By Robert McCutcheon, US Industrial Products Leader; and A.J. Scamuffa, US Chemicals Leader
Innovation can – and should – help improve the bottom line. A solid strategy for innovation is the essential starting point—and more than a third of chemical executives say they don’t yet have a well-defined strategy. That needs to become a priority. And strategy work doesn’t stop once you’ve articulated a vision. If you haven’t revisited your innovation strategy recently, it may be time to take another look. We’ve identified the following as key ways to improve your innovation efforts.
Broaden innovation efforts beyond products and increase innovation ambition. Products still top the list as the number one innovation priority for many chemical companies. They’re critical, and so is making sure your product portfolio can address the major trends that are transforming the global economy. But it’s important to recognize, and drive, innovation in other areas, too. In three areas – technology, customer experience, and the supply chain – more than 40% of chemicals respondents expect breakthrough or even radical innovation over the next three years. Companies that aren’t emphasizing these areas, or that settle for primarily incremental innovations, may fall behind the competition. We see business model innovation as vital, too.
Get the basics right. In our overall research, we found that the top innovators spend a greater portion of revenues on innovation, compared to the overall sample. Our chemicals respondents told us their companies were spending significantly less; some may need to consider increasing their investment. But to make the most of it, chemical companies need to get innovations to market. Technology advances can help; for example, streamlining testing procedures. Building an innovation function across the whole organization can also help increase overall efficiency.
Build and maintain a strong culture to attract and motivate talent. Every kind of innovation is driven by people. When it comes to building a strong innovation culture, chemical executives put the most emphasis on recognition and reward and strong processes. Most are also making sure that employees get opportunities to innovate and set the tone from the top. A strong innovation culture can help with recruiting. Chemical companies will need to win the fight for talent – especially in growth markets like Asia. Some are already supporting math and science education today, to help increase tomorrow’s pool of skilled workers.
Enhance collaboration. Around one in five chemicals executives say their companies are already co-creating innovative products and services with customers and external organizations. That’s good – but it needs to get even better to match top innovators across industries. Many chemical companies see open innovation as the way forward. And some are starting to explore corporate venturing too. Both can be good ways to help open up more collaboration.
To read more on this topic, download “Using innovation to drive sustainable growth in the chemicals industry.”