State of Innovation in the GCC Chemical Industry

Transcription

1 State of Innovation in the GCC Chemical Industry By Abdulwahab Al-Sadoun Secretary General, GPCA

2 Agenda Importance of Innovation for the Arabian Gulf Chemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

3 Importance of Innovation in the Arabian Gulf Petrochemical Industry What is Innovation? Innovation; is the implementation of a new or significantly improved product (good or services), or process, a new marketing method, or a new organizational method in business practices. Key Innovation characteristics: It is a continuous process that involves multiple aspects of the firm s activities). It must contain a degree of novelty, which can be new to the firm, new to the market or new to the world Innovation could take the shape of Incremental or Radical improvement 6

4 Importance of Innovation in the Arabian Gulf Petrochemical Industry Since 50 years or so, breakthrough Product Innovation in the polymer industry has declined substantially and the focus had been on incremental innovation in product application and process optimization UF PF PED PUR PIB PRT PA SBB LDPE PMMA BR PS PVC PPS POM PAR PTFE EPM EPDM Iso.PP HOPE ABS PAN Epoxy PBT Silicone LLDPE PEEK PES PI PEI LCP Opportunities to introduce fundamentally new commodity products are limited, although variations of existing products can be introduced in response to market needs, thus process technology tends to be the predominant over product innovation Source: Chart from McKinsey Innovation presentation; presented to GPCA Board Workshop,

5 Importance of Innovation in the Arabian Gulf Petrochemical Industry What makes Innovation important for the GCC industry is a push for further Innovation across the value-chain driven by many factors: Internal Feedstock availability Shift into Differentiated product portfolio with a different source of competitive advantage External Regions outside the GCC are gaining new source of advantaged feedstock Drive for self-sufficiency in traditional markets Increased internal & global competition makes the case for further innovation even stronger. 5

6 Agenda Importance of Innovation for the Arabian Gulf Petrochemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

7 State of Innovation in the GCC Petrochemical Industry The Innovation Perception GPCA conducted its 2nd Innovation Survey for the leading GCC chemical companies. 24 comapnies participated representing > 70% of GPCA s Full Member comapnies. The aim is clearly to assess the status of Innovation in the Gulf Industry 7

8 State of Innovation in the GCC Petrochemical Industry The Innovation Perception The 2015 survey results reflects a rather broader picture of the regional industry s view of innovation and it serve as a measure for the change made since the past survey conducted in

9 State of Innovation in the GCC Petrochemical Industry The Innovation Perception Likewise 2010, 80% of leading Gulf petrochemical companies see Innovation as being among their top priorities in 2015 How important is Innovation to your company at present? 2015 results How important is Innovation to your company at present? 2010 results Somewhat Important 21% Somewhat Important 15% Among my top 3 priorities 54% Among my top 3 priorities 65% Most Important 25% Most Important 20% 0% 20% 40% 60% 0% 20% 40% 60% 80% 6

10 State of Innovation in the GCC Petrochemical Industry The Innovation Perception Significantly higher number of companies have innovation strategy in place; 41% in 2015 which has doubled over the past five years Does your company currently have an Innovation strategy? 2015 Results Does your company currently have an Innovation strategy? 2010 Results No, no need for us 8% 13% Not more than an idea yet 13% 17% We seriously consider this 38% 49% Absolutely 41% 21%

11 State of Innovation in the GCC Petrochemical Industry The Innovation Perception Likewsie 2010, Innovation in Products & Process is clearly seen as the most important areas of Innovation, with Marketing & Organization catching up Describe in % the current importance of the respective Innovation activities for your company 2015 results Describe in % the current importance of the respective Innovation activities for your company 2010 results Organization 20% Organization 18% Marketing 23% Marketing 17% Processes 27% Processes 28% Products 30% Products 37% 6

12 State of Innovation in the GCC Petrochemical Industry The Innovation Perception In spite of being typically risk averse and reluctant viz-a-viz change, Top Management and Manufacturing are seen as the key drivers for innovation. The typically more open to change Marketing and R&D share rank #3 This may reflect a short-term and profit target in the GCC industry 6

13 State of Innovation in the GCC Petrochemical Industry The Innovation Perception The full potential of Open Innovation through a closer cooperation with regional academic & research Institutions is yet to be leveraged 2/3 of the companies rate the intensity of their cooperation with universities on innovation as rather low or even low This could be attributed to: Industry s focus on Finding Solutions to a major R&D/Innovation Challenge Rather Low Rather High How would you assess the intensity with which your company is cooperating with universities on new developments for process, products or applications? Low 25% 29% 38% IP, Academic Capabilities,.. etc. Very High 8% 0% 10% 20% 30% 40%

