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1. Achieving Operational Excellence:
Five Elements of Success in the
Global Chemicals Industry

2. 2
Remaining unease across global markets, ongoing price pressures
caused by new competition and decreasing demand, changing
regulations, and an emphasis on “green” supply chains continue
to add volatility and uncertainty to the global chemicals sector.
The chemicals industry has been hit by a steady
stream of dificult events, centered on a set of
market-changing discontinuities.

3. After a period of sustained growth in
the early part of the last decade (15%
CAGR between 2002-2008), the $2.6
trillion chemicals industry is looking
to recapture its lost momentum—and
lost proits.
Where to turn? Given the “new
normal” economic climate, we believe
a razor-sharp focus on operations will,
perhaps more than ever before, help to
separate the winners from the losers.
Operationally excellent companies
historically have demonstrated an
ability to emerge from a downturn in
a stronger position. These companies
achieve superior capital eficiency,
operating margins and growth through
a laser focus on leading industry KPIs.
Regardless of a company’s market
position, winners consistently
deliver results by getting the ive
big operational calls right:
First, they have a deep understanding
of their “competitive essence,” which
they have rigorously aligned with their
operations and structures.
Second, they build organizations that
out-structure their competition.
Third, they have the capabilities,
processes, and skills to out-execute
competitors.
Fourth, they ind a unique blend of
structural and executional changes
to drive operational excellence.
And inally, they deine the right
“change journey” that will lead them to
operational excellence and consistently
high performance.
“Proitable growth in a competitive
global market can only be achieved
through operational excellence,” says
Dr. Jürgen Hambrecht, chairman of
the board for BASF. “Only a long-term
view creates sustainable value.”
BASF has sustained its growth through
a global operational excellence program
intended to generate €1 billion in
additional earnings annually. But not
all companies can demonstrate such a
track record of operational excellence.
Accenture research shows that 95
percent of senior executives across
industries doubt that their companies
have the right operating model to
support their international strategy.
As discontinuities grow in consequence
and in frequency, managers run ever
greater risks of making poor decisions.
They can no longer afford to do so.
Still picking up the pieces from the
global inancial crisis, most executives
are already on a journey to change
their company’s operational models,
whether they recognize it or not.
How they make the journey will
have a signiicant bearing on their
company’s eventual positioning. It
is imperative, therefore, to select the
appropriate change journey with care,
and to embark on it with wholehearted
commitment and full preparation.
2

4. 3
As the global economy ebbs and
lows from one crisis (U.S.) to the next
(European debt markets), chemical
companies are looking for new
opportunities to improve performance
and recapture lost growth momentum.
But leadership teams are facing a series
of challenges that will likely result
in a reshufling of winners and losers
across the industry’s distinct segments,
from petrochemicals and polymers
to inorganics and agrochemicals.
The challenges come in many forms:
In saturated Western markets, organic
growth is dificult, leading large
players to look at acquisitions as the
primary means for achieving above-
average growth and increasing market
share. Many segments in the chemicals
industry remain highly fragmented,
with the top ive companies in
categories such as adhesives and
sealants, catalysts, plastic additives,
food additives and electronic chemicals
controlling less than 50% of the market.
This opens the door for consolidation
through M&A, with the current
economic rebound raising the specter
of new takeover opportunities (recent
examples include CF Industries’ $4.7
billion acquisition of Terra Industries
in the agrochemicals sector, Japanese
chemicals leader Mitsubishi Chemical’s
$2.52 billion purchase of Mitsubishi
Rayon, and the 3.1 billion-euro takeover
of Cognis by BASF). This is a particular
focus of global providers seeking to
improve their presence in emerging
markets along with their proximity to
critical feedstocks and their desire to
move further up the value chain to
increase differentiation. For companies
that prefer to focus on organic growth,
innovation will continue to be the main
driver. But chemical companies are
continually pressured to improve their
return on innovation by increasing both
the effectiveness and eficiency of their
R&D operations. In either case, cost
reductions in operations within mature
market segments will be key to funding
geographic expansion and innovation.
Emerging markets—and emerging
players in those markets—represent
another challenge as they put
increasing competitive pressure on
mature markets. The future state of
the chemicals industry is likely to be
deined by access to feedstocks and
growing consumer demand in emerging
markets. As such, the industry will
increasingly be deined by players that
have access to the feedstocks, markets
and technology of the emerging
world. Already, we are seeing the rise
of emerging market multinationals
(EMMs), with companies such as
Sinopec (China), SABIC (Saudi Arabia),
ChemChina (China), Reliance Industries
(India), Braskem (Brazil), and Lukoil
(Russia) capturing local market share
from mature-market multinationals.
These EMMs are not constrained by
traditional operating models and have
demonstrated a willingness to take on
more risk than more established players.
For example, by investing in assets in
Africa, emerging companies reason that
uncertain political situations in some
parts of the continent are an acceptable
trade-off to ensure better proximity to
raw materials.
Operational Excellence:
Leadership Perspectives
“The key drivers—market-
driven growth and
innovation, increased
presence in emerging
economies and operational
excellence—remain at the
heart of DSM’s strategy.”
Feike Sijbesma, CEO, DSM
“Through perseverance,
resilience, and reorganization,
as well as the ongoing
commitment to operational
excellence, we have
positioned our businesses for
growth in the coming year.”
Jeff Quinn, CEO, Solutia Inc.
Major Discontinuities in the
Global Chemicals Market

