Digital strategist Greg Verdino has mentioned that if the change you’re observing is happening outside of your company, you’re likely being disrupted; if the change is happening within your company, you’re transforming. Clearly – we’d all prefer to transform ourselves rather than be disrupted. That said, the things that have made us all successful in the past, are the things to which we often most vigorously cling, and which make it so very difficult to even envision the transformation before us, let alone aggressively drive it to fulfillment.
In the chemical industry, competitive differentiation often came through access to advantaged feedstocks; proximity to key markets and customer segments; and/or possession of unique intellectual property or process know-how. While these advantages remain important, they are no longer sufficient to maintain competitive differentiation in an increasingly digital age; an age where there exist unprecedented levels of connectivity, a massive amount of high-granularity big-data, and real-time processing which enables simulation and predictive capabilities.
In such an age, chemical companies face the need to move beyond sustainable competitive advantage, to ‘sustainable collaborative advantage’ and take advantage of the increasing ability to *compete as an ecosystem*, not just as individual companies focused on internal sources of differentiation and advantage. Furthermore, with the capacity to connect to customers, suppliers and the outside world in ways not possible before, chemical companies also need to begin to consider *competing on outcomes*, delivering on specific and measurable customer results rather than selling increasingly commoditized chemical products by the ton.
We already see certain specialty chemical companies looking to specialize on key business areas such as R&D, product development, and customer intimacy – while exploring the full outsourcing of other key areas like manufacturing and supply-chain activities, in effect competing as an ecosystem along with customers and extended partners. In the agrochemicals space, we’ve seen significant advancements in the area of “precision farming”, where massive amounts of farm data are collected and synchronized with soil, weather and other data, and run through proprietary algorithms to delivery highly prescriptive advice to farmers about which seeds to plant at what depth, how far apart, in what soil conditions, nourished with which fertilizers and treated with which crop protection chemicals… in essence delivering on an output: crop yield.
The impact of Digital Transformation on the ways in which chemical companies need to re-think competition is real. In what ways are you anticipating digital transformation in your industry area, and in your company? How will it affect the way you look to compete in the future?
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