Tuesday, January 31, 2017

2017 Chemicals Trends

Learned a lot lending an editorial hand here:

PwC Strategy&, January, 2017

By Vijay Sarathy, Marcus Morawietz, Jayant Gotpagar, and Jeremy Bebiak

2017 Chemicals Industry Trends

Chemicals companies face a formidable challenge: delivering profitable growth in a hypercompetitive, low-growth world.

The structural headwinds in the chemicals industry are blowing like a gale out of the global economy. In a funk since peaking in 2007, global economies have been unable to reach the 35-year GDP growth average of 3.5 percent in six of the past eight years. And the two years of “high” growth were more of a bounce back from the sharp downturn of 2009 than precursors of a sustained turnaround.

Within this problematic macroeconomic environment, made worse for many multinationals by the strong dollar, demand for chemicals has fallen. Overall industry sales growth increased an anemic 2.1 percent in 2016 as the sector faced declining industrial production and broad inventory rightsizing by many of its customers. Chemicals companies that sell petroleum-based products often fell short of these industry averages because lower oil prices led to sharp top-line declines, sometimes in the range of 30 to 40 percent. Only naphtha-based producers benefited from oil price weakness, because it translated into materials cost reductions of about 60 percent for some companies, which greatly improved profit margins. Read the rest here.

Monday, January 30, 2017

Private-sector participation in the GCC: Building foundations for success

Learned a lot lending an editorial hand here:

PwC Strategy&, Jan. 30, 2017

by Hilal Halaoui, Salim Ghazaly, Karim Aly, Joe Youssef Malek, and Rawia Abdel Samad

The governments of the Gulf Cooperation Council (GCC) states have decided to change their economic development model. The state-led approach which relied upon natural resources successfully raised incomes from developing to developed country levels in a little over a generation. However, that model is no longer appropriate as it is undermined by oil dependence, a lack of workforce diversity and skills, a growing need for public services, and insufficient innovation.

One effective response is private-sector participation (PSP). GCC states are already using PSP, but have wielded it tactically and ad hoc. As a result, they have not tapped its full potential. Instead, a comprehensive strategic program of public–private partnerships (PPPs) and privatization initiatives that covers all major sectors of the economy is needed to define a country’s PSP plan. If GCC states can successfully develop, launch, and execute such a PSP program, they can transform their economies. The GCC states could avoid US$164 billion in capital expenditures by 2021 and generate $114 billion in revenues from sales of utility and airport assets alone, and up to $287 billion from sales of shares in publicly listed companies.

Furthermore, GCC states could narrow the innovation gap with other countries, enhance the delivery of and access to government services, and improve their infrastructure. To capture these benefits, GCC governments will need a rigorous and comprehensive approach to PSP and a clearly articulated, long-term implementation plan that encompasses all economic sectors. Such an approach rests on three foundational elements: A governing policy for PSP that is either a standalone policy or part of a broader national policy; a legal framework that encompasses the new laws or modifications to existing laws necessary to facilitate PSP activities; and an institutional setup that clearly defines and allocates authority over PSP to existing government entities or establishes new entities to govern it. Download the white paper here.

Wednesday, January 25, 2017

Peter Diamandis’s Excellent Adventure

strategy+business, January 25, 2017

by Theodore Kinni

Stephen Hawking believes we humans won’t survive another thousand years unless we colonize space. And if we do colonize space, people will probably erect statues of Peter Diamandis in town squares across the universe. At least that’s the impression that ex–San Francisco Chronicle reporter Julian Guthrie gives in How to Make a Spaceship (Penguin, 2016).

In Spaceship, Guthrie tells the story of the Ansari XPrize and of SpaceShipOne — the privately developed, piloted craft that, in 2004, won the US$10 million competition by flying into space and back twice within two weeks. Although it was an inspirational feat, the book is a bit of a mixed bag. It’s a terrific yarn, to be sure. But it’s also an overly detailed biography of Diamandis that verges on hagiography and a missed opportunity to explore how new industries emerge from the intersection of government and the private sector.

Diamandis was 8 years old when Neil Armstrong stepped onto the moon in 1969. Like millions of American kids of similar age, he dreamed of becoming an astronaut. Unlike almost all those other kids, he never outgrew the dream — even as he attended Harvard Medical School, where he graduated only after promising the school’s dean never to actually practice medicine.

Instead, Diamandis became a serial entrepreneur in the space business. Among the numerous ventures he cofounded and led from the late 1980s to the 2000s were International Microspace, which provided low-cost satellite launch services; Zero Gravity, which offered well-to-do thrill-seekers parabolic “weightlessness” flights in a Boeing jet; and BlastOff, which aimed to fly a mission to the moon. The business results of his ventures were mixed at best: Zero Gravity is the only one of these three still operating independently. But in zooming from one business to another, Diamandis got the idea to jumpstart a private-sector space race with a prize — a competition modeled on the $25,000 Orteig Prize that prompted Charles Lindbergh’s solo flight across the Atlantic in 1927. Read the rest here.

Wednesday, January 4, 2017

Samuel Bacharach’s Required Reading

strategy+business, January 4, 2017

by Theodore Kinni

It’s curious how often uncommonly clear and commonsensical thinking about management comes from long-time laborers in the field. Perhaps decades of experience enable them to distill the subject to its essence — or maybe it’s just that 40 or 50 years of hard work have earned them the right to speak plainly. Samuel B. Bacharach, organizational behavior professor at Cornell University’s Industrial and Labor Relations (ILR)  School since 1974, is one of those laborers.
“Leadership is a narrative of execution, that’s what it’s about,” says Bacharach, who is currently McKelvey-Grant Professor at Cornell. Until 2016, he served as director of the ILR’s Institute for Workplace Studies. Bacharach boils a leader’s job down to three things: working with people to generate ideas, mobilizing groups to move ideas forward, and sustaining momentum to get things done.
But just because leading is easily described, that doesn’t mean leading can be easily done. Bacharach has devoted much recent effort to bridging theory and practice to help leaders become more effective. He cofounded the Bacharach Leadership Group, a New York–based leadership development consultancy, has implemented his leadership training modules in a number of major corporations, and, with eCornell, the university’s online learning company, developed a 10-course corporate leadership training certificate for high-potential employees.
A prolific author and editor of more than 20 books, including Keep Them On Your Side: Leading and Managing for Momentum (Platinum Press, 2006), Bacharach has increasingly focused his writing on practical leadership, too. His newest book, the first in a planned series, is The Agenda Mover: When Your Good Idea Is Not Enough (Cornell University Press, 2016). In it, Bacharach paraphrases Thomas Edison, reminding us that “a good idea without execution is a hallucination.”
When I asked Bacharach to share an essential reading list for leaders who are moving agendas through the maze of complex organizations, he recommended four books. “The first two books are about why ideas get stuck,” he explained, “and the second two are about the political skills you need to move ideas forward. In terms of moving strategy, these books raise essential questions that all mindful leaders should think about.” Read the rest here.