Case study: Operating model transformation at Reckitt
In 2024, Reckitt leaders found the organization at a pivotal moment: It was operating in more than 70 markets while navigating industry disruption, fundamental decisions about which businesses to separate and where to focus, and the prospect of a simultaneous transformation and business carve-out. Geopolitical and supply chain disruptions had affected performance. Prior transformation efforts had not delivered the expected impact or pace of progress, while increased M&A activity added further pressure.
As Reckitt Chief Human Resources Officer Ranjay Radhakrishnan describes it: “The starting point was one of deep complexity and growing doubt. Performance was shaped by a series of one-offs, and that created a shadow over the underlying strength of the business.”
Organizationally, the operating model had also become unclear. “The organization was, quite literally, sitting on the fence, on governance, accountability, and where decisions really sat, and that made change unavoidable,” he explains.
Rather than layer another incremental program onto an already complex system, leadership faced a clear choice: Recalibrate slowly, or reset decisively. While many organizations may have sequenced their next chapter, Reckitt chose to act on three fronts simultaneously: separating noncore businesses, establishing a new operating model, and materially restructuring its cost base. Reckitt partnered with McKinsey from strategy through execution to deliver the transformation.
Against this backdrop, Reckitt’s leadership moved to provide what Radhakrishnan describes as “electrifying clarity on the direction, what was core, what was noncore, and what that meant for the organization and for individuals.”
Resetting the portfolio and strategic focus
The transformation required a set of hard business choices: where to play, what to exit, and how to fundamentally reset the cost and operating model to restore performance. This meant concentrating Reckitt on a set of high-growth power brands, separating noncore businesses, and redirecting capital, talent, and leadership attention toward fewer, higher-return growth engines—ultimately focusing the business on 11 core brands while preparing other parts of the portfolio for separation or alternative ownership.
This shift clarified where Reckitt would succeed, reduced competing priorities, and aligned capital and leadership focus behind a core set of growth engines.
Critically, Reckitt did not treat these portfolio choices as a prelude to transformation; it ran them as part of the same integrated reset. That parallel approach gave separation real momentum. It forced clarity on what the future core needed to look like and ensured that governance, processes, and productivity were redesigned for both the retained business and the assets being carved out, ultimately enabling the carve-out to be completed in record time.
Redesigning the operating model and cost structure
The operating model redesign focused on simplification and accountability to accelerate decision-making, reduce structural cost, and improve how the business delivers on its growth plans. Reckitt moved from a center-driven global business unit model to one where decision-making shifted toward geographic areas and their respective markets, bringing accountability closer to consumers and customers.
In practice, this translated into a fundamental shift in how the business operated, delayering the organization from five management layers to three. Reckitt established Global Business Services to serve as a platform for enterprise-wide transformation, driving end-to-end process excellence, accelerating automation and AI adoption, and unlocking sustainable value across the business. It also improved the cost of goods sold by redesigning its supply network across manufacturing, logistics, and procurement, embedding productivity as a structural feature of the operating model rather than a one-off cost program.
Clear roles and responsibilities further simplified governance and clarified decision rights, shifting ownership from a predominantly center-led model to one with greater market accountability. Global functions were realigned with a new geographic structure to support this shift.
Talent and leadership decisions
Leadership transitions also became more intentional. Rather than announce all leadership appointments at once, Reckitt implemented what Radhakrishnan describes as “rainfall in waves,” staggered announcements that allowed leaders to shape their teams deliberately while maintaining business continuity. As he notes, “We knew that ‘instant thunder’ doesn’t work. Leaders end up with teams appointed for them, not with them.”
Talent decisions were anchored in role requirements, ensuring the organization could both sustain business continuity and deliver the capability step-up required to execute the new strategy. These decisions came with real trade-offs, separating businesses with strong heritage and making calls that prioritized future performance over continuity.
“Talent and staffing were the hardest, constantly balancing business continuity, capability upgrade, and getting the right mix of experience,” says Radhakrishnan.
At the core was a clear “where to play, where to win” logic, concentrating on a focused set of power brands while exiting businesses that did not fit the long-term growth and performance model.
Executing at pace: Governance and discipline
Reckitt and McKinsey established a dedicated transformation office to govern both transformation and separation as one integrated program. Acting as a single control tower, it coordinated sequencing, decