Living Business in Chemicals: Strategies and Offerings
March 12, 2018
March 12, 2018
In a previous blog post, we explored the need for chemical companies to become “Living Businesses.” A Living Business can anticipate and adapt to customer needs, and stay in step with customers so that it remains perpetually relevant to them. In this blog, we look at two tenets of transforming into a Living Business: develop growth strategies for the digital age and create connected products and services.
Growth Strategies for the Digital Age
Growth strategies should be recast for the digital age and focus not just on expanding the business, but also on disruption and the creation of new businesses. This means breaking new ground through the use of technology and through innovative approaches to sales and marketing. Chemical companies’ digital growth strategies should consider a range of possibilities:
For chemical companies that do make these investments, startups could become new engines that help evolve the core of the business. These startups are often at the frontline of disruptive growth and tuned in to the customers’ demands and preferences. To succeed with startup investing, chemical companies will need to conduct continuous screening of the new companies, manage their integration well and be prepared to scale up those companies’ innovations.
Create Connected Products and Services
Companies that consistently develop successful new products and services tend to focus not on what customers are buying, but why they are buying it. That is, they look at what the customer wants to accomplish.
Connected products and services are one key to meeting those needs. These offerings take advantage of wireless/mobile connectivity, the Internet of Things, sensors and big data to enable personalization and link together the components, processes and analytics needed to deliver the outcomes that customers want. At the same time, they provide a new way to engage customers and enable companies to gather data about customers that can be used to constantly improve offerings.
How do connected products and services work in the chemical industry? Consider one chemical company that is transitioning from selling water-treatment chemicals to selling water-treatment services and expertise. The company’s offering combines chemicals, remote services, and sophisticated monitoring and control of factors such as scale, corrosion, fouling and microbiological growth to help customers reduce, reuse and recycle water in their operations. When used at hotels, this connected product/service has helped reduce annual water use by more than one-third. Looking ahead, the chemical company plans to aggregate and analyze data from across many customer systems to better anticipate disruptions, model scenarios and manage water and energy use across an enterprise.
Meanwhile, another company that traditionally sold marine coatings now offers a predictive tool that lets ship owners and managers monitor the condition of a hull while the ship is in use. Traditionally, fleet managers have struggled to make the right trade-offs between downtime, maintenance costs and fuel usage when it comes to hull maintenance—largely because it is difficult to know the condition of the hull underwater. The predictive tool uses advanced modeling, analytics and artificial intelligence to provide insights into hull conditions. This enables scenario planning and the development of more-accurate hull maintenance specifications before ships go into dry dock for repairs.
Yet another business—a vehicle-finish manufacturer—has launched a digital tool for use in body repair shops. This tool helps simplify workflows and provides a real-time overview of the repair process. This helps shops increase throughput, eliminate waste and enhance employee engagement. In essence, the chemical company has combined digital innovation and big data with a deep understanding of the key challenges faced by its customers as they use its products. Overall, this approach enables the company to move from selling paint to facilitating margin improvement for the owners of the body shops.
As these examples show, some chemical companies are moving ahead quickly with connected products and services. We believe that others should set targets that can help them make that shift—focusing, for example, on achieving a certain percentage of revenue from such products by a given year. Those companies that started on this transition some time ago have set targets of up to 50 percent by 2020.6
By applying the Living Business tenets to sales and marketing, chemical companies can stay closer to evolving customer preferences and find new ways to use digital technology to drive growth.
In the next blog in this series, we take a look at another tenet of the Living Business: “Orchestrate iconic customer experiences.”
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Sources:
1 “Borealis acquires German recyclers mtm plastics GmbH and mtm compact GmbH,” Borealis news release, January 7, 2016. Accessed February 9, 2018 and viewable at: https://www.borealisgroup.com/news/borealis-acquires-german-recyclers-mtm-plastics-gmbh-and-mtm-compact-gmbh.
2 “SABIC highlights how it is using ‘chemistry that matters’ to meet global challenges at K 2016 trade show,” SABIC news release, October 19, 2016. Accessed February 9, 2018 and viewable at: https://www.sabic.com/en/news/4082-sabic-highlights-how-it-is-using-chemistry-that-matters-to-meet-global-challenges-at-k-2016-trade-show.
3 “BASF invests in innovative functional chemical company, NBD Nanotechnologies,” BASF news release, November 7, 2017. Accessed January 30, 2018 and viewable at: https://www.basf.com/en/company/news-and-media/news-releases/2017/11/p-17-365.html.
4 Accenture Research analysis of CB Insights data.
5 “Temperatures Rising: Funding to European Pharmaceuticals Startups Heats Up,” CB Insights, October 16, 2017. Accessed February 9, 2018 and viewable at: https://www.cbinsights.com/research/europe-pharma-startups-deals-funding/.
6 Accenture project experience.