STRATEGIC FRAMEWORK

Rigorously shape a winning portfolio

A key element of our strategic direction is an active portfolio management. We have identified brands and categories with a total sales volume of more than one billion euros, predominantly in our consumer businesses, of which a large proportion has already been sold or discontinued since the introduction of the Purposeful Growth Agenda. In addition, M&A are an integral part of Henkel’s strategy. The key criteria for acquisitions are availability, strategic fit and financial attractiveness of potential targets. We will utilize our strong balance sheet to pursue high-impact acquisitions. While we aim to expand our technology leadership in Adhesive Technologies with acquisitions, we will focus in our consumer businesses on leading country and category positions as well as on “white spots” and new business models.

Accelerate impactful innovations with increased investments

We aim 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. While we will also push decision-making across the organization even closer to the market and further leverage the potential of open innovation and idea crowdsourcing, we also scale agile approaches and continue to invest in incubators and innovation centers. This shall enable the development of impactful innovations in both business units. Innovations and brands will be supported with consistent investments in core categories and regions. Henkel has therefore once again significantly increased growth investments in advertising, digital and IT.

Boost sustainability based on strong track record with ambitious targets

Building on its strong track record and further progress towards our targets for 2020 and beyond, we aim to strengthen sustainability as a competitive differentiator. We have defined the next milestones for three key topics which are highly relevant for consumers, customers, business partners and society at large: On the way to becoming climate-positive in our operations by 2030, we plan to reduce the carbon footprint of our production by 65 percent and save 100 million tons CO₂ together with our consumers, customers and suppliers by 2025, compared to the base year 2010. We also aim to source 100 percent of the electricity we procure from renewable energy sources by 2030. Working towards a circular economy and zero plastic waste in the environment, we have defined ambitious packaging targets for 2025: 100 percent of Henkel’s packaging will be recyclable or reusable¹ and we aim to reduce fossil-based virgin plastics in our consumer product packaging by 50 percent. We also want to enhance our positive social impact on communities – through 100 percent responsible sourcing together with our partners, by leveraging our about 48,000 engaged employees and by helping to improve 30 million lives globally by 2030.

Sustainability will be firmly anchored in all activities. By establishing sustainability as a central pillar in their innovation strategies, the Consumer Business will advance their product portfolios with a particular 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.

Transform Digital into a customer and consumer value creator

Going forward, we aim to transform Digital into a customer and consumer value creator. We want 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, we will further pursue our end-to-end data integration. This shall enable the company, for instance, to create AI-driven innovative and customized solutions. We will also invest in digital talent, especially data scientists and engineers with future capabilities and deep technological industry expertise. And finally, we want to enable digital business focus and efficiency. We will completely reorganize our digital set-up, establishing a new digital structure called “Digital Business." We have established a new CDIO (Chief Digital and Information Officer) position at the end of 2019. Digital and IT teams across Henkel will now be combined under the leadership of the CDIO who will directly report to the CEO. 

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, we are planning to establish digital innovation hubs in Berlin, the Silicon Valley and Asia.

¹ Excluding adhesive products where residue may affect recyclability or pollute recycling streams.

Reshape operating models to be lean, fast and simple

We are reshaping our operating models across the entire company to be lean, fast and simple and to continuously improve the competitiveness of our processes and structures. We aspire to intensify our 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, we introduced new Leadership Commitments to all employees globally in 2019. We plan to accelerate this cultural journey with these commitments at the core and will foster a culture of collaboration and empowerment, upskill our employees on future capabilities and enable our people to grow and develop.