The big mistake in “selling” digitalization to the chemical industry

…and how we do better!

Coming from a conference, where the topic “digitalization” in the chemical industry was quite prominent, I’d like to reflect on one mistake, we all do in my opinion, when we discuss the digital transformation in the chemical industry. What I observe is, that too much of the argumentation is focused on a technology driven approach. But actually: Who cares? How is this relevant for a decision maker in the industry?

I think in the last two or so years we all did a great job to wake up the decision makers in the chemical industry, that there is a new wave of technology rolling over our world. Now most of the big corporations have their digital units or programs. And even smaller companies are up to date with the general topic of digital transformation.

But what is missing is concrete applications and use cases. What problem is actually solved with digitalization? What pain is relieved? What benefits will be gained?

So I want to give a different point of view on digitalization, based on internal frictions the chemical industry is facing. With the term “frictions” I refer to unsolved problems, issues, or challenges the chemical industry faces and that cannot satisfactorily be addressed with the current tools. According to Gijs van Wulfen, one of the leading innovation bloggers, innovation speakers and LinkedIN influencers, these frictions are the source and destination for innovations. Not always a technological invention is needed to address these frictions in a new, creative, innovative way – but often these inventions are the drivers for new solutions to an old problem.

So, what are the frictions in chemical industry? It is a commonplace that the business environment became more volatile, uncertain, complex and ambiguous. Global shifts in supply and demand structure, changing customer values as well as singular political changes, like BREXIT, impact the chemistry business as any other one.

More specific, the chemical industry is burdened by high capital investments and long cycles (which disadvantages it in this VUCA-world), a shift in the raw material base to more sustainable ones, and increasing regulation.

Moreover, the innovation pipeline dried out in many segments. New product offers are much more often just variations of already existing ones than real new blockbusters. It seems that everything that could have been invented is invented by now. Real innovation happens rather at the interfaces: in the bio-chemistry and medical application thereof, in the material sciences, etc. But same time, as most of the chemicals and materials are used in complex formulations or composites in rather complex applications the industrial research chemists face a high level of complexity when called out to deliver innovations.

To transform the traditional business models of the chemical industry to new value generation machines in our 21stcentury, we need to ask ourselves:

  • How can our industry become more agile?
  • How can our industry solve the innovation dilemma?
  • How can we do more smart investments?
  • How can we understand customer needs better – over a complex value chain?
  • How can we match the need for even higher service levels at the customer end with the cost pressure we facing?
  • How can we better cooperate in a network and in exchange with other sciences?
  • How can we incorporate a design for sustainability in our development cycle?

In general: the chemical industry is facing a high level of complexity and uncertainty.

So more information, a more secure basis for decisions will be a pain reliever for executives who need to take decisions, no matter how certain the information basis is.

The symbiosis of data and artificial intelligence is driving the Chemistry 4.0 Revolution

Therefore, the aim for digitalization in the chemical industry must be to solve the complexity friction. Only if there is a basis for more informed business decisions and / or a data based approach to the complex application fields there is a business case for digitalization in the chemical industry. The most relevant application are therefore modeling and forecasting based and the use of artificial intelligence for sense making.

This doesn’t mean that other applications like virtual and augmented realities or distributed ledgers (Blockchain) can be neglected. It just means that the focus of the digital transformation in the chemical industry must be on data. So in this respect, the “Data is the new oil” has a meaning for the chemical industry. Whilst transforming from oil-based pipeline economy to a renewable based circular economy, the data we create will be the fuel for new inventions and innovative business models.

When you want to learn more about digital*chemistry, drop me a comment here or contact me under: innovation //at// alexandermadl.com