Lux Research Benchmarks Innovation at 40 Top Chemicals and Materials Firms
BOSTON, MA – While the chemicals and materials industry is centuries old, it still requires innovation, particularly in using new digital technologies to drive growth in the face of market challenges. To help understand the role innovation plays at top companies in the industry, the team at Lux Research, a leading provider of tech-enabled research and advisory services for technology innovation, released its Lux Competitive Benchmark focused on the chemical and materials market.
The new report, "The Lux Competitive Benchmark for Large Chemical and Material Companies," analyzes 40 leading chemical and material firms using the proprietary Lux Competitive Benchmark, which rates companies based on Innovation Effort and Business Execution. Innovation Effort is a quantitative evaluation of the resources a company invests in developing and commercializing new technologies, while Business Execution is a quantitative look at a company's ability to generate cash and growth.
"Playing to win in the chemical industry today requires innovation, but companies need to determine the right level of Innovation Effort for their particular market situation," said Matt Wagner, Senior Analyst on the Acerbating Materials Innovation team at Lux Research and author of this report. "For savvycompanies, the objective is not maximizing Innovation Effort, but rather figuring out the right amount of investment for a firm's particular market."
While the Lux Competitive Benchmark of all 40 companies doesn't show a clear correlation between Innovation Effort and Business Execution, the Lux team found that in certain industry segments, the story is quite different. Specifically:
1) Basic Commodity Chemicals Sector: Business performance in this sector is driven by factors like operational excellence, access to end markets, and feedstock advantage, rather than cutting-edge material innovation, and most show relatively low impact from Innovation Effort. The Lux Take on innovation here: Invest in advancements like industrial internet of things (IIoT) to more efficiently operate manufacturing, storage, and distribution functions.
2) Paint, Coatings, and Adhesives Sector: These are specialty chemical producers, reliant on developing formulations for specific, and evolving, customer applications, so innovation is a key driver of success. For these firms, there is a strong correlation between Innovation Effort and commercial results. Lux Take: Use materials informatics to efficiently develop high-performance formulations.
3) Diversified Chemicals Sector: These firms develop a large variety of chemicals, so new applications and customer-focused formulations are growth areas. While diversified chemicals show a range of performance, Innovation Effort correlates reasonably well with better Business Execution. Lux Take: Tap into digital platforms to support the roll-up and portfolio management of valuable businesses.
4) Materials Sector: These companies primarily manufacture materials and fabricated subcomponents rather than bulk chemicals. There is also a strong relationship between innovation and business results, as tailoring downstream products to customers is a key driver of performance. Lux Take: Exploit opportunities enabled by digital manufacturing to move to a higher-value position in the value chain.
"The Lux Competitive Benchmark for Large Chemical and Material Companies" report, available to Lux Members, dives into detail about the Innovation Effort and Business Execution mix of top performers across the chemical and materials industry and in each of the above sectors. The report also provides a geographic breakdown of the Lux Competitive Benchmark. For more information, download the Executive Summary.
Lux Research is a leading provider of tech-enabled research and advisory services, helping clients drive growth through technology innovation. A pioneer in the research industry, Lux uniquely combines technical expertise and business insights with a proprietary intelligence platform, using advanced analytics and data science to surface true leading indicators. With quality data derived from primary research, fact-based analysis, and opinions that challenge traditional thinking, Lux empowers clients to make more informed decisions today to ensure future success.