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Accelerating performance in the chemicals industry

Subscribe to Industrial 11/30/2017 Louis Besland, Scott Jacobs and Regina Madyarova
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A multiyear research effort by Heidrick & Struggles identified acceleration—or the ability to reduce time to value by building and changing momentum more quickly than competitors—as a competitive game changer. Acceleration, in turn, requires a focus on mobilizing, executing, and transforming with agility—or “META.”

For chemicals companies to be deemed “accelerating,” they must be in the top 20% of revenues for their industry for the past three and seven years, generate no more than 20% of their growth through acquisitions, and rely on the government for no more than 20% of their revenues.1 When we looked at global chemicals companies through these criteria, we saw that, despite the dampening effects of cyclicality and the impact of fluctuating input costs on revenues, around half (27 companies) of the 55 large chemicals companies we studied are beating their peers and can be classified as either “accelerating” or “advancing” (see figure). Meanwhile, 28 companies were either “steady,” “lagging,” or “derailing,” indicating that slightly more than half of all large chemicals companies studied have significant room for improvement relative to their peers.

Accelerating performance in the chemicals industry_Figure 1

How do chemicals companies achieve acceleration? Forward-looking companies are quick to adapt to an ever-changing environment. They adjust, for example, to the recent availability of cheaper feedstock in the United States, changes in customer requirements related to environmental sustainability, or larger shifts in market demand. Being agile through the appropriate use of mergers, acquisitions, and divestments is also critical to acceleration.

Consequently, the chemicals industry needs leaders who not only are proficient in strategy, cost, safety optimization, and other traditional skills but also have an entrepreneurial spirit and creativity coupled with passion for innovation. These leaders should also possess a laser-like customer focus to follow the lead of an increasingly demanding customer base. Leaders also need to be able to make connections between events that may seem implausible or impossible, to be able to constantly disrupt and challenge the status quo.

The days of the hierarchical leader are over. Assessing and developing leaders’ agility and ability to motivate others are key in accelerating—and maintaining—high levels of performance in the chemicals industry.


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About the authors

Louis Besland (lbesland@heidrick.com) is a partner in Heidrick & Struggles’ London office; he leads the Chemicals and Oil & Gas sectors in Europe and Africa.

Scott Jacobs (sjacobs@heidrick.com) is a partner in the Leadership Consulting Practice and the knowledge leader for organizations; he is based in the London office.

Regina Madyarova (rmadyarova@heidrick.com) is the practice manager for the Energy, Infrastructure & Sustainability and Natural Resources sectors; she is based in the London office.

The authors wish to thank Ruben Hillar for his contributions to this article.

References

1 A fourth test—did the company see its profit margin reduced by no more than 20% as a percentage of revenues as it grew?—is used to determine whether a company is a “superaccelerator.” For more about the 25 superaccelerators that our research uncovered, see “VUCA, meet META: The 2017 list of superaccelerators.

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Louis Besland Partner +44 20 70754000
Scott Jacobs Partner +44 20 70754000

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