Strategy, leadership

and company

culture
Strepsils are but a few of the easily recognisable products in Australia.
However, RB has identified 19 of their best selling products that, in their
category, are globally number one or two on the market. They call these
their Powerbrands global leaders in high growth categories.
Focussing on their Powerbrands makes sense, as the profits from these
19 brands alone make up more than two-thirds of the companys total
revenue. RB invests heavily in these brands through advertising and
marketing to maximise the returns and grow their market share. They
also concentrate on continual innovation, listening to the needs of their
customers and looking for ways to make their products better.
Another key strategy is to focus on organic growth. This refers to the
development and growth of their existing Powerbrands; they only look to
acquire new brands if they add significant financial or market value to the
company.
Like all good businesses, RB is continually looking for ways to reduce costs.
Managing costs by eliminating waste and improving efficiency contributes
to their aim of turning growth into profit. Squeezing costs at every
opportunity is an important aspect of cash management and is reflected in
their above industry-average profits and returns for shareholders.

Product brand recognition is one of the companys great strengths and is

a result of RBs products maintaining a consistent overall image around the
world. Their plan is to create brands that are truly global. Local leaders can
express the product differently, taking into account local market conditions,
if it means gaining market share or improving growth however, this
does not allow them to change the way a brand is headed. To keep the
consistency in their brands, RB has a global category team for each
category, which works with the markets to define and ensure consistency
of the brands purpose and positioning everywhere in the world.
Marketing
RBs Powerbrands are supported by an extensive marketing strategy. They
spend approximately 12-13 percent of their net revenue on media advertising
higher than any of their competitors. Not happy with simply trying to gain a
greater share of the market, they invest with the aim of actually growing the
entire category. For example, RB spent a large amount of advertising dollars
promoting the sale of dishwashers which is not one of their product lines
with the aim of increasing the demand for automatic dishwasher detergents.

3 The Global Powerbrands

20 million products
sold daily
1 Introduction
To be successful in the fast-paced world of household, health and
personal care products, you have to think big. Reckitt Benckiser (RB)
is a world leader in the making and marketing of household, consumer
health care and personal products. With over 20 million products sold
daily across almost 200 countries, RB is a global success story.
RB came about as a result of a merger in 1999 between the German
company Benckiser and Reckitt & Colman from the United Kingdom.
The two businesses were a good match, with a combined history
of innovation spanning over 150 years. Complimenting each other
geographically, they now covered extensive markets across Europe, the
UK, Australia, the United States and many smaller markets worldwide.
Similarly, their product portfolios worked well together, with Benckiser a
market leader in automatic dishwashing and fabric care products, while
Reckitt & Colman had achieved success in disinfectants, home care,
pest control and health and personal care.
The merger was a successful one, with RB the fastest growing business
in its sector. The above industry-average growth since the merger
can be linked directly to the companys strategy, company culture
and leadership model. Having the right people helps create the right

culture, one RB describes as strong, fast-acting and highly effective.

The company embraces diversity and encourages constructive conflict
to achieve the best ideas and innovations. The leadership team expects
their employees to use initiative, take ownership of their ideas and to
take risks, with the aim of outperforming the market.

2 Strategy
RBs strategy has always been clear: employ the right people to drive above
industry-average growth and turn it into profit and cash. Ensuring this
central message is clearly communicated to all stakeholders makes good
business sense. By focussing on the common goal, both shareholders and
employees can be confident they understand the companys vision and the
strategy to achieve their objectives.
Employing and retaining people with the right principles and attitudes helps
to create the culture and approach to business that makes RB unique.
To stay ahead of the market, RB needs creative thinking and employees
who are willing to take a risk on new ideas, as well as a leadership team
prepared to support them.
The range of products RB manufacture and sell is extensive. Household
names such as Aerogard, Clearasil, Dettol, Mortein, Pine O Cleen and

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The concept of the Powerbrand was introduced in 2002 and consists of RBs
leading global brands that compete in markets with significant potential for
high growth. The profit margins on Powerbrands are disproportional that is
they are well above the industry average. Only the exceptional ones make
the grade. They are mainly number one or two globally in their category.
Brands like Finish, Vanish, Clearasil, Mortein, Dettol, Scholl, Harpic and
Airwick are worldwide household names as a result of RB concentrating the
majority of their innovation, marketing and media investments around them.
In 2010, 69 percent of RBs revenue and 85 percent of their growth came
from these 19 Powerbrands.

innovative
Powerbrands

Innovation
In a market where there are many competitors all selling very similar
products, differentiation is a key tactic in setting your product apart
from the rest. In the markets that RB competes in, innovation is essential.
Instead of spending large amounts of money researching and developing
new products, they use extensive market research to determine what the
consumer wants and needs, in order to make their use of the product ever
more easy and convenient, and the results from the product ever better.

