Chemical company executives who responded to a PwC survey on innovation and growth said that innovation is an important part of their company culture, but less than two thirds said that they have a clearly defined innovation strategy.
Less than 2/3 of chemicals executives say they have a well-defined innovation strategy, compared to 79% of the top innovators across industries.
For many chemicals industry companies, innovation is already a core part of their internal culture and their company mission, but it may not yet be delivering all the value it could be. Innovation can, and should, help improve the bottom line. A solid strategy for innovation is the essential starting point, yet more than a third of chemicals executives say they don’t have a well-defined strategy.
Products still top the list as the number 1 innovation priority for many chemicals 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. Those companies that aren’t emphasizing these areas, or that settle for primarily incremental innovations, may fall behind the competition. And we see business model innovation as vital too.
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, chemicals companies need to get innovations to market. Technology advances can help, for example by streamlining testing procedures. Building an innovation function across the whole organization can also help increase overall efficiency.
Every kind of innovation is driven by people. When it comes to building a strong innovation culture, chemicals executives put the most emphasis on recognition and reward and strong processes. Most are also making sure that employees get opportunities to innovate and setting tone from the top. A strong innovation culture can help with recruiting. Chemicals 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.
Around one in five chemicals executives say their companies are already co-creating innovative products and services with customers and external partners. That’s good – but it needs to get even better to match top innovators across industries. Many chemicals 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.