?

  2. What types of outcomes can you sell instead of molecules/compounds?

  3. How can digital fuel your growth and improve your business performance?


THE CEO AGENDA: BUSINESS & PORTFOLIO STRATEGY


Build More Resilient Business Models


Technology and connectivity are making new business models possible—and the changing reality reflected in the five megatrends is making them necessary. To meet the growing demand for innovation, efficiency and delivering outcomes, chemical companies can explore new ways of working and make resilience a new basic watchword for the industry.


Key Questions


  1. Who will your competitors be in a networked, outcome-oriented industry?

  2. What business model will meet today’s demands for shareholder value and tomorrow’s strategic needs?

  3. What will your company’s business model look like if the core business is outcomes, not chemicals?

  4. How resilient is your business—and how can you increase resilience?

  5. What happens to your products in a truly circular economy?

THE CEO AGENDA: BUSINESS & PORTFOLIO STRATEGY


Build More Resilient Business Models


Technology and connectivity are making new business models possible—and the changing reality reflected in the five megatrends is making them necessary. To meet the growing demand for innovation, efficiency and delivering outcomes, chemical companies can explore new ways of working and make resilience a new basic watchword for the industry.


Key Questions


  1. Who will your competitors be in a networked, outcome-oriented industry?

  2. What business model will meet today’s demands for shareholder value and tomorrow’s strategic needs?

  3. What will your company’s business model look like if the core business is outcomes, not chemicals?

  4. How resilient is your business—and how can you increase resilience?

  5. What happens to your products in a truly circular economy?


THE CEO AGENDA: MARKETING & SALES


Ride the Tide of Rising Expectations


The most successful and resilient businesses have one thing in common: they consistently find ways to meet or exceed customer expectations. On one hand, doing so is becoming more important and challenging with megatrends changing the nature of markets and consumers. On the other hand, digital technology is making it easier to focus on the customer.


Key Questions


  1. What can you do to differentiate your products and build customer stickiness?

  2. How could you use digital technology to anticipate your customers’ customers’ needs?

  3. What could you do to make it easier to do business with your company?

THE CEO AGENDA: MARKETING & SALES


Ride the Tide of Rising Expectation


The most successful and resilient businesses have one thing in common: they consistently find ways to meet or exceed customer expectations. On one hand, doing so is becoming more important and challenging with megatrends changing the nature of markets and consumers. On the other hand, digital technology is making it easier to focus on the customer.


Key Questions


  1. What can you do to differentiate your products and build customer stickiness?

  2. How could you use digital technology to anticipate your customers’ customers’ needs?

  3. What could you do to make it easier to do business with your company?


THE CEO AGENDA: PRODUCT & PROCESS INNOVATION


Connect and Collaborate for Innovation


Increased customer demands are driving change in research and development (R&D) at chemical companies. The industry needs to shed its traditional R&D model that was typically closed, slow and predictable. Instead, in order to drive better, faster innovation, it needs to embrace a new R&D model that is open, agile, disruptive and connected.


Key Questions


  1. Who are your trusted partners for more open, agile and disruptive innovation that are ready to participate in an innovation ecosystem?

  2. How are you thinking “beyond chemistry” and shifting from creating products to creating outcomes?

  3. What are your new talent requirements for faster innovation?

THE CEO AGENDA: PRODUCT & PROCESS INNOVATION


Connect and Collaborate for Innovation


Increased customer demands are driving change in research and development (R&D) at chemical companies. The industry needs to shed its traditional R&D model that was typically closed, slow and predictable. Instead, in order to drive better, faster innovation, it needs to embrace a new R&D model that is open, agile, disruptive and connected.


Key Questions


  1. Who are your trusted partners for more open, agile and disruptive innovation that are ready to participate in an innovation ecosystem?

  2. How are you thinking “beyond chemistry” and shifting from creating products to creating outcomes?

  3. What are your new talent requirements for faster innovation?


THE CEO AGENDA: OPERATIONS


Make Operations Wired and Data-Driven


Years of process improvement have brought high levels of safety and efficiency to chemical operations. However, the impact of the megatrends is creating an ever-growing need for greater operational excellence. In this environment, leveraging digital technology in plants and the supply chain will prove to be a key requirement for success.