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A good example is the Finish dishwasher detergent. They noticed that

consumers usually use three different products in their dishwashers: a
powder, a rinse and salt. In 2000 RB came up with the Finish PowerBall
2-in-1 that combined the powder and rinse aid. They then improved it
in 2001 by adding salt, and again in 2005 by adding a glass protector.
They support their new and improved products with heavy marketing and
their strategy has paid off, with over a third of their revenue coming from
products that have been developed in the last three years.

4 Culture and People

Finding the right values
A strong corporate culture is an important part of any good business
and attracting and retaining the right people has been a key part of RBs
success. At the time of the merger, about 80 percent of senior employees
were let go as they did not fit the new culture. It was easier to hire new
staff or leave a position vacant, rather than wasting time trying to change
people or put the wrong person in the job. During recruitment, there are
four core values that RB is looking for:
Achievement we dont just aim high, we always aim to outperform
Entrepreneurship we allow daring ideas to thrive
Team Spirit we work as one united by common principles and attitudes
Ownership we take initiative to do whats needed.
Cultural style
RB has a unique culture of constructive conflict and values this as a positive
problem solving tool. Rigorous discussion and debate is encouraged at their
meetings and participants are expected to come well prepared to fight for
their ideas and to have thought it through very carefully. At the end of the
meeting a decision is made often whoever has the strongest argument
wins! All then agree to get behind and support the decision and move on.

culture

Debate often stems from the significant international diversity that exists
within the organisation, with employees bringing different ideas and
perspectives to the table. For example, among the top 400 executive
employees globally, 49 different nationalities are represented. The global
nature of their Powerbrands means diversity within their management team is
crucial to understanding and developing the markets in which they operate.
A global company needs employees with different national perspectives
as it encourages risk taking. It increases its ability to challenge any it
wont work in this market parochial thinking. Diversity improves creative
thinking, challenges existing consumer behaviour models and brings a
wealth of ideas to the organisation.

market has the advantage and the faster the innovation comes to market
the longer you have to take advantage of first mover economics. The
company structure at RB is flatter than most other organisations. Middle
management is limited, bringing the executive team in closer contact with
those on the front line. This helps generate faster response times and
also reduces office politics, giving employees more control over their work.
In such a fast paced market, where consensus is not sought, there is no
patience for lengthy meetings, glossy presentations or political power plays.
Swift decision making is vital if RB expects to be first to market. In an
industry that relies on innovation to succeed, they need strategies to get
their new ideas to market before their competitors. For RB, this means not
worrying if the manufacturing costs of their latest product are not as low
as they could be when first launched although cost cutting starts the
very next day. A good example of this is the launch of the Dettol (Lysol)
No-Touch soap. The product was first launched in the US market before any
competitor products and was so different to anything else in the category
it drove significant growth for the company. At RB, decisions are made fast
and innovations are driven globally. As a result, within one year of launching
in the first market the No-Touch system was being sold in numerous
countries around the globe and has sustained the first-to-market advantage.
Performance
RB recognises the value of their high performing employees and they are
prepared to pay for it. Remuneration is strongly performance-based,
consisting of a base salary plus incentives such as bonuses and share
options for those who feel confident to push their ideas to get great results.
High performance is not all that is expected of RB managers. International,
speedy mobility is part of their cultural style. Given the global stature
of their Powerbrands it is an advantage for the management team to
move between international offices as their career progresses, gaining
experience and invaluable insights into operations and product performance
in different markets: taking ideas from one market and introducing them as
radical in another.
Cost control
Keeping production costs under control is important in any business.
However, RB considers this just as vital as building sales. A conservative
attitude is reflected right across the organisation.
In line with RBs strategic aim of turning their above industry-average growth
into cash, they have set up two cost-cutting teams. The Squeeze team
looks to reduce the amount of materials used in their packaging, and this can
generate significant savings. For instance, in 2009, the team recommended a
new, resealable pack of Vanish stain remover as an option for consumers, and
saved the company millions by using 70 percent less plastic than the original.
Secondly, the X-trim team is responsible for improving efficiency across the
entire organisation. This may mean changing the layout of a manufacturing
plant, or finding a cheaper way to distribute their products. For example
a simple change in the production process of aerosol cans resulted in a
major efficiency improvement. The decoration of aerosols cans had always
been achieved by printing directly onto the body of the can at the can
manufacturers factory, before storing the cans by their intended use (e.g.

