Tomorrow’s Battles, Yesterday’s Operating Systems
Why Organisational Readiness May Be the Missing Link in the Chemical Industry’s Strategic Reset
-
October 19, 2026
-
A few years ago, the CEO of a chemical company set an ambitious direction: standardise and streamline operations, centralising them in an outsourced shared service centre. The logic was compelling, as the potential synergies were significant and supported by clear benchmarks. But speed was of the essence. The organisation, however, was starting from a decentralised and largely unharmonized base. Reaching the target required an organisation able to absorb change at pace and let go of deeply embedded ways of working. It was not yet able to do so, a situation we see in many transformations.
In transformations of this kind, the destination is often not the problem. The distance is. That distance grows when sites and functions move at different speeds or hold onto competing priorities. If businesses are asked to change faster than they know how, the opportunity to unlock millions in savings and efficiencies can disappear, together with the confidence and commitment needed to deliver them.
We have seen this pattern across the European chemical industry. Companies increasingly understand the need for a strategic reset. Many, however, are not organisationally prepared to execute it. The missing link is often not another strategic answer, but the ability to shift behaviours, capabilities and organisational routines at scale. That means getting functions and sites to work from the same set of priorities, rather than pursuing their own objectives in isolation.
The Strategic Case Is Clear. The Execution System Is Not.
The pressures on Europe’s chemical industry are structural, rather than simply a period of time in which companies can wait for demand to return. Despite announced closures amounting to around 9% of European production capacity, EU chemical capacity utilisation remains well below its long-term average, suggesting that the sector’s structural adjustment is far from complete.1 Margin improvements driven by temporary supply disruption or import scarcity are easily mistaken for structural recovery. They are not the same thing, and companies that treat one as the other risk under-preparing for the reset that is still coming. There is persistently low-capacity utilisation, rising closures and elevated insolvencies, driven by energy economics and global overcapacity, both of which are further eroding regional competitiveness.2 Cost reduction alone will not be enough, instead companies will need portfolio discipline, asset-level economics, liquidity management and early stakeholder alignment. For these elements to have an impact, they must be applied rigorously but can often produce uncomfortable answers. It is then on the organisation to determine if they are capable of making the tough decision the numbers point to.
Few European players can still afford to compete broadly across both commodity and specialty chemistry, as capital and management attention are finite. A genuine strategic reset means choosing where the business has earned, or can earn, the right to compete, rather than defending every position it currently holds. Portfolios must be reshaped. Assets must be assessed more selectively. Innovation must be converted into viable growth. Yet a sound strategic answer does not automatically create the organisational conditions needed to deliver it. The challenge goes beyond structure. An organisation’s operating system – its decision rights, incentives, leadership behaviours and everyday routines – have been designed for stability. hose disciplines have long been a source of strength, but they can slow the business when faster change is required. A strategic reset therefore also requires an organisational reset too.
Where the Current Operating System Is Reaching Its Limits
Across our work on transformations in the chemical sector, several recurring patterns emerge. Whilst they look different on the surface, they stem from the same underlying issue, that organisations are trying to solve future challenges with principles built for the past.
Hero Leadership Crowds Out Capability Building
Chemical companies have good reason to value leaders who solve difficult problems under pressure. In safety-critical, capital-intensive operations, experienced judgement and decisive intervention protect people, assets and continuity. Plant managers who stabilise a crisis deserve recognition.
Transformation asks for an additional form of leadership. Leaders must anticipate what needs to be different and then build capabilities where the value may only emerge over time. They must also be prepared to make portfolio or investment choices that reduce short-term performance before strengthening the business longer-term.
If promotions, recognition and performance conversations remain dominated by near-term operational delivery, leaders receive a clear signal: fix the immediate issue first and defer capability building until capacity allows. But when immediate demands persist, capability building is continually pushed aside.
Organisational readiness therefore depends on developing transferable capability before restructuring makes the need urgent.
Functional Optimisation Defeats System Value
Manufacturing, engineering, procurement, R&D and commercial teams have developed deep expertise and powerful optimisation disciplines. But many of the choices now facing the sector do not belong to one function or one site. Closing or repurposing an asset affects supply, customers, utilities, people, capital and the wider network. A decision that is rational within one function can destroy value elsewhere.
The industry already has a language for this interdependence: Verbund. Originating from integrated chemical production networks, the concept describes how plants, infrastructure and value chains create greater value when they operate as a connected system rather than as standalone assets. As an analytical extension of this familiar industry principle, an organisational Verbund describes a different way of allocating accountability and defining success.
An organisational Verbund aligns incentives across sites and functions, gives leaders shared responsibility for enterprise outcomes and makes trade-offs explicit. It asks commercial teams to see the asset implications of portfolio choices, operations leaders to see the market consequences of local optimisation and corporate functions to design processes around end-to-end value rather than functional control.
It also asks people to redefine where their primary responsibility lies. Leaders may need to support decisions that reduce the resources, autonomy or importance of their own function or site in order to strengthen the enterprise as a whole. Shared measures are necessary, but they are not always sufficient. The trade-offs must be transparent and the collective goals credible. Leaders also need support in navigating the resulting shifts in identity and status that cross-functional change can create.
