Reckitt’s Strategic Reset – Asrar Qureshi’s Blog Post #1308
Dear Colleagues! This is Asrar Qureshi’s Blog Post #1308 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to pharmaveterans2017@gmail.com for publishing your contributions here.
Preamble
This blogpost takes insights from a recent McKinsey article. Link to the article at the end.
Reckitt is a British multinational consumer goods company headquartered in Slough, United Kingdom. It manufactures health and hygiene products. Reckitt’s brands include the antiseptic brand Dettol, the sore throat medicine Strepsils, the toilet cleaner Harpic, the hair removal brand Veet, the cold, flu, and cough relief brand Mucinex, the indigestion remedy Gaviscon, the pain relief medication Nurofen and other brands and products like: Durex, Lysol, Finish, and Vanish.
When Incremental Change Is Not Enough: Lessons from Reckitt’s Strategic Reset
There comes a point in the life of every organization when improvement is no longer enough.
A company may have strong brands, talented people and loyal customers, yet still find itself weighed down by complexity. Decision-making slows, responsibilities become blurred, too many priorities compete for resources, and previous transformation programs deliver less than expected. At that point, leaders face a fundamental choice: keep improving the existing system or fundamentally reset it?
Reckitt’s recent transformation offers a compelling case study of the second approach.
The global consumer health and hygiene company was operating across more than 70 markets while facing industry disruption, geopolitical and supply-chain pressures, portfolio questions and the challenge of separating noncore businesses. Rather than launch another sequential improvement program, Reckitt pursued three moves simultaneously: transform the core business, separate noncore businesses, and redesign its operating model and cost base.
The lessons extend well beyond consumer goods. Reckitt demonstrates that successful transformation is not simply about reducing costs or introducing technology. It is about creating clarity, focus, accountability and the organizational capacity to execute strategy.
The Hidden Cost of Complexity
Complexity rarely arrives through one dramatic decision. It accumulates. A new product is added. Another market is entered. A management layer is created. A reporting process is introduced. Responsibilities are divided among functions. Exceptions become permanent, while old systems remain alongside new ones.
Each decision may appear sensible. Collectively, however, they can create an organization in which people are uncertain about who owns decisions, where authority sits and which priorities matter most. This was part of Reckitt’s challenge. Its operating model had become less clear, particularly around governance, accountability and decision rights.
Strategy Requires Choices, and Trade-offs
One of Reckitt’s most significant moves was to clarify what was core and what was not.
The company concentrated resources on 11 core brands with stronger growth and return potential while preparing other businesses for separation or alternative ownership. This allowed capital, leadership attention and talent to be redirected toward fewer strategic growth engines.
This illustrates a fundamental principle of strategy: Strategy is as much about deciding what not to pursue as deciding what to pursue.
Organizations often equate growth with accumulation: more products, markets, customers and initiatives. But mature businesses can become stronger through subtraction. Every organization has finite money, leadership attention, skilled people and organizational energy. When everything is a priority, nothing receives enough attention to become exceptional. Strategic focus therefore requires more than communicating a list of priorities. Resources must follow those priorities.
Why Three Moves at Once?
A distinctive feature of Reckitt’s transformation was its decision to address three interconnected challenges simultaneously.
The portfolio strategy determined what the future business should look like. The operating-model redesign determined how that business would function. The cost reset aligned resources with the new direction. Treating these issues as one integrated reset helped avoid a common transformation problem: solving individual issues sequentially while leaving their underlying connections untouched.
This offers a broader lesson. When organizational problems are interconnected, solving them one at a time can prolong the very complexity leaders are trying to eliminate. An integrated transformation does not mean rushing every decision. It means recognizing when portfolio, structure, cost and execution need to move together.
Simplification Is More Than Cost Cutting
Transformation programs often become synonymous with reducing headcount or expenditure. But cost reduction alone does not create a better organization.
Reckitt redesigned its operating model to improve decision speed, accountability and structural efficiency. The company reduced management layers from five to three, moved greater decision-making responsibility toward geographic areas and markets, and established Global Business Services to support process excellence, automation and AI adoption.
The distinction matters. A leaner organization is not automatically a simpler organization.
Put Decisions Closer to Customers
Reckitt also shifted greater accountability toward geographic areas and markets. The logic is compelling. Teams closer to customers often possess information that headquarters cannot fully capture. Centralization can create consistency, but excessive centralization can slow decisions and distance them from the market.
Decentralization, however, only works when authority accompanies accountability. Giving local teams responsibility without the ability to make decisions simply creates frustration. The objective should be accountability with appropriate authority.
Transformation Is a People Challenge
Organizational transformation ultimately affects people. New structures change reporting relationships. Portfolio decisions alter career opportunities. Technology changes processes and roles. Delayering redistributes authority.
Reckitt’s experience highlights the importance of balancing business continuity with the capabilities required for the future. Leadership appointments were staggered rather than introduced simultaneously, allowing new leaders to build their teams while maintaining continuity.
This reflects a crucial transformation principle: organizations need both stability and change. Move too slowly and momentum disappears. Move too abruptly and valuable knowledge and organizational stability can be lost. The objective is not simply to replace people. It is to build the capabilities required by the future strategy.
Governance Should Accelerate, Not Slow, Change
Large transformations can easily become collections of disconnected projects. One team redesigns technology, another works on procurement, another changes organizational structures, and yet another handles communications. Each initiative may progress while the overall transformation loses coherence.
Reckitt created a dedicated transformation office that served as a central “control tower” for the transformation and business separation, coordinating decisions, sequencing and issue resolution.
Transformation Requires Strategic Courage
Perhaps the hardest part of a strategic reset is making decisions that are uncomfortable. Portfolio choices may mean letting go of businesses with long histories. Operating-model changes can alter careers and reporting relationships. Decentralization can shift power. Technology can challenge established ways of working.
Meaningful transformation therefore requires more than analytical capability. It requires strategic courage. Discomfort alone does not prove that a strategy is correct. But significant transformation usually requires challenging assumptions, habits and interests that have become embedded over time.
Sum Up
The ultimate test of transformation is not whether a company completes a project. It is whether the organization operates differently afterward. If decisions become faster, accountability clearer, resources more focused and productivity more systematic, transformation has changed the organization’s DNA.
When problems are structural, incremental solutions can become a way of postponing difficult choices. Sometimes the responsible decision is not to optimize the existing organization but to redesign it.
That requires clarity about where the business is going, discipline about where resources should go, courage to abandon what no longer fits and a management system capable of turning strategy into action.
Concluded.
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