5. Volatility is another disruptive force.
Raw materials costs are increasingly
unstable; the pace of business
cycles is increasing. The growing
interconnectedness of local and regional
markets increase complexity and risk,
as crises in one area can quickly impact
another market on the opposite side
of the globe due to the real-time
exchange of information enabled
by the global economy. Chemicals
companies must respond more quickly
to rapidly changing cycles across
geographies, which requires more
balanced customer bases and product
portfolios, sophisticated cost and price
management practices, and deep
insights into market developments.
As traditional business practices evolve,
companies will need to increase both
the lexibility and agility of their
operating models and processes.
A fourth challenge is sustainability,
spurred by growing environmental
and safety concerns (e.g. REACH). New
regulations aimed at product safety and
sustainable production are driving up
costs and forcing chemical companies
to reine processes and governance
structures to develop more sustainable
products and supply chains by reducing
error rates and increasing lexibility to
adapt to changing operating models.
As chemical companies address
these external trends, they also face
a signiicant internal challenge: a
shrinking workforce. The worldwide
chemical workforce is contracting,
as aging workers leave the industry
and younger engineers focus on
different disciplines. The gap has
created a need for as many as 15,000
fresh chemists or chemical engineers
globally each year. As chemical
companies seek to revamp their
operating models, they are hard-pressed
to capture and transfer the wisdom
of outgoing employees while attracting,
training and retaining employees
who possess the new skills required to
compete in the new global economy.
To be more responsive to these market
discontinuities, chemical companies
are inding an urgent need to become
more lexible in their operations. The
winners in this new landscape are
creating global operating models that
enable them to capture market share
and exploit global scale eficiencies
(assets, sourcing approaches) whilst
also building lexibility and customer
centricity close to demand points.
Accenture believes that a more
proactive approach to achieving
operational excellence is the most
important competitive differentiator
for these times.
The general principles around
operational excellence are not new.
But the volatility and uncertainty
of global markets for all segments
of the chemical industry makes
operational excellence a new
imperative for many CEOs.
4

6. Petrochemicals
For emerging companies:
• Managing large-scale operations including distribution
and logistics (e.g., port bottlenecks in the Middle East)
• Managing global governance, as large locals turn into
giant multinational companies
• Managing large-scale, rapid integration of acquired
(e.g., Western) companies
• Managing cultural differences in a global company
For mature companies:
• Managing cost competitiveness; e.g., reduce complexity,
error rates; increase process speed, decision making
• Increasing local presence in emerging markets
Polymers (Plastic Resins, Synthetic Rubber,
Film and Fibers)
• Building processes that allow for high lexibility
to follow customers
• Managing cost competitiveness to deal with cost
pressures from emerging regions
• Segmenting customers to serve cost-sensitive and
other customer needs
• Fostering large-scale facilities to produce cost-eficient
and state-of-the-art technologies (e.g., managing joint
ventures to reach scale)
• Integrating vertically (e.g., to counter tire manufacturers
producing their own synthetic resins)
Inorganics
• Continuing to focus on presence in local markets,
as some markets tend to be very regional
• Choosing capital investments that coincide with the
company’s production cost model as well as market
growth considerations
• Remaining attentive to environmental regulations
• Managing price and maintaining supplier relationships
Paints and Coatings:
For emerging markets/companies:
• Exploring M&A options (e.g., the fragmented Chinese
and Indian paints and coatings market)
For mature markets/companies:
• Exploiting high health, safety and environmental standards
as a competitive advantage in emerging markets
• Focusing on innovation , R&D and end market relationships
• Focusing on end-user proximity and stable position within
the home market
• Investing in distribution infrastructure and branding
Agrochemicals
• Building globally eficient operating models (e.g. , sales
and operations planning)
• Differentiating services based on customer and market
demand and driven by proitability
• Balancing working capital with service levels while
maintaining lexibility
• Establishing a global presence in large agro markets
• Deining a strong local presence and knowing how to meet:
– Regional farmers’ needs
– Local legislation on gene-manipulated seeds
– Local soil requirements and weather conditions
• Managing cost competitiveness in the fertilizer business
to deal with strong cost competition
• Building global logistics vs. regional distribution channels
• Leveraging local R&D
Source: Accenture research
Key impact of market discontinuities on
operational excellence, by chemical segment
5

