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CEO Dialogue Series

Henkel’s Carsten Knobel: A CEO who sticks to his strategy

27 February 2024 in CEO Dialogue SeriesPodcast availablePodcast available

Henkel CEO Carsten Knobel tells IMD President Jean-François Manzoni why he has remained laser focused on implementing its purposeful growth agenda and why the company decided to exit Russia. ...

Much like Henkel’s best-selling superglue Loctite, CEO Carsten Knobel is known for pursuing a clear course and standing by his decisions – even when external pressure mounts.

Since assuming the helm just before the onset of the COVID crisis in 2020, Knobel has navigated multiple challenges, including a pandemic that shuttered factories and shops, a billion-euro sales loss following the company’s exit from Russia and most recently, soaring raw material costs. Through it all, his steadfast commitment to Henkel’s purposeful growth agenda, which includes investing more into products and marketing, has not wavered.

“In retrospect, there isn’t much I would have done differently,” reflected Knobel on the crisis management that marked the first year of his tenure. “For sure, the COVID situation and the pandemic did slow things down, particularly in terms of restructuring and transforming the company.” Overall, though, he believes his approach as CEO has remained consistent.

Founded in 1876 by Fritz Henkel, an entrepreneur from western Germany who developed the first self-acting laundry detergent in the world, the DAX-listed company will be familiar to consumers today for its Persil laundry detergent and Schwarzkopf shampoo. Yet Henkel makes around half of its 22 billion euros ($25 billion) in annual revenues from its adhesive technologies business, which includes glues to secure nuts to bolts, used in the wings of passenger planes, and as a substitute for welding in modern cars.

From co-pilot to pilot

When Knobel was promoted to CEO he had spent almost a quarter of a century at Henkel in roles in the business as well as finance, including eight years as CFO. He, nonetheless, had to ask himself whether he was the right person for the role.

“When I was the CFO, I always held the concept that the CFO or the financial director is a kind of co-pilot of the plane or the company. As a co-pilot, you support the decisions, offer opinions, and have an impact, but ultimately, you’re not the final decision maker,” he said.

Careers thrive when good leadership skills are clearly on display.
“If you want in the long-term to develop, to aspire and to survive, I think you need to have a growth component because that's the only thing to attract customers, to attract consumers, to convince them.”
- Carsten Knobel

Before accepting the job, Knobel reflected on things that had gone well during his time as CFO but also on the mistakes, to help him craft a vision to steer Henkel into the future. He also asked himself what kind of leader he’d like to be. “I strongly believe in empowerment, enablement, and fostering an open feedback culture. I encourage everyone to be brave and venture new ideas and concepts,” he explained. “In the end, you’re not winning this game alone. You can have many individual players, but if you’re not working as a team, it’s not possible to win.”

Surprisingly, for a CFO, whose mandate is to focus on efficiency, Knobel quickly switched his focus to growth. “Efficiency comes to an end at a certain point. You can’t continue doing this indefinitely. And if you want to develop, aspire and survive in the long term, I believe you need to incorporate a growth component as that’s the only way to attract and convince customers and consumers.”

Growing with purpose

Henkel’s purposeful growth program is focused on a winning portfolio, a clear competitive edge in the areas of innovation, sustainability and digitalization, as well as a future-ready operating model based on a strong company culture. Knobel’s ambition was, however, soon complicated by the COVID pandemic, which plummeted the company, like the entire world economy, into crisis-fighting mode.

He remains proud that Henkel did not lay off any of its 50,000 employees around the world due to the pandemic and that it continued to pay a stable dividend to shareholders. Having the support of a long-term family owner certainly helped create breathing room to execute the company’s strategy. Henkel’s chairwoman, Simone Bagel-Trah, is the great-great-granddaughter of Fritz Henkel and was in daily contact with Knobel throughout the pandemic.

Lacking data and facts, the former financial director and his Management Board colleagues found themselves having to rely on intuition and instinct. An asset, Knobel says, was Henkel’s strong company culture and values, which served as a North Star for decision-making during the crisis.

“At Henkel, we stand for our shared values, and a strong corporate culture; which is what has made Henkel special over the last 147 years,” said Knobel, who joined the company as a graduate in 1995 before ascending through the ranks.

Stronger together

A further headwind was the surging price of raw materials, which slashed 1 billion euros off Henkel’s bottom line in 2021 and a further 2 billion euros in 2022. Despite pressure from financial markets, the company has consistently pursued its growth strategy rather than pivoting to reduce costs.

In 2023, the company underwent a far-reaching transformation by consolidating its laundry and home care and beauty care businesses into a unified consumer brands unit, positioned alongside its adhesive technologies unit. The internal merger is geared towards achieving approximately 500 million euros in savings in the mid-term, which will enable Henkel to channel more resources into innovation and marketing for its consumer brands with the highest-growth and margin potential. Additionally, it will facilitate more strategic and focused acquisitions, said Knobel.

CFO co-pilots air plane
“I always held the concept that the CFO is a kind of co-pilot of the plane or the company. As a co-pilot, you support the decisions, offer opinions, and have an impact, but ultimately, you're not the final decision maker.”
- Carsten Knobel, CEO of Henkel

Over the years, Henkel has faced recurring calls from analysts and investors to break the business into two more homogeneous parts: its adhesives business which is primarily focussed on B2B industrial customers and a separate consumer brands business.

Knobel dismisses this suggestion, arguing that keeping both strong pillars gives the group more financial firepower for strategic acquisitions, while also helping to balance risks during turbulent times since each business area is exposed to distinct market dynamics and business cycles.

Resolve over Russia

Without a doubt, one of the toughest decisions he has faced over the past four years as CEO was to exit the Russian market, which accounted for around 5% of Henkel’s revenues.

Within 48 hours of the invasion of Ukraine in February 2022, Henkel ceased all its advertising and sponsorship campaigns in Russia and suspended investments, but the company still came under fire for continuing to operate. At the time, Henkel generated sales of around 1 billion euros in Russia and employed some 2,500 people across 11 production sites, so had to consider its responsibility towards its staff, said Knobel.

Following a careful analysis of the situation, including exchanges with board members at other German and international companies, and discussions with the shareholders’ committee, Henkel decided to cease operating in Russia two months after the outbreak of war in Ukraine. A year later, in April 2023, it closed the sale of all its business activities in the country to a consortium of local financial investors.

In moving decisively to cease operating in Russia, Henkel is in the minority of western firms who have followed through on announcements to exit the country. Research by Simon Evenett from the University of St. Gallen and IMD’s Niccolò Pisani published in the Journal of International Business Policy, found that only between 8-13% of firms from the European Union and G7 nations managed to complete the equity divestment of one or more of their Russian affiliates by December 2022.

The decision was not without financial consequences; Henkel had a market leading position across all its businesses in Russia. Yet Knobel has no regrets.

“We gave away 1 billion in turnover and a business with disproportionately high profitability,” he said. “I think we brought a very complex process to a successful completion. We believe it was the right decision, and I would make the same decision today.”

Watch the full CEO Dialogue to hear more from Carsten Knobel on how Henkel built a world-leading, customer-centric business and the company’s sustainability strategy, including its circular economy ambitions.


Jean-François Manzoni

Jean-François Manzoni

IMD President

Jean-François Manzoni is the President of IMD, where he also serves as the Nestlé Professor. His research, teaching, and consulting activities are focused on leadership, the development of high-performance organizations and corporate governance.

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