Governance Designed for Certainty Slows Strategic Choices
Rigorous governance is indispensable in chemicals. Decisions that affect process safety, product quality or regulatory compliance must be made with discipline and evidence. The problem begins when the same decision logic is transferred unchanged to choices with a different risk profile.
A market entry, an innovation investment or a portfolio exit cannot be made risk-free through more analysis. These choices require a clear hypothesis, bounded exposure and the ability to learn. Applying safety-critical governance to these choices can lead to repeated reviews and diffuse accountability, creating delays precisely when decisions are time-sensitive.
Organisational readiness means distinguishing two domains. Operational risk requires control, standardisation and escalation. Strategic uncertainty requires explicit decision rights, testable assumptions and pre-agreed thresholds that determine where an initiative should continue, change course or be stopped. Both demand rigour, but different forms of rigour.
This distinction also makes the execution problem visible. If leadership agrees to exit low-margin segments but sales incentives still reward volume, the obstacle is not strategic clarity. If R&D is asked to accelerate but stage gates still assume exhaustive development before market entry, the obstacle is not ambition but the operating system.
There is also a people challenge, if employees see that raising uncertainty is penalised or that course corrections are interpreted as failure, they will default to familiar routines. Strategic learning in chemicals cannot mean experimenting with safety, quality or regulatory compliance. It means testing strategic and organisational assumptions within clear boundaries, while enabling people to raise concerns early and change course without every correction being treated as failure. Good governance creates permission to act within the operating system.
Building Organisational Readiness in Chemicals
The answer is not to import a generic “agile” model into a highly regulated industry. Nor is it to dismantle the disciplines on which safe and reliable operations depend. Readiness comes from making deliberate distinctions, where to preserve control, where to create discretion and where to manage the enterprise as one system. Readiness is also a strategic choice as well as a capability-building exercise. Few companies can build every capability the reset demands in-house and at the pace the market requires. Part of readiness is being honest about where to build, where to partner and where to buy. It also requires reflection on the changes needed in leadership, behaviour, capability and everyday work.
Redefine What Performance Means
Transformation requires more than adding new objectives to existing performance systems. It requires a broader definition of performance itself. In a stable operating environment, performance is often associated with reliability, target delivery, cost control and the ability to solve immediate problems. These qualities remain essential. But structural change also requires leaders who release resources for enterprise priorities, build capabilities beyond their own teams and make decisions whose value may only become visible over time.
This cannot be solved through revised scorecards alone. Leadership expectations, promotion decisions, recognition and everyday performance conversations must reinforce the same behaviours as the strategy. Otherwise, employees are asked to transform while continuing to observe that the organisation rewards the past.
Build Understanding and Ownership
People need to understand more than the strategic destination. They need to see why established ways of working are no longer sufficient, what the transformation will require from their part of the organisation and where they can shape the path forward. This does not mean seeking consensus on every decision. It means involving the right groups early enough to surface operational realities, strengthen the design and create credible ownership of implementation.
Build the Organisational Verbund
For the most consequential transformation choices, accountability should follow the value chain rather than the hierarchy. Cross-site and cross-functional outcomes need named owners, shared measures and forums designed to resolve trade-offs, not merely represent interests. The test is simple, can the company optimise the whole when a local unit must give something up?
Embedding this way of working requires more than structural changes. Leaders need new routines for joint decisions, teams need clarity on how conflicts will be resolved and success stories must show that enterprise contribution is genuinely recognised. The organisational Verbund becomes real when people experience it in decisions, not only when they see it in the operating model. This becomes concrete at the point of an actual decision, such as a divestment, a site reallocation or a joint venture. These decisions are only as good as the organisation’s ability to see its full consequences at the moment it is made, not months later when each function discovers separately what it means for them. That enterprise-wide view is what an organisational Verbund is for.
Assessing Readiness for Strategic Change
Before embarking on a strategic reset, leadership teams should take a step back and assess whether their organisation is truly prepared to execute it. The following questions can help reveal whether the operating system, behaviours and decision-making processes are aligned with the ambitions of the strategy.
- Are we rewarding leaders only for solving today’s problems, or also for building the capabilities we will need tomorrow?
- Which strategic decisions consistently take longer than the market allows?
- Do people understand not only what the strategy is, but what it requires them to do differently?
- Where do our most important transformation decisions cross functions or sites, and who owns the enterprise outcome?
- Where are employees receiving conflicting signals between the change we communicate and the behaviours we continue to reward through our incentive schemes?
- Where are we applying safety-critical governance to decisions that require speed and learning?
- If conditions changed sharply within the next 12 months, what would slow us down most: our decision system, our capabilities or our ability to mobilise people behind a new direction?
The Next Advantage Is Execution
Europe’s chemical industry does not suffer from a lack of strategic debate. The choices are difficult, but many are visible, whether its reshaping portfolios, confronting asset economics, protecting critical capabilities and finding new sources of growth.
The harder question is whether organisations are able to act on those choices. A strategic reset pursued through yesterday’s incentives, interfaces and decision rules will struggle to move beyond the deck. So will a new organisation design that people do not understand, cannot enact or are not rewarded for sustaining.
Footnotes:
1: “European Chemical Closures & Investments Radar,” cefic (December 2025).
2: FTI Consulting, “European Chemical Industry: From Structural Stress to Strategic Reset,” (April 2026).
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
Related Insights
Published
October 19, 2026
Key Contacts