7. 6

8. 7
For many companies, addressing
these discontinuities and achieving
competitive advantage requires
a renewed focus on operational
excellence. Accenture research shows
that operationally excellent companies
have historically demonstrated an
ability to ride the storm and emerge
from a downturn in a stronger position
(Exhibit 1).
Industry leaders have used the latest
downturn to pursue operational
excellence opportunities. For example,
emerging from a crisp and clear
understanding of its competitive
essence to “manage global complexity
through an integrated portfolio from
feedstock to specialty chemicals,” BASF
has addressed operational excellence
through the “NEXT” eficiency program
it launched in 2008 to improve earnings
by an expected €1billion. A signiicant
part and major beneit lever of NEXT
was the global harmonization of BASF’s
cross-functional, end-to-end processes
across the 75 business units worldwide
led by Dr. Robert Blackburn, Senior Vice
President and Head of Global Supply
Chain Management, BASF.
In the chemicals industry, companies
that consistently outperform industry
averages in both revenue growth
and operating margins have also
shown increased activities related to
operational excellence, such as locating
close to feedstocks, integrating value
chains, and becoming more customer-
or specialty-focused (Exhibit 2).
The best approaches to operational
excellence, however, are dificult
for most companies to pinpoint.
Executive management confronts a
seemingly limitless range of potential
responses: Should we launch a top-
down transformational program,
or a company-wide Lean Six Sigma
program? Do we need to nail down
a new operating model before we
start making big changes? Do current
market disruptions call for a strategic
response that transcends economic
cycles? Working through this maze
of questions in order to achieve
operational excellence right requires
a strategy built from ive hallmarks
of operational excellence.
The Five Hallmarks of Operational Excellence

9. 8
Winners
Exit from recession
Average ROIC
Related to
the industry
Index
Exhibit 1: Operationally excellent companies can separate
themselves from the pack post-recession
Source: Accenture research
Followers
Time
Exhibit 2: Characteristics of top performers in the chemicals industry
Source: Accenture research
Financial performance/company classification
Close to source/
commodity focused
companies
Value chain
integrated
companies
Customer/specialty
focused companies
Revenue Growth
(CAGR 99-09)
Operating Margin
(Avg. 99-09)
Sustainable Top Performers
Segment Average
Sustainable Top Performers
Segment Average
23.4% 8.7% 16.6%
13.6% 3.6% 8.0%
24.5% 23.0% 25.7%
15.0% 13.9% 19.7%

