Henkel launches new strategy for growth
This new strategy is based on a thorough analysis of strengths and the need for change.
Germany-based adhesives major Henkel has launched a new strategic framework to deal with the recent overall performances, which have been below set ambitions and expectations. This new strategy is based on a thorough analysis of strengths and the need for change. The main elements of this framework are a winning portfolio, competitive edge in the areas of innovation, sustainability and digital as well as future-ready operating models, underpinned by a strong foundation of a collaborative culture and empowered people.
Speaking on the new strategic framework, Carsten Knobel, Chief Executive Officer of Henkel, said, “We are building on a strong foundation for the future: strong brands, innovative technologies and attractive businesses. Going forward, this framework will help us to win the 20s for Henkel. Our new strategic framework for purposeful growth will drive Henkel’s successful development in the future and will evolve over time. This means creating superior customer and consumer value to outgrow our markets, reinforcing our leadership in sustainability and enabling our employees to grow, professionally and personally, through their work at Henkel.”
Rigorously shape a winning portfolio
A key element of the future direction is an active portfolio management. M&A will remain an integral part of Henkel’s strategy. The key criteria for acquisitions are availability, strategic fit and financial attractiveness of potential targets. Henkel will utilise its strong balance sheet to pursue high-impact acquisitions.
Competitive edge: innovation, sustainability, digital
In order to further strengthen its competitive edge, Henkel will focus on accelerating impactful innovations, boosting sustainability as a differentiating factor and transforming digital into a customer and consumer value creator.
Accelerate impactful innovations with increased investments
Henkel aims to accelerate impactful innovations, supported by increased investments. This will include an enhanced innovation approach, for example by expanding the use of digital tools and data for faster and better insights. Henkel will also scale its agile approaches and continue to invest in incubators and innovation centers. This shall enable the development of impactful innovations in all three business units.
Boost sustainability based on strong track record with ambitious targets
Building on its strong track record and further progress towards its targets for 2020 and beyond, Henkel aims to strengthen sustainability as a competitive differentiator. Sustainability will be firmly anchored in all activities. By establishing sustainability as a central pillar in their innovation strategies, the consumer businesses Beauty Care and Laundry & Home Care will advance their product portfolios with a focus on sustainable packaging solutions and the further roll-out of brands with purpose. Adhesive Technologies will continue to leverage its potential through products and technologies that set industry standards.
On the way to becoming climate-positive by 2040, the company plans to reduce the carbon footprint of its production by 65 percent and save 100 million tons CO2 together with its consumers, customers and suppliers by 2025. Working towards a circular economy and zero plastic waste in the environment, Henkel has defined ambitious packaging targets for 2025: 100 percent of Henkel’s packaging will be recyclable or reusable and the company aims to reduce fossil-based virgin plastics in its consumer product packaging by 50 percent.
Transform Digital into a customer and consumer value creator
Henkel’s new “Digital Business” is built on two pillars: first, “Business Technology,” which is a vehicle to drive efficiency across the value chain through continuously optimizing business processes and IT systems. The second pillar is “Henkel Digital,” a new dedicated unit for market-oriented incubation and innovation. Under this roof, Henkel is planning to establish digital innovation hubs in Berlin, the Silicon Valley and Asia.
Henkel wants to boost 1:1 engagement and digital sales in the consumer businesses by expanding existing and establishing new digital platforms for direct consumer relationships. The end-to-end customer-centric digitalization in the industrial businesses will be driven to generate new business and to further digitalize customer experience across all touchpoints. In addition, Henkel will further pursue its end-to-end data integration. Henkel will also invest in digital talent, especially data scientists and engineers with future capabilities and deep technological industry expertise.
Reshape operating models to be lean, fast and simple
Henkel is reshaping its operating models across the entire company to be lean, fast and simple and to continuously improve the competitiveness of its processes and structures. The company aspires to intensify its efforts to enable new business models, to step up customer & consumer proximity with faster decision-making and continuously increase efficiency.
Strengthen collaborative culture with empowered people
A strong culture, shared values and a clear framework for collaborating as one team are key for Henkel’s future success. As a first step, Henkel introduced new Leadership Commitments to all employees globally in 2019. Henkel plans to accelerate this cultural journey with these commitments at the core and will foster a culture of collaboration and empowerment, upskill its employees on future capabilities and enable its people to grow and develop.
Summarising the new strategic framework Carsten Knoble said “We are convinced that today, we have laid the foundation for Henkels’ future successful development. Now, we will focus on implementing these measures, driving change and further evolving our growth agenda."