Comment: Reckitt new boss takes it back to basics
Things to like about Reckitt’s new boss Laxman Narasimhan.
One, he’s a nice guy, and is hilariously enthusiastic about the company’s Durex brand.
Two, he comes from PepsiCo, which is obsessive about keeping retailers happy and investing in its brands.
Three, he knows brands aren’t just assets on a balance sheet. They’re best when they have a story to tell of history and provenance.
It’s simple stuff, but previous chiefs at this beast of a business have failed to get it, having been, variously, arrogant, overpaid, distant from their distributors and neglectful of storytelling. Swapping the Reckitt name — fine since 1840 — to the bland corporate name of "RB" epitomised the rot.
Little wonder they repeatedly disappointed the markets, then pursued the desperate, $17 billion, takeover of baby milk maker Mead Johnson. A business no one else wanted to buy in a sector Reckitt knew nothing about.
Today, Narasimhan slashed £5 billion off its value, admitting his predecessors hadn’t appreciated the low birth rate in China. Who'd have guessed?
Anyway, now stuck with it, he’s decided to try to make it work, probably wise three years into the integration. He’s also not selling the hygiene and homecare business as some expected.
Instead of such drastic actions, he’s plotting a simpler path. Invest more in the brands, take more care of the retailers and move products into new countries.
Shareholders will take a short-term hit as he pays for it all, but it makes sense. Early days, but you get the feeling Reckitt has a more humble sheriff in town.
