Carsten Knobel on taking Henkel’s Purposeful Growth agenda to next level

Video transcript:

“Digital can be a true value creator for us in order to get into direct contact with customers into direct contact with consumers. And by that addressing our target groups more effectively and also understand them faster and better. “

Alexandra Jankovich: Welcome, Carsten. So nice to meet you, and great you could take the time to talk with me.

Carsten Knobel: Good morning, Alexandra. Also welcome from my side.

Alexandra Jankovich: Very good. Well, let’s start with the first question. You started in 2020 as CEO and presented your purposeful growth agenda. Could you give an update on where you stand?

Carsten Knobel: For sure. I’m happy to do so. And I think you’re also starting with a very good question. I’m very proud of our purposeful growth agenda, and also the progress that we have made through the past two years.

We have created this framework that we have kept firmly inside despite all the volatility, all the challenges, which are around the world. And by that, it matches the specific demands of our business units on the one side, but also our competitive environment. And at the end, it’s based on our company purpose and also on our values.

And that consists out of five key elements. First of all, I think it’s about portfolio, a successful portfolio with creating a clear competitive edge in the areas of innovation in terms of sustainability, in terms of digitalization, as well as future operating models. And all of that is based on a strong company culture, which is the foundation of everything.

And maybe I give you some examples in order to make it more tangible. We have leveraged the potential of open innovation. We have scaled agile approaches and established incubator and innovation centres within our company. And by that we became faster, more agile, and also more impactful.

And I also believe that when I talked about the competitive edge, sustainability plays an important factor, and this is really something which can and must be also a clear differentiator for us. It’s a topic that has been always of high importance for Henkel. And today, sustainability is really crucial to generate growth, and also create value for our stakeholders. And we have just recently launched a revised sustainability strategy.

And next to innovation and sustainability, there’s also digitalization, which is driving the transformation in many ways within our company. Here, we aim really to transform digital into a true customer and consumer value creator. It’s about expanding new digital platforms for direct consumer relationships or direct to consumer business, but also to further digitize our customer experience across all touchpoints.

And in all these areas, I think I can say that we have made good progress, however, and I think that’s important also within the company, we have still areas where we must get better and where we see also the need for further action. And that’s why we will now take our purposeful growth agenda to the next level.

Alexandra Jankovich: Great. Well, I’m happy to hear that you have made progress in the challenging times. As you often share, people are the key components of the transformation. Could you share some changes that you’ve made in this field?

Carsten Knobel: For sure. Happy to do so, Alexandra. First of all, I think you raise a very important point because companies are only as good as their people. And I think that is why our cultural transformation is a top priority for us. And I believe it is key for our future success. So, it’s not only a soft topic or a nice-to-have. I think, in a strong culture, we have really empowered people who can grow, who can develop, but also unfold their full potential.

And within our cultural transformation journey, we built our company purpose. And the company purpose is: “Pioneers at heart for the good of generations.” And I think it’s something where all of us at Henkel are united, and which also gives us a long-term perspective. And by that, we are strongly convinced that the culture and our purpose are two sides of the same coin. In that sense, our leadership culture plays a very key role in shaping the company culture. And by that, we developed, over the course of the last couple of years, clear leadership commitments at Henkel, and we expect all colleagues to live up to them.

And maybe I give you a kind of a glance, what these commitments are about and we want to change with that. From taking the safe or the easier route to really acting as entrepreneurs. Or from putting our own territory first to collaborating as a strong team. Or from telling people what to do and rewarding a confirmatory to developing our people with passion. And last but not least, from using processes as an excuse to owning our results.

And you may think now that these are great statements, but how can they lead change in the behaviour or in a culture? And I think here it’s important that all our employees really can experience them. That’s why we made our leadership commitments very concrete. We have action of the do’s and don’ts behind them. And we have also executed workshops with, really, our 52,000 colleagues around the globe, really, to discuss, to evolve about leadership and taking that to a next level. And it’s an important step.

But we want to take an even further step and by that have also made cultural transformation, really a top priority. And among a lot of other topics, we have introduced a 360 degree feedback tool, and also training modules for self-reflection, because I think it’s important that every individual is working on his or her development as a leader. And we want to establish an even more open-minded and more collaborative, diverse, but also inclusive culture. And important is, and that’s always a big topic with corporates, it should not be a one-time initiative. It’s really a journey for me. It’s for us a journey. And therefore, it takes time. And you will not change that within a quarter or within a year.

On the other side, it also needs to be great fun because we get valuable feedback. And I personally, also, changed myself, and also, I learned a lot. because I think it always starts with yourself. And it’s very clear if we want to transform our business where there is definitely a need because of the challenging times in which we are in, you can’t do that without the cultural transformation. And there is no cultural transformation without a personal one.