14 Agenda Importance of Innovation for the Arabian Gulf Petrochemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

15 6 State of Innovation in the Arabian Gulf Petrochemical Industry Infrastructure Significant investment in setting up state-of-the art regional applicationfocused Research & Innovation Centers New centers inaugurated during the past 5 years: SABIC Plastic Applications Development Center (2013) GCC Research & Innovation Centers ( ) Borouge Innovation Centre (2014) Sipchem Products Application Center (2015)

16 State of Innovation in the Arabian Gulf Petrochemical Industry Infrastructure A significant majority in 2010 & 2015 is rating the quality of infrastructure in the region as not being supportive to Innovation targets How do you rate the quality of infrastructure/institutions in the Middle East to successfully drive Innovation? 2015 Results How do you rate the quality of infrastructure/institutions in the Middle East to successfully drive Innovation? 2010 Results Low 13% Low 33% Rather Low 50% Rather Low 39% Rather High 33% Rather High 22% Very High 4% Very High 6% 0% 20% 40% 60% 0% 20% 40% 60% 6

17 Agenda Importance of Innovation for the Arabian Gulf Petrochemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

18 State of Innovation in the Arabian Gulf Petrochemical Industry Inovation Ostacles Competency of own staff due to insufficient educational standards are perceived as most critical Obstacle for Innovation in the industry What are the obstacles when creating an Innovation culture with your company? 2015 results What are the obstacles when creating an Innovation culture with your company? 2010 results No obstacle 25% No obstacle 9% Limited budget 10% Limited budget 14% Education system 20% Education system 18% HR availability 45% HR availability 59% 0% 10% 20% 30% 40% 50% 0% 20% 40% 60% 80% 6

19 Agenda Importance of Innovation for the Arabian Gulf Petrochemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

20 State of Innovation in the GCC Petrochemical Industry Future Trends & Prospect Over the next 10 years, Innovation is expected to play an even more important role within the regional industry How important is Innovation to your company at present? In 10 years, how important will Innovation be to your company? Somewhat Important 21% Somewhat Important 13% Among my top 3 priorities 54% Among my top 3 priorities 48% Most Important 25% Most Important 39% In 2015, 56% increase in the number of respondenets who consider Innovation as Most Important for their companies 6

21 State of Innovation in the GCC Petrochemical Industry Future Trends & Prospect At the same time, there are key competencies identified as most important for success in the next 10 years Ranking of the importance of competencies for company s success in the next 10 years, Average Rank Marketing and Sales Excellence Supply chain management Corporate portfolio management R&D Procurement/ sourcing Being predominantly exportoriented, competencies related to: Marketing/Sales and Supply Chain Managment were rated most important for the future Finance 3.1 Note: Importance of competencies for success 1-8 with 1 being most important

22 State of Innovation in the GCC Petrochemical Industry Future Trends & Prospect Over the next 10 years, most companies continue to see innovation in products and processes having the biggest potential Describe in % where you see the biggest potential for innovation in your company in the next 10 years 2015 results Describe in % where you see the biggest potential for innovation in your company in the next 10 years 2010 results Organization 15% Organization 18% Marketing 19% Marketing 12% Processes 30% Processes 31% Products 36% Products 39% 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% 50%

23 State of Innovation in the GCC Petrochemical Industry Future Trends & Prospect Significant improvement is ahead in understanding the needs and opportunities within the GCC Downstream Industry Do you understand the needs and opportunities of the downstream industry well enough to offer innovations which will be adopted easily by your customers? Somewhat 29% Understanding the innovation needs and opportunities of the downstream industry is gaining momentum throughout the GCC Region Well Very Well 17% 54% Over half of the surveyed companies believe they do understand their downstream customers need 0% 20% 40% 60% 6

24 Agenda Importance of Innovation for the Arabian Gulf Petrochemical Industry Status of Innovation in the Industry The Perception of Innovation Innovation Infrastructure Innovation Obstacles Future Trends and Prospect Concluding Remarks

25 State of Innovation in the Arabian Gulf Petrochemical Industry Conculding Remarks Important Learnings: Top Management play a key role as Driver and Owner of Innovation within the company The commodity business is still very profitable but with the looming feedstock cost advantage dilution in the future, the business value of innovative products and their related price premiums will become critical for the industry s profitability. The GCC Chemical Industry is permanently concerned about capabilities buidling (e.g. HR development) With limited scope for product innovation, the focus of the industry may be on process innovation, supply chain management, and organizational innovation to improve productivity and cost advantage. Innovation is an investment in the Future 25

26 State of Innovation in the Arabian Gulf Petrochemical Industry THANK YOU