In the face of disruptive technologies, globalisation, and constant market volatility, transformation is a key imperative. A crucial part of this transformation will be building innovation capabilities and turning them into a powerful growth engine, remarks Dr Abdulwahab Al-Sadoun.
In today’s global economic conditions, the chemical industry in the Arabian Gulf is facing a new norm. Slower than usual economic growth, a dramatic fall in crude oil prices, reduced feedstock advantage and shifting competitive landscape have created a challenging business environment for regional producers.
On the other end, megatrends such as globalisation, urbanisation, resource scarcity, population growth, climate change, Internet of Things (IoT) and the changing nature of work, are leading to disruptions never anticipated before.
While some challenges have remained constant, 2017 has seen the rise of new tests for the global competitiveness of chemical companies. The geopolitical landscape is shifting into new territory, while the sheer pace of technological development makes it difficult to keep abreast of the latest trends and ahead of the competition. This new market environment is pushing producers to understand the weaknesses and strengths of their respective business models, re-evaluating their strategies and exploring new partnerships for growth.
As a result, only those with utmost resilience, able to adapt and evolve, transforming threats into rewards and opportunities into gains, stand a chance for survival in this turbulent business landscape.
Increasingly, the chemical industry is having to look both inward and outward to add value to the business. If companies are to continue to be successful in this new market environment, business leaders must look beyond the established cycles towards more long-term investment decisions. They should fully harness and streamline the company resources to consistently deliver excellence in the core business. More importantly, they should spot opportunities and threats and adapt at a faster pace than their competitors to create a winning advantage.
In this highly competitive global industry landscape, transformation will be key to survival and success – a transformation that is about choosing the right strategic capabilities that differentiate companies from their competitors, experimenting and moving innovation forward, re-inventing the existing business to stay ahead of the challenges at hand. It would be better if we can also add agility and speed to this transformation.
Focusing on innovation not only on technology, but also on services, will be an absolute must to deliver a competitive advantage. In many ways, this requires a new way of thinking. It requires right-sizing the company and restructuring the business to realise its full potential and that of its people. It requires being agile and bringing products faster to market, in addition to portfolio adjustment after years of haphazard growth. This is especially true if companies are to build models that create value beyond basic chemicals. Most GCC chemical companies have traditionally been focused on commodity production. Today, a new transition to higher-margin specialty chemicals is coming into shape. Unlike the commodities model, which is based on feedstock cost advantage and volume, the specialties model involves a greater emphasis on innovation and closer customer relationship and services.
Successful companies in the future will be those that take the steps to commit to systematic transformation – changing their strategy, business and operating model, people, and organisation on an ongoing basis. Agility has become an asset in today’s continuously volatile market.
The future belongs to those able to build a winning culture and drive sustainable growth faster than their competitors. This, in turn, demands a new kind of leadership that is not only directive but also inclusive and that has an appetite for risk.
The 12th Annual GPCA Forum during 27-29 November 2017 at Madinat Jumeirah, Dubai, will explore how transformation can provide a vehicle to meet the present megatrends; what advantages will integration and global scale bring to our value; how will transformation through international expansion can help meet challenging market conditions; and much more. The time is now right to embrace change and deliver a transformation that enables us to continue to create value and lasting contributions to our business, people, society and planet.
Dr Abdulwahab Al-Sadoun is the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA). Set up in March 2006, GPCA is a dedicated non-profit association, serving its members with industry data and information sources.