Business Chemistry: How to Build and Sustain Thriving Businesses in the Chemical Industry is a concise text aimed at chemists, other natural scientists, and engineers who want to develop essential management skills. Written in an accessible style with the needs of managers in mind, this book provides an introduction to essential management theory, models, and practical tools relevant to the chemical industry and associated branches such as pharmaceuticals and consumer goods. Drawing on first-hand management experience and in-depth research projects, the authors of this book outline the key topics to build and sustain businesses in the chemical industry. The book addresses important topics such as strategy and new business development, describes global trends that shape chemical companies, and looks at recent issues such as business model innovation.
Features of this practitioner-oriented book include:
Eight chapters covering all the management topics relevant to chemists, other natural scientists and engineers.
Chapters co-authored by experienced practitioners from companies such as Altana, A.T. Kearney, and Evonik Industries.
Featured examples and cases from the chemical industry and associated branches throughout chapters to illustrate the practical relevance of the topics covered.
Contemporary issues such as business model design, customer and supplier integration, and business co-operation.
List of Contributors xi
Preface xv
Part I Strategy 1
1 Management Challenges in the Chemical and Pharmaceutical Industry 3
Jens Leker and Hannes Utikal
1.1 Introducing the Chemical Industry as a Source of Innovation and Prosperity 3
1.2 Characteristics of the Chemical and Pharmaceutical Industry 4
1.2.1 Product and Process Characteristics 5
1.2.2 Market Characteristics 7
1.3 Business Transformation in the Chemical Industry 9
1.3.1 Business Transformation and Organizational Change Processes 10
1.3.2 Drivers for Change 12
1.3.3 Fields of Business Transformation 14
1.4 Managerial Challenges in the Chemical Industry 15
1.4.1 Creating Strategic Learning Processes 16
1.4.2 Managing Value Chains Across the Globe 17
1.4.3 Optimizing Processes 19
1.4.4 Creating Product, Process, and Business Model Innovations 22
1.4.5 Developing Human Resources 23
1.5 Summary 25
References 26
2 Principles of Strategy: How to Develop Strategy 31
Jens Leker and Tobias Lewe
2.1 The First Day for CEO Walter Brown 31
2.2 Strategy Definitions and Their Interrelations - A Framework for Mindful Strategic Management 34
2.3 Historic and Current Trends in Strategic Management 38
2.4 Strategy Development Process 46
2.5 Industry Dynamics, Signaling Systems, and the Effect of Trends 50
2.6 Summary 55
References 56
3 Strategic Analysis: Understanding the Strategic Environment of the Firm 59
Jens Leker and Manuel Bauer
3.1 Strategic Analysis to Improve a Firm's Performance 60
3.2 Industry Analysis 63
3.3 The Resource-based View in the Context of Strategic Analysis 74
3.3.1 Underlining Assumptions for the Resource-based View 76
3.3.2 VRIN/O Characteristics 79
3.4 Dynamism of Markets 87
3.5 Dynamic Capabilities 91
3.5.1 Capacity (1): Sensing and Shaping Opportunities and Threats 96
3.5.2 Capacity (2): Seizing the Opportunity 98
3.5.3 Capacity (3): Reconfiguring 99
3.6 Summary 103
References 104
4 Management of Business Cooperation 109
Theresia Theurl and Eric Meyer
4.1 Cooperation and Corporate Strategy 110
4.1.1 What Does Cooperation Mean? 110
4.1.2 Why Is the Management of Cooperation Different? 113
4.2 How Cooperation Can Help to Achieve Corporate Objectives 115
4.2.1 Cost Advantages 115
4.2.2 Access to Resources, Know-how and Technologies 116
4.2.3 Access to Markets 118
4.2.4 Time Advantages 119
4.2.5 Distribution of Risks 119
4.3 Morphologies of Cooperation 119
4.3.1 Horizontal, Vertical and Lateral Cooperation 119
4.3.2 Types of Cooperation 121
4.3.3 Strategic Alliance 121
4.3.4 Value Chain Cooperation 123
4.3.5 Project Cooperation 124
4.3.6 Networks and Virtual Enterprises 126
4.3.7 Cooperative 128
4.3.8 Joint Venture 129
4.4 Management of Business Cooperation: A Process Model 129
4.4.1 The Management Process 129
4.4.2 Strategic Positioning 132
4.4.2.1 Market Analysis 132
4.4.2.2 Company Analysis 135
4.4.3 Preparation 138
4.4.3.1 Partner Choice 138
4.4.3.2 Competition Law and Cooperation 142
