Making a Difference at Air Products & Chemicals
Meldrum, Duncan H., Business Economics
As I sit here trying to determine factors that help business economics functions succeed, I have to admit that I do not know any typical business economics functions. Neither benchmarking exercises nor extensive informal networking has ever turned up another function that quite matches my current one. Perhaps no typical function exists. The application of economics is probably too dependent upon a company's culture and upon the specific skills and training of its economic practitioner. What may be a path to distinction at one company could well be a path to extinction at another.
The principles, performance assessment methods, applications, and characteristics discussed below have worked for me in my almost twenty years as a business economist. I spent most of those years in a variety of economics functions at Air Products and Chemicals, Inc., an industrial gas and intermediate chemical producer. My current title is corporate economist, and I report to the vice president of corporate planning. The company sells its products in more than thirty countries on every major continent. Key industrial gases cannot be transported over long distances, so we maintain plants in almost all the countries in which we operate. Some of our products are sold, and inputs purchased, under long-term contracts. The nature of our business shapes much of what I do on a daily basis, so keep these characteristics in mind as you read the following.
Profit drives business in capitalist economies, so business economists more than any other economists need to focus on the profit creation process. The key to any success my career has had rests on that very simple principle. Every task the economics function undertakes must provide some demonstrable value added to the company.
The great thing about economics is that it can add value in many ways. Most economists (myself included) like to analyze challenging and complex problems that tax our skills and knowledge. A good business economist, however, must avoid the temptation to concentrate on challenging and interesting problems that do not impact the company's bottom line. Sometimes the greatest contributions a business economist can make come from a very mundane application of a very simple economic principle or statistic. While an academic economist might not find some of the work I do all that challenging or interesting, I get a lot of satisfaction from making a contribution to the company's profitability.
Repeating myself in simple terms, because I think it bears repeating: if an economics-related task adds to the company's bottom line, I do it. If asked to do work that does not increase profitability, I minimize my effort or do not do it.
The economics groups I worked in when I left my line job in the Navy in 1978 did many activities typical of economics functions of the day. This work included macroeconometric modeling used in forecasting and policy analysis, public relations, massive document preparation, etc. The groups operated in relative isolation from the rest of their organizations and received relatively limited feedback.
As technology changed and businesses began to question the value of economics functions, it became pretty obvious the old style economics function could not last. With limited feedback, we had very little ability to determine if we were adding anything to the company's profitability. To get better feedback, I put in place a number of mechanisms I still use today.
Log. My old Navy habit of keeping logs gave me what I consider my most valuable assessment tool. Since the mid 1980s, I have logged every request for presentations, analysis or assistance I have received. I log them by category (macro, industry, data, international, modeling), requester's department, and include a terse synopsis (one line) of the request and response given by the economics group. I note how economics added value. …