2021 is the year of growth and recovery in the chemical industry. After all, the pundits (economists and market watchers) say so. And, after the year that many chemical companies and chemical markets saw in 2020, growth is welcome.
There’s a saying “A rising tide raises all ships.” Meaning, across the industry, all producers and marketers will see an uplift, based simply that overall market activity is picking up.
But is that enough for you and your business?
How do you ensure you meet, if not beat the market?
1. Check Your Assumptions
Many companies assessed and reset their strategies during 2020. And then used that strategy to build their Annual Business Plan. But, what is the foundation of that strategy and plan?
Typically, business strategies are created using a set of assumptions about their business environment – market demands, competitive responses, business drivers. One thing that’s certain about the past 12 months – business and market behavior have been difficult to predict.
So, take the opportunity now to review the assumptions and premises upon which you set your strategy and annual business plan. Identify differences and adjust accordingly.
2. Engage Your Market (i.e. Talk to your Customers!)
I’ve got a saying:
“Growth occurs at the intersection of Strategy and Marketing”.
All-too-often, business strategies are an internal exercise. Yes, strategists look at market trends, gather data, and develop what they consider to be a market-focused growth strategy. BUT, those strategy and market discussions and assessments and targeting occurs internally engaging their customers to find what’s really important and how they can ensure that they’ve got a winning strategy.
So, engage your market and customers, with something other than “How much product are you going to buy this year?”.
- Find out what they deem important – in services and products
- Test your hypotheses – about their business requirements, their end-use markets, when and how they will make purchase decisions
- Find out what matters:
What do they love about you as a supplier? – Do more of that! Integrate it into your messaging, tell your team.
What do they dislike about you as a supplier? – Fix it.
What do they like / dislike about your competitors? – Develop a response
Engage your market and customer to inform your strategy, value proposition, and offerings.
3. Tune-up Your Strategy & Business Plan
Once you’ve checked your assumptions and engaged your market and your customers, make some adjustments to ensure that you can win. Take the advice and insights from your markets and customers and adjust your strategy and plans to win with them. Recovery and growth is available, but not if you don’t adapt and change for it. (Remember the old adage: “Insanity is doing the same thing, expecting different results.”)
2020 was a the “Year of the Pivot” for many chemical companies. Extending product lines, entering new markets (hello, hand sanitizer) and actively innovating (Ascend Performance Material’s new Acteev technology is a great example.). Strategies and business plans were dynamic. Sure, some of that was survival-focused. But much of it was truly market-focused.
I think 2021 will be the “Year of Agility”. The road ahead is still bumpy. While COVID vaccines are rolling out, new COVID outbreaks are occurring. For every upside, there’s a downside. Staying agile and market-focused, and keeping your strategy “alive”, will be critical to your business success.
4. Solidify your Supply Chain
One of the things I’m hearing consistently this year as I talk to chemical leaders is that their growth is being hampered by their supply chain. One leader I recently spoke with told me: “We could sell 20% more product, but we can’t get the raw materials to do so.” Another told me: “Steel is tight, and we can’t get enough drums. Without drums, we can’t ship our product.” Supply chain woes are real.
Many producers significantly dialed back capacity in 2Q2020. Frankly, everyone was afraid of holding too much inventory and getting completely stuck. But, that left the supply chain vulnerable once demand picked back up (in some markets, demand rebounded very quickly.)
Once production is dramatically reduced or idled, it is slow to catch back up. It reminds me of the lessons I learned during an Operations Management class back in business school: Variability is the Thief of Productivity. When dramatic slow-downs occur at the front of the value chain (as happened in 2020) even for a short period of time, the effect is amplified across the value chain both in duration and overall impact.
So, what can you do? Solidify and diversify your supply chain. Find alternatives. Create stability across your demand plan. Temper the variability to create stability. Learn from the lessons of 2020, where supply chain vulnerabilities struck for a variety of reasons, and re-strategize, diversify and solidify your supply chain.
5. Set clear targets for your entire team and measure them.
We’re at the end of January, 1/12 of the year is complete, and many leaders are still telling me: “We’re putting together our team’s targets and goals for the year.” Snap to it! Your team can’t execute and contribute to your growth goals if they don’t know what they are, and don’t understand their role in it.
Make sure your team, whether sales, supply chain, product development or the many other roles and functions in your organization, knows your overall plan and strategy, how you want to achieve the plan and its growth, and the role they play. And, put metrics in place, so that they can track the year.
2021 is poised to be a year of growth and recovery across the chemical industry. Consider the 5 actions to ensure that your business is ready to achieve and grow.
Are you concerned that your business doesn’t have the right strategy or marketing plan in place to achieve your growth goals? Setup a strategy call to review your plans and identify actions you can take today, to ensure that 2021 is a success.