The chemicals industry is facing lots of challenges, but CEOs agree that opportunities abound
31 May 2016
This is a tough environment for chemicals CEOs, but according to industry-specific data from PwC’s latest Global CEO Survey, many still see opportunities for growth increasing over the long term. In fact, 71% of chemicals CEOs say there are more opportunities for growth than there were three years ago, suggesting a high pace of change. What seems clear, however, is that the issues challenging CEOs are the same issues in which growth is most likely to occur.
Resource scarcity and climate change, technological advances, shifts in global economic power, and rising customer expectations are forcing CEOs to adjust. They’re restructuring their organizations, increasing their customer focus, and trying to build distinctive capabilities that provide competitive advantage.
At the heart of it all? Rising stakeholder expectations.
The relationship between chemicals CEOs and their most important stakeholder, the customer, is in flux. While most CEOs believe that customers are still looking at the basics (cost, convenience, and functionality), some say customers are increasingly looking for other qualities as well. Thirty-seven percent of chemicals CEOs in our survey are working on developing new ‘ethical’ products in response to customer expectations. More than half say they will make significant changes to minimize the social and environmental impact of their business operations.
More than two-thirds of chemicals CEOs think innovation/R&D is the top tool for meeting stakeholder expectations. But they will need the talent to drive innovation through new technology. It’s no wonder then that chemicals CEOs are concerned about the availability of key skills. After all, they will have to compete with many other industries for talent. Some chemicals CEOs say their companies are already changing their talent and HR strategies to make themselves more competitive. But with 46% planning to increase headcount this year, we will all need to think about ways to manage our people strategies to both attract and retain top talent.
Every chemicals CEO in the survey is planning some changes to defining and managing risk in response to changing stakeholder expectations. And yet only around half are concerned that cyber threats could impact growth – and just 8% are extremely concerned. I think companies have not entirely grasped the scope of cyber threats yet, but that’s apt to change as digital transformation takes off.
To reach stakeholders, the industry has to promote its new products and sustainability and environmental efforts. Many companies are already moving in that direction. They are putting more emphasis on brand, marketing, and communications – and on measuring results. It reflects the strong commitment of the sector to making their businesses as sustainable as possible. In fact, 85% of chemicals CEOs say that business success in the 21st century will be defined by more than just financial profit.
PwC’s 19th annual CEO Survey is clear: this is a world in which we are all facing rising expectations. But to generate the growth our businesses need and the trust our customers require, CEOs will need to place the needs of the greater society first.