Alexandra Jankovich: Yeah, a great and very important transformation. So, if we move to digitalization, you want to increase the value for customers and consumers through digitalization. How will you do this?

Carsten Knobel: I mentioned it before. Along with the sustainability and innovation, I think digitalization is one of our focus areas within our framework to boost, really, our competitive edge. And by that, growing faster than the markets in which we’re operating. And digital can be a true value creator for us in order to get into direct contact with customers, into direct contact with consumers. And by that, addressing our target groups more effectively and also understand them faster, and better in that context. And only through this direct contact with consumers, I think we are also able to keep our fingers on the pulse and really read them, understand them. And by that, react quickly on trends and also on changing market developments.

And in this context, I think I would like to particularly highlight the direct to consumer in that consumer business. Because B2C has become an extremely important business model. In my opinion, really, we need three things in order to get that thing right. So, first of all, we need the right digital expertise. We need the right culture, but we also need the digital technologies behind that. And with this help, it is for us to develop new business models or to expand also existing platforms in which we are operating.

And one example here is RAQN. RAQN, for us, is a new platform for digital business and e-commerce, which we have launched last year, developed by ourselves. And with RAQN, we laid, really, the foundation. for more speed and also more customer proximity in the online world. It helps us to launch products and services faster, in a more targeted, in a more personalized and efficient manner. And by that, responding to three industry megatrends.

The first one is to shift towards hyper-personalization. And by that, a 24/7 experience. Second, it’s also about data-driven economy. And the third thing is, it is about the acceleration of digital commerce. Partnerships in that, offer many opportunities. And here we are operating and collaborating with many external partners and also start-ups. But we also need to shape and drive the digital transformation, also from within Henkel.

And that’s one reason why we have established also internal incubator teams in our consumer businesses. And they’re really acting as think tanks because they’re combining, on the one side, agile work approaches with scale, but also with expertise of a global company.

And what we have also introduced, that we are also testing. So, they test new brand concepts for new consumer groups directly on the market in a really test and learn approach. So, quite important, faster feedback loops in order to get that into execution. And the key priorities of our incubators, are not surprisingly, speed and also agility. And by that, we have created a digital unit. We call it Henkel dx. And Henkel dx has opened a new digital hub in Berlin to foster digital innovation, but also the business models and leading technology solutions we have taken into that.

So, I hope you can see, Alexandra, Henkel’s digital transformation is in full swing. And for sure, we can still get even faster and better because not everything what we’re doing is working out at the first step. But I think it’s important to have also this attitude of trial and also accepting error or mistakes in order to get better going forward.

Alexandra Jankovich: Absolutely. That is very important. And you’re already giving a couple of examples of the consumer business, and I think you also have an ambition in the adhesives business with customer-centric digitalization to generate new business. Could you also share some of your actions or plans in that area?

Carsten Knobel: We integrate the digital technologies to change the way we operate, but also how we produce, how we sell to our customers. And by that, also how delivering our products and services to our customers. So, with this, we will not only strengthen our existing business, but we will also further digitalize our customer experience across all the touch points. And by that, expanding it also to new business models.

And with an addition to that, I think we will also further pursue our end-to-end data integration because data is definitely an important factor, also, when it comes to our adhesives technology in business. And maybe also here are some examples.

We have integrated all SAP business units on one global SAP platform. We have consolidated all websites on one single technology, which we are partnering with Adobe. And we also make product development leaner, faster, and by that, more collaborative. We have introduced a new R&D platform, we call it Albert, which we have developed by ourselves.

And we are already, for some time, running a global e-shop for adhesives business, which in the meantime has created more than 30%, or around 30% of our business in total. So, it’s available to customers in more than 60 countries. And I mentioned, it creates roughly $2 billion of revenue. So, that’s just the start, but I think that’s a thing which we have So we have a clear digital agenda on our side. We have a clear roadmap to have operational excellence by digital operations and by our supply chain organization.

And thirdly, also digitizing our know-how along the entire value chain. And by that, I mentioned the data points. So, really driven by a data-driven insight and innovation.

Alexandra Jankovich: Yes, very good. And this data driven insight and being close to the customer with your world-class technology is, of course, the great combination that you want to achieve. And you also told about the eCommerce shop. What impact does it have, also, for growing value pools, like the small and medium-sized enterprises? The fact that you can serve them digitally.

Carsten Knobel: With this, you’re creating, for sure, speed. Also, in terms of less direct contact getting more efficient and effective in a way, and in adhesives differently than to our consumer branded businesses, we are not in touch with bigger retailers. But here with a couple of thousands, more than 30,000 of customers. And by that, you can’t operate with all of them face to face or individual basis. And by that, I think with this e-platform, you’re driving definitely efficiency and effectiveness into the organization and into the business.