10. 9
1.
What is our competitive
essence?
Can you deine what your organization
does better than anyone else? This is
the “competitive essence” that, when
operationalised, enables a company
to win in a market.
Competitive essence is the mechanism
by which the organization best creates
economic proit. It is a long-term
characteristic—something that should
change only when the company’s
underlying value proposition changes.
It can be summarized simply and
clearly; it’s a statement that everyone
in the organization can hold onto.
A great example is when President
John F. Kennedy famously asked a
janitor at the National Aeronautics
and Space Administration (NASA) what
he did, and the janitor replied: “I help
men get into space.” Other examples
come from Apple, whose competitive
essence is speed to market, rooted in
delivering constant innovation (think
iPhone) and ‘cool’ products; and Procter
& Gamble, deined by the speed and
success of new product development.
In the chemicals industry, Monsanto’s
competitive essence is leadership in
farming innovation, while BASF’s lies
in managing global complexity with
an integrated portfolio, from feedstock
to specialty chemicals.
Competitive essence is much more
than a question of brand labeling
or an exercise in creating a clever
tagline. It also transcends ideas of
brand perception and brand equity.
It is also just the irst step in the
journey toward operational excellence,
in which companies must decide
whether to focus on pursuing
advantages in structure, execution,
or a mix of both.
2.
What changes can we
make to out-structure
the competition?
For companies to achieve operational
excellence, their structure must
align with their competitive essence.
Aligning both the organization
(governance, process, people) and
asset (infrastructure, network) structures
to optimally support the competitive
essence often requires programs
of transformational nature. Both
organizational as well as asset-based
structures are designed and developed
based on external and internal
priorities—from regulatory trends
and long-term supply-chain
costs to changing skill sets and
improved technology capabilities.
The structural dimension must
answer four key questions:
• What are the distinctive capabilities
of our organization and our assets,
and the activities in which we should
focus investments?
• Where do we establish our operations
to ensure the right mix of global,
regional, and local presence?
• Who should be in the critical
roles required for our structure
to succeed, and who should we
partner with to outsource non-
core capabilities?
• How do we execute on this model
to gain advantage?
In an increasingly global marketplace,
where power centers are being
established in emerging markets, new
operating models will be required. For
example, in petrochemical products and
major plastics, Asia and the Middle East
have emerged as the top two producers
(Exhibit 3). In other segments, mature
Operational Excellence:
Leadership Perspectives
“Operational Excellence is a
focus activity in 2010.”
Bob Margevich, Managing
Director, Functional Chemicals,
Akzo Nobel

11. 10
companies are building capacities
close to raw materials and emerging
companies are growing a local presence.
Structural adjustments will be required
to capitalize on accelerated growth
openings in these emerging markets.
The organization will beneit from
global scale while remaining locally
responsive, and will be able to spread
leadership talent across the enterprise
to support growth in new markets.
The right operating model will take
full advantage of rapidly developing
global talent, skills and cultural
differences. And it will mitigate the
rising risks inherent in an increasingly
interconnected global economy. P&G is
one example of a leading company that
has continuously evolved its operating
model to achieve structural advantage.
Over the past 30 years, it has remade
its model four times: from a multi-
local model in the 1980s, to a regional/
functional structure in the mid-1990s,
to a global model at the turn of the
century, to its current state: a “super-
global, super-local” model that has
been simpliied around category, market
and business service outcomes.
BASF’s Verbund model is one example
how a company can achieve structural
advantage through its physical asset
structure. BASF locates and links
multiple processing plants at one site
to create eficient value chains. The
plants can share byproducts and other
materials to save resources and energy.
Close physical location also minimizes
emissions and lowers logistics costs.
Exhibit 3: Chemical capacity shifts, top petrochemical products and major plastics
107
133
23
161
122 131
88
313
128
138 147
395
132 141
173
442
2000 2010 2015 2020
Europe North America Middle East Asia
Capacities in million metric tons - Top 12 Petrochemical and Plastic Products
Benzene
Butadiene
EPS
Ethylene
HDPE
LDPE
LLDPE
Methanol
MX
PET resins
PP
Propylene
PS
PVC
Toluene
Source: Accenture research

12. Chemical companies seeking structural excellence often take
one of these paths:
Global vs. Local Operating Models: The dynamics of the
global marketplace, combined with maturing information
technologies, is enabling new ways of doing business and
making new types of relationships possible. The globalization
of supply/ demand markets requires companies to review
existing operating models and decide what they want to do
locally and what will be done on a global level. Key dimensions
when considering a global vs. local operating model include:
multidirectional capital lows; competition for resources
and talent; emerging consumer segments; and new sources
of innovation. There are many options of operating model
conigurations; key design parameters are framework, scope,
site locations, sourcing strategy and implementation.
Network Coniguration: The structuring of assets is as
important as organizational structure when pursuing
operational excellence. Chemical networks are characterised
by asset-intensive manufacturing sites and global material
lows. These activities can result in signiicant inventory and
transportation costs. The network coniguration deines the
ideal manufacturing sites, storage locations and transportation
mode by optimising total network costs vs. required service
levels. High service levels combined with low-value density
products can force chemical companies to manufacture and/or
store products as close as possible to customer sites.
Shared Services/Outsourcing: Companies in mature markets
will need to continue to make dificult decisions about which
organizational functions (e.g., support and service) should
be centralized across business units, in order to manage
costs more effectively. Business services such as inance
and accounting, HR, procurement, customer service, and IT
can be bundled in a shared service center and consolidated
geographically or outsourced fully to an external service
provider. We’re seeing a trend toward creating a global network
of multi-function shared services instead of a single shared
service across the entire organization. Beneits of a shared
services model include: improved business performance metrics
(e.g. DSO) and quality of service with guaranteed service levels;
standardized processes and specialized expertise to drive
continuous improvement; increased lexibility to adapt to new
demands; and an increased focus on core business and revenue
generation initiatives
Segment relevance Petrochemicals Polymers Inorganics
Paints and
Coatings Agrochemicals
Structure
Shared Services
Global vs. Local
Operating Model
Network Configuration
Frequent Measures of Structural Excellence
11