4.5 Institutionalisation 143
4.5.1 Institutionalisation of Cooperation Management 143
4.5.2 Rules and Rights 145
4.5.3 "Cooperative Transfer Prices" 146
4.6 Operational Management of a Cooperation 147
4.6.1 Monitoring 147
4.6.2 Influence and Communication 148
4.7 Monitoring Cooperation Success 149
4.8 Summary 151
References 151
Part II Innovation 155
5 Principles of Research, Technology, and Innovation 157
Jens Leker, Thibaut Lenormant, and Gerald Kirchner
5.1 What Is Innovation and Why Do You Need It? 157
5.1.1 Temporality 159
5.1.2 Content 160
5.1.3 Subjectivity 160
5.1.4 Intensity 163
5.1.5 Normativity 166
5.2 Sources of Innovation 168
5.2.1 Technology-push Versus Demand-pull 168
5.2.1.1 Environmental Scanning 172
5.2.1.2 Causal Models 173
5.2.1.3 Delphi 173
5.2.1.4 Extrapolations 173
5.3 Organizing for Innovation 174
5.3.1 The Innovation System 174
5.3.2 The Organization of R&D Departments 176
5.3.3 Closed and Open Innovation 179
5.4 Managing the Innovation Process: Stage-Gate® 184
5.4.1 Stage 1 "Ideas Management" 185
5.4.2 Stage 2 "Feasibility" 186
5.4.3 Stage 3 "Lab Development" 187
5.4.4 Stage 4 "Scale-up" 188
5.4.5 Stage 5 "Ramp-up" 189
5.5 Summary 190
References 191
6 New Business Development - Recognizing and Establishing New Business Opportunities 195
Daniel Witthaut and Stephan von Delft
6.1 New Business Development: Management in Unknown Areas 196
6.2 Innovation Strategy 197
6.3 Organizational Structure and Culture 200
6.4 Searching for New Business Opportunities 203
6.4.1 Why Should We Search for New Business Ideas? 204
6.4.2 What Kinds of Business Ideas Are Requested and Hence Searched for? 204
6.4.3 Where Do You Search for New Business Ideas? 204
6.4.4 Looking Outside the Boundaries of the Firm 206
6.5 Selecting New Business Opportunities 207
6.5.1 The R-W-W Screen 208
6.5.2 Understanding and Mapping the Whole Value Chain 214
6.5.3 Discovery-driven Planning 215
6.5.4 Portfolio Management 218
6.6 Implementing the New Business Concept 220
6.7 Learning: Capturing the Value from Lessons Learned 225
6.7.1 Learning from Failures: Post-completion Audits 225
6.7.2 KPIs for Measuring the Success of an NBD Unit 226
6.8 Summary 228
References 228
7 Designing and Transforming Business Models 231
Stephan von Delft
7.1 Business Model Design: Essential Management Decisions 232
7.1.1 Business Models at BASF 241
7.1.2 Business Models at P&G 246
7.2 Strategy, Business Model and Tactics 249
7.3 Business Model Innovation 252
7.4 The Role of Business Models in the Chemical and Pharmaceutical Industry 263
7.4.1 Value Growth in- and out-side the Core 264
7.4.2 New Technologies - New Applications 266
7.4.3 Shifts in Competition 268
7.4.4 New Ways of Value Creation 270
7.5 Summary 272
References 273
8 External Integration: Why, When, and How to Integrate Suppliers and Customers 277
Carsten Gelhard and Irina Tiemann
8.1 Introduction 278
8.1.1 Why Do Companies Integrate External Partners? 278
8.1.2 The Sources of Innovation 279
8.2 Customer Integration 281
8.2.1 Degree of Collaborative Activities with Customers 281
8.2.1.1 Listening to the Voice of the Customer 281
8.2.1.2 Customer Integration (outsourcing) 282
8.2.1.3 Customer Co-creation 283
8.2.2 Up- and Down-sides of Collaborative Activities with Customers 285
8.2.2.1 Mutual Learning and Trial and Error 285
8.2.2.2 Innovativeness 286
8.2.2.3 Reduction of Market Failure 287
8.2.2.4 Customer Relationship Management 288
8.2.2.5 Increased Dependency and Uncertainty 289
8.2.2.6 Associated Costs 289
8.2.3 Typologies of Customer Co-creation 290
8.2.3.1 Co-ideation 290
8.2.3.2 Co-development 297
8.2.3.3 Co-launch 299
8.2.3.4 Co-design 299
8.2.3.5 Co-production 300
8.2.3.6 Co-marketing 300
8.2.3.7 Co-usage 300
8.2.4 Designing and Assessing Customer Co-creation Practices 301
8.2.5 BASF as Best Practice for Providing Customized Solutions 305
8.3 Supplier Integration 309
8.3.1 Emergence of Chemical Supplier-induced Innovations 309
8.3.2 Typologies of Supplier Integration and Roles 311
8.3.3 Supplier Willingness to Be Involved in the New Product Development 316
8.3.4 Value Creation and Supplier Relationship 316
8.3.5 How Do You Attract the Most Innovative Chemical Suppliers? 318
8.4 Invisible for Black & White - A Best Practice for Collaborating with Both Suppliers and Customers 322
8.5 Summary 324
References 326
Index 333