Key Questions


  1. How much could investments in operational excellence add to your bottom line?

  2. How much could you save by investing in operational excellence to lower outages?

  3. What are your strategic plans to further your operational excellence with digital technology?

THE CEO AGENDA: OPERATIONS


Make Operations Wired and Data-Driven


Years of process improvement have brought high levels of safety and efficiency to chemical operations. However, the impact of the megatrends is creating an ever-growing need for greater operational excellence. In this environment, leveraging digital technology in plants and the supply chain will prove to be a key requirement for success.


Key Questions


  1. How much could investments in operational excellence add to your bottom line?

  2. How much could you save by investing in operational excellence to lower outages?

  3. What are your strategic plans to further your operational excellence with digital technology?


THE CEO AGENDA: HUMAN RESOURCES


Design the Workforce of the Future


Waves of change are headed toward the chemical industry in terms of talent. As boomers retire taking with them decades of experience, millennials are joining the workforce. Plus, digital technology and automation call for new types of skills. Since people come first, preparing for these changes, and others, must be top priority on the CEO agenda.


Key Questions


  1. In the digital era, how will you compete for the best talent against more attractive technology companies like Google or Amazon?

  2. With a liquid workforce that is more fluid and mobile, how will you use technology and knowledge-management resources to maintain and exceed your current standards of excellence?

  3. What can you do to remake the chemical industry’s image in order to compete for younger workers?

THE CEO AGENDA: HUMAN RESOURCES


Design the Workforce of the Future


Waves of change are headed toward the chemical industry in terms of talent. As boomers retire taking with them decades of experience, millennials are joining the workforce. Plus, digital technology and automation call for new types of skills. Since people come first, preparing for these changes, and others, must be top priority on the CEO agenda.


Key Questions


  1. In the digital era, how will you compete for the best talent against more attractive technology companies like Google or Amazon?

  2. With a liquid workforce that is more fluid and mobile, how will you use technology and knowledge-management resources to maintain and exceed your current standards of excellence?

  3. What can you do to remake the chemical industry’s image in order to compete for younger workers?

ABOUT THE CHEMICAL INDUSTRY VISION

Research methodology

The Accenture Chemicals leadership team collaborated with Accenture Research to develop the Chemical Industry Vision 2016. We began with secondary research of various sources, synthesized the results into a collection of major industry and company trends, and identified emerging technologies that will have an impact on the industry. Our industry strategists and consultants refined these findings via discussions with chemical company executives in major industry hubs around the world. Additionally, the findings were field tested at four industry events between October 2015 and early 2016. This research will be updated regularly, providing the backbone for future deep-dive research over the next several years.

 

Research methodology

The Accenture Chemicals leadership team collaborated with Accenture Research to develop the Chemical Industry Vision 2016. We began with secondary research of various sources, synthesized the results into a collection of major industry and company trends, and identified emerging technologies that will have an impact on the industry. Our industry strategists and consultants refined these findings via discussions with chemical company executives in major industry hubs around the world. Additionally, the findings were field tested at four industry events between October 2015 and early 2016. This research will be updated regularly, providing the backbone for future deep-dive research over the next several years.

 

Meet the authors

Meet the authors

David Yankovitz


David Yankovitz

Dave is a Managing Director and leads Accenture’s global chemical industry practice.

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David Yankovitz


David Yankovitz

Dave is a Managing Director and leads Accenture’s global chemical industry practice.

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David Yankovitz


Bernd Kreutzer

Bernd is a Managing Director in Accenture Strategy and leads our global chemicals and natural resources strategy practice.

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David Yankovitz


Bernd Kreutzer

Bernd is a Managing Director in Accenture Strategy and leads our global chemicals and natural resources strategy practice.

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Paul Bjacek


Paul Bjacek

Paul is a Principal Director and leads Accenture’s chemicals and natural resources strategic research.

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Paul Bjacek


Paul Bjacek

Paul is a Principal Director and leads Accenture’s chemicals and natural resources strategic research.

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