13. 12
3.
What capabilities do
we need to out-execute
the competition?
Execution excellence is a hot-button
issue among senior executives: Polled
recently by The Conference Board,
CEOs rated “excellence of execution”
as their top challenge for the second
year in a row. Nearly half of the survey
participants—up from roughly a quarter
just six months earlier— were also
concerned about their organizations’
speed, lexibility and adaptability
to change.
Excellence in execution centers on
three drivers and is equally important to
manufacturing and business processes
(Exhibit 4):
• Simpliication: the elimination of
duplication and low-value activities
and a clearly deined decision-making
authority
• Speed: a reduction in cycle times,
waiting time, and errors; elimination
of waste; standardizing and
harmonizing processes; and the
collaborative sharing of information
• Discipline: managing for results,
fact-based work, performance
measurement and the proper
incentives
These drivers emphasize how the right
day-to-day work processes can help
an organization achieve signiicant
measurable performance improvements
in cash low and cost eficiencies
by improving lexibility and speed
to market, quality and reliability,
and customer value. The drivers also
can help leadership teams focus on
the right methods for addressing market
discontinuities (see sidebar on page 13)
A leading South American chemicals
company, for example, was faced
with organizational and supply chain
complexities created by a past merger.
The company launched a program to
harmonize its cost-to-serve, demand
planning and inventory management
processes and policies. The beneits
were numerous: reduced inventory,
increased availability of plant capacity,
greater visibility of inventory levels, a
better balance between production and
sales, and optimized shipping (fewer lost
orders). The program is expected to drive
savings of $35 million annually.
Exhibit 4: Companies that achieve execution excellence do so through simplicity, speed and discipline
Execution Excellence
• Low operating costs
• High capital turns
• Fast to market
• High success rates
• High client satisfaction
• High flexibility
Simplicity Speed Discipline
Manufacturing
Operations
Business
Processes
• Eliminate duplication
and rework
• Eliminate low
value activities
• Clarify decision
making authority
• Standardize and
harmonize processes
• Reduce cycle times
• Reduce waiting time
• Harmonize processes
• Share information
collaboratively
• Manage for results
• Build an execution
culture
• Measure, report
and improve
• Set incentives
Supporting Methods:
• Process Harmonization
• Lean Six Sigma
• Complexity Management
• Kaizen
• Etc.