Alexandra Jankovich: Yes, absolutely. No, great progress is made on that. And I think it can probably open up A lot of… well, new customers as well, that couldn’t be served before, as you said, in a personal way. You also already mentioned that in January, of course, you announced the merger of the laundry and homecare and the beauty care business into one unit. Now, what is your vision for that unit?

Carsten Knobel: Now, I think, Alexandra, vision is indeed a really good terminology, or a term, how you describe it, because it’s much more for us than just the reorganization to realize some synergies. I’m really convinced that the merger will bring significant benefits to Henkel for our shareholders, for our customers, and our own organization, our own people. I think it’s a bold strategic step and a major change at Henkel. And with Henkel consumer brands, I mentioned that we will create one big multi-category platform with a size of around 10 billion euros. We will have a broader basis to further optimize, but also to shape our portfolio beyond the current level. And by that, to capture new growth opportunities.

And I think it’s important for our employees too, because this opens up new opportunities for more exciting, for greater task and responsibility, for bigger opportunities. And I think that the consumer brands will make us even more attractive on the employer market. That’s the overall, I would say, vision, which is related to this merger.

Alexandra Jankovich: Yes. And I think you also stated in the press release that you will have a one customer and channel approach, that you want to have an integrated approach across retail, trade, and channels. Can you share how you will do that?

Carsten Knobel: For sure, I can. So, one of our five corporate values is putting our customers at the centre of everything we do. So, customer is definitely, at the end, the ultimate priority. But we know how it is, internal processes, structures, administrations. I think they are eating up a lot of resources. And I think that’s not specific for Henkel. But I think that’s something for large international companies, which they have to face. And that is why we are continuously improving, but also adapting our processes and structures.And by that, to become faster, more agile, more flexible, and ultimately, to focus on what counts on our customers and consumers. Their needs. Their wishes.

Alexandra Jankovich: You have very clear goals in your 2030+ Sustainability Ambition Framework. Can you tell a bit about it?

Carsten Knobel: For sure, I can. So, first of all, it’s good that you also mentioned that, that also you perceived that. But really, sustainability is definitely deeply rooted in our company DNA. And by that, in integral part on how we do business. And together with the strategic priorities, such as innovation, digitalization, and sustainability, it’s really at the heart of our growth agenda. And sustainability is also one of our four values of our company. And by that, it is also reflected in our purpose: “Pioneers at heart for the good of generations.”

And you mentioned it, we just launched our new or revised sustainability strategy. What we call 2030+ Sustainability Framework And here, I think it sets the strategic frame to further accelerate on transformation. Evolving our portfolio, our processes, and even more strongly towards the sustainability of what we’re doing. And this includes a new long-term ambition.

And one is that we want to become climate-positive already by 2030. And that is 10 years earlier than we originally had planned for. And another focus is on a circular economy. So, we have set ourselves ambitious targets when it comes to the sustainability of packaging or sustainable packaging by 2025. So, 100% of our packaging material shall be recyclable until 2025. We want to reduce the amount of virgin plastic by 50% by developing smarter packaging, by reducing the plastic volume in general. But also by using more recycled plastic.

And acting sustainable, I think also means that we are promoting equal opportunities and strengthening diversity. And here, we have set ourselves a truly ambitious and important goal. We want to achieve gender parity across all management levels by 2025. And we are currently at 38%. So, this is also what it means for me to be “Pioneer at heart for the good of generations.” Taking, definitely, gender and also different views into account.

Alexandra Jankovich: Yes, that was my last question about your gender parity goals. So, I’m very happy that you started talking about it yourself because that’s, of course, also a very important topic, and you’re very ambitious on that as well. So, I understand that relates to your values and to your purpose, which is very important. So, thank you very much. Did I leave anything out that you want to share something else about the agenda?

Carsten Knobel: No, I think you touched all the important points and what is currently on our mind. And especially in these very challenging times, I think it’s good to have an agenda, a strategic agenda, which has been proven over the last two years that it is working. For sure, always with improvement potential and also always with change. Because the world is changing, we are living in a very volatile environment. And I think by that, it has been proven that our agenda is the right one, and we will continue to work on that, to reach our ambitious goals going forward.

Alexandra Jankovich: Well, thank you very much. And we were also very happy that as SparkOptimus, we could also support you on the adhesive side with part of the digitization. So, thank you for that as well. Great company to work with. And well, good luck with the purposeful growth agenda, the next steps. And thank you for taking the time for this interview.

Carsten Knobel: Yes. Highly appreciated to have the talk with you. And also, all the best for you and your team. Thank you.

Alexandra Jankovich: Thank you very much.

Carsten Knobel: You’re welcome.

Alexandra Jankovich: Bye-bye, Carsten.

Carsten Knobel: Bye.