cost
control

Speed and action

Generating the ideas and making quick decisions is only one aspect
however. Getting those ideas to the market fast is imperative. The first to

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what product they would ultimately contain). These cans were then
shipped to the RB factory and stored again until needed for production.
It was decided to label cans after filling in the production process. This
resulted in savings through many areas. Firstly there was less inventory
of cans, at both the manufacturer and RB factory, as one can could now
be used for multiple variants. The printing of labels, and application, was
cheaper than printing tin plate, even allowing for the cost of the new
labeling equipment.
This project resulted in million dollar savings, and resulted in a more
flexible production process.

5 The leadership model

A good leader may be described as one who influences, motivates and
enables their employees to do their job well and contribute to the success
of the organisation. There are a number of theories of leadership styles.
One theory suggests there are three main types as set out below:
Authoritarian
Management make
decisions and
employees follow
orders

Participative/
Democratic

Delegative/
Laissez-faire

Employees
involved in
decision making

Little or no
guidance from
management other
than establishing
broad objectives
and policies

Employees motivated
by either reward or
penalty

Authority is
distributed
throughout the
organisation

One-way
communication from
the top down

Employees selfmotivated by
intrinsic rewards

Little input from others. Teamwork.

Employees make
decisions
Management has
very little authority
over employees.

It is thought that all leaders fit into one of these styles or somewhere in
between. The leadership style at RB would lean more towards Participative, but not Democratic, as no vote is taken and consensus is not sought.
However, crucially, it follows distributed leadership principles.

6 Conclusion
Since the merger in 1999, RB has seen phenomenal success. A clear and
consistent strategy has led to above industry-average returns for each of the
11 years of operation and kept them well in front of their competitors. A priority
on employing the right people to create a company culture of performance and
innovation has been a key driver. Embracing the diversity within the company
to encourage creative thinking and rigorous debate of ideas has seen the rate
of innovation of their products double since the merger. Finally, their strategy
of investing heavily into their global Powerbrands has reinforced their position
as a world leader in household, health and personal care products.

a global
success story
GLOSSARY
Corporate culture A set of
either formal or informal values
and behaviours that exist within
an organisation.
Differentiation Emphasising
some aspect(s) of a product
or service that makes it stand
out from the similar product or
service sold by other producers.
Distributed leadership 
A leadership system where
everyone is responsible and
accountable for leading within
his or her area. All employees
are considered experts and are
valued for their knowledge and
experience.
First mover economics 
A sometimes insurmountable
advantage gained by the first
significant company to move into
a new market.
Laissez-faire A nonauthoritarian leadership style.
Laissez-faire leaders give
minimal guidance to their
employees and try to achieve
control through less obvious
means. They believe that people
excel when they are left alone
to respond to their
responsibilities and obligations
in their own ways.

Market research Finding

out information about the
characteristics of potential
customers to solve marketing
problems and help with
marketing decisions.
Net revenue A companys total
earnings (or profit). Net revenue
is calculated as total revenue
(earnings) minus total expenses
for the business in a given
period.
Organic growth The growth
rate that a company can achieve
by increasing output and sales.
This excludes any profits or
growth acquired from takeovers,
acquisitions or mergers.
Product brand recognition The
extent to which an organisations
target market is able to identify
a brand by its features. Brand
recognition is most successful
when people can state a brand
without being explicitly exposed
to the companys name, but just
visual cues like logos, slogans
or colours.
Remuneration Reward for
employment in the form of
pay, salary, or wage including
allowances, benefits, bonuses,
cash and non cash incentives.

Questions & Extension Activities for

ReckittBenckiser are on
www.afrbiz.com.au & www.bizcs.co.nz
You will also find links to the
ReckittBenckiser website

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The Australian Financial Review and Australian Business Case Studies Pty Ltd. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors or omissions in this Case Study.

These are sometimes big innovations but often many smaller ones, where
they can incrementally improve a product, implementing a few changes that
may save the consumer time or make the product more convenient to use,
and that they are prepared to pay more money for.