14. Chemical companies seeking excellence in execution may take
one of several paths to address the market discontinuities and
other challenges we described earlier. These paths include:
Asset Utilization/Optimization: CAPEX demand, the market
impact of new capacities, and time-to-build issues can limit
the economic options of a chemical company looking to
grow by investing in new assets. Optimizing asset utilization,
therefore, is often a better option for increasing output (or
reducing waste) to help generate additional revenues. Key
drivers of asset optimization are maintenance excellence,
integrated planning, TCO models and a heavy emphasis on
quality.
Demand/Supply Balancing and S&OP: In the complex market
environment of the chemicals industry, companies must excel
at forecasting product demand and adjusting supplies up
or down quickly in response to changing market conditions.
Improved demand and supply balancing typically increases
service levels and reduces inventories. Sophisticated planning
capabilities also enable companies to adjust costs and service
levels according to their competitive essence (e.g., a low-cost
provider plans with less inventory, trading off against the risk
of stock outages).
Lean Manufacturing and Operations: Increasing cost
pressures have forced many chemical companies to produce
their products at the lowest possible costs. This pressure has
led many organizations to implement lean manufacturing
programs, utilizing techniques such as Six Sigma to optimize
the production process and reduce errors. Lean manufacturing
will also help chemical companies address the war for talent,
which is heating up amidst a shrinking workforce and the
expected decline of well educated engineers pursuing careers
in the chemicals sector.
Merger Integration/Process Harmonization: Leadership
teams considering mergers or acquisitions must carefully select
targets and perform the due diligence necessary to ensure that
the target company its the buyer’s strategy and competitive
essence. Operationally, merger execution must be as eficient
as possible – across all areas such as culture, infrastructure
(physical and IT), and back-ofice systems – in order to capture
maximum value. Dow, for example, has a track record of
achieving 14-18% cost synergies with its major acquisitions.
It continued that trend when it purchased Rohm & Haas in
2009. Dow combined Rohm & Haas with its specialty materials
businesses under the Advanced Materials portfolio, creating
synergies of $1.3 billion, including over $400 million in
purchasing synergies.
Customer Interactions: High levels of customer service often
require signiicant investments, while low service might result
in lost customer sales. It is critical, therefore, that a company
offers service levels that align with its competitive essence.
Doing so requires a clear view of current service levels and
clearly deined objectives for customer service.
Compliance and Risk Management: For obvious reasons,
compliance in the chemical industry is a critical factor in
business performance. Companies must be able to adapt
quickly to new regulatory environments – those that stay
nimble in the ever-changing regulatory environment can
gain competitive advantage.
Segment relevance Petrochemicals Polymers Inorganics
Paints and
Coatings Agrochemicals
Execution
Asset Utilization/
Optimization
Demand and Supply
Balancing/S&OP
Lean Manufacturing
and Operations
M&A Integration/
Process Harmonization
Customer Interaction
Compliance and
Risk Management
Source: Accenture research
6 Areas for Improving Executional Excellence
13

15. 14

16. 15
4.
What blend of structural
and executional changes
does the company need?
Most companies strive for the proper
balance of structure and execution that
drives operational excellence. It’s not an
easy equilibrium to achieve. Given the
opportunities and threats presented by
the recent global inancial crisis, we are
now seeing many companies in Japan,
Korea, India, and China seeking to place
much greater emphasis on regional
and global operating models and better
balancing their efforts across execution
excellence and operating model
changes. At the same time, we
are also seeing many companies in
developed economies focusing on
execution excellence while evolving
their operating models to better
compete in a changing world.
DuPont, for example, increased its
emphasis on cash generation in 2009
as it sought to maintain its inancial
strength during the recession. A
main driver of the cost savings was
a corporate reorganization in which
the company integrated 23 strategic
business units into 13 businesses,
removing layers of management and
moving decision-making closer to its
customers. The restructuring also helped
the company to generate $3.4 billion in
free cash low and achieve $1.1 billion
in ixed cost productivity.
At the same time, however, the
company did not pull back on
its innovation execution. DuPont
introduced more than 1,400 new
products in 2009—about 60 percent
more than in 2008—and iled more than
2,000 U.S. patent applications, the most
ever in a single year for the company.
5.
What change journey
will achieve operational
excellence?
It is not enough for executives to
know where they plan to take their
organizations, or the proper blend of
structural and executional excellence
they hope to achieve; how they
make those journeys will also have a
signiicant bearing on their companies’
eventual positioning. Choosing an
appropriate “change journey” is non-
trivial because each company has a
different context for change, a unique
starting point and its own “corporate
DNA”—all of which inluence the type
of journey that will work best for
the organization. Business leaders at
chemical companies are no exception;
they must select the appropriate change
journey with care and embark on it
with wholehearted commitment and
full preparation.
Accenture has identiied three main
types of change journeys (see table to
the right). For every company and every
leadership team, there will be, in theory,
one optimal response to discontinuity—
one “journey” that best suits the
company’s culture and positions it for
survival and/or leadership (Exhibit 5).

17. 16
1. Continuous improvement focuses
on building bottom-up process
excellence step by step. This change
journey usually involves a large number
of small initiatives dispersed across
the organization in order to build an
ongoing change capability. Continuous
improvement efforts are typically led
by divisional or geographical leaders
and yield quick beneits, require small
relative investments and tend to
become a natural part of doing things.
This journey best suits an organization
that believes it has a solid target
operating model deined and that tends
toward decentralization of authority to
carry the model out.
2. Transformational programs
involve top-down, largely structural
change. Here, the journey involves
change on a grand scale, almost
always with complete reinvention of
the operating model and big shifts in
the organization’s structure to sync
up with the business strategy. In a
company that has the right DNA and
the right C-level leadership to drive the
program, transformation is usually the
fastest way to implement big change
and to leapfrog the competition.
3. Targeted Interventions involve
functional improvement programs
across structure and execution. This
is the most common type of journey,
aimed at focusing on the area of
greatest need that will yield clear
return on investment. There is typically
a compelling reason to change—a
threat caused by a market or industry
discontinuity, or a new opportunity for
growth—along with a sense of urgency.
In this type of journey, an organization
decides to make big changes to its
operating model, but chooses to do
it a piece at a time in order to lessen
the risk of the change initiative.
Exhibit 5: A range of factors influence the change journey
Continuous
Improvement
Transformational
Programs
Global Operating
Model Re-Invention
Lean Transformation
Regional Operating
Models
Tax Efficient
Operating Models
Global Shared Services
Operating Models
R&D
Operations
HQ
Simplification
Global Operations
(SCM) Strategy
Process Innovation/
Optimization
Lean Six Sigma Execution
Lean Six Sigma
Capability Building Targeted
Interventions
Structure
Incremental Magnitude of Change Step Change
Execution
Execution/
Structure
Balance
The three main “change journeys”

18. 17
The complexities of markets, customers,
business units, and departments mean
that most companies will attempt
more than one approach to achieving
operational excellence. Some senior
managers will argue persuasively
for discrete incremental eficiency
programs, while others press
equally powerful arguments for
wide-ranging, highly public, multi-
year transformation initiatives.
So how do companies know which
journey to take? Companies that
successfully reach higher planes of
operational excellence work through
three key steps:
1. They assess the operating models
they will need. Leadership teams should
be very clear about the discontinuities
that are the primary catalysts for
their change journeys. They then can
work through a diagnostic exercise to
assess their current operating models
and to validate their target operating
models. The focus here is on both the
strategic operating models that deine
their capabilities in the face of the
discontinuities and on the operating
models that emphasize improving
eficiencies in existing business
processes.
For global companies, choosing the
right operating model requires a set
of thoughtful tradeoffs between the
need for local market agility vs. global
scale in processes and capacity, the
cultural acceptance of standardization,
the availability of talent, and other
factors. The right operating model is
a function of a company’s response
to global market changes and the ability
of leadership teams to evolve and grow
as they balance being both super global
and super local.
2. They are realistic about choosing
the right journey. Making clear-eyed
comparisons of their “to be” and current
operating models, companies can more
easily select the change journey that is
most likely to be successful for them.
Their choices are determined largely
by the company’s own characteristics—
its capacity for change, the skills and
experience of the leadership team,
its openness and transparency, its
goals and expectations, its operating
eficiency, and more—as well as by the
personal characteristics and leanings
of its top managers.
3. They take steps to improve the
odds of executing well. With the
change journey selected, operationally
excellent companies pay close attention
to the factors that improve the odds
of execution success—putting in
place the right governance systems,
appointing the right staff to the right
teams, establishing the right incentives,
identifying the most crucial project
milestones, and tracking progress
against them.
Operational Excellence:
Leadership Perspectives
“We will continue to rigorously
apply the inancial discipline
and operational excellence
needed during one of the most
challenging economic periods
ever seen.”
Ellen Kulmann, CEO, DuPont
Determining the Right Path

19. Chemical companies looking to recapture momentum
must sharpen their focus on operational excellence,
or risk falling behind rapidly in the face of new
competition and market discontinuities that are
disrupting “old” operating models. The winners will
be those that are taking steps now to deine their
competitive essence, determine how to out-structure
and out-execute their competition, and choose the
proper “change journey” that leads to sustainable
growth and innovation. The losers—paralyzed,
perhaps, by budget constraints and steep drops
in shareholder value—are already falling behind.
Will the global economic crisis
rewrite the chemical industry
landscape?
It’s possible.
18

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and outsourcing company, with
approximately 204,000 people serving
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Combining unparalleled experience,
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Accenture collaborates with clients to
help them become high-performance
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company generated net revenues
of US$21.6 billion for the iscal year
ended Aug. 31, 2010. Its home page
is www.accenture.com.
For more information:
To learn more about reaching a new
level of operational excellence contact:
Mark Pearson
mark.h.pearson@accenture.com
44.20.7844.3247
Matthias Hegele
matthias.hegele@accenture.com
41.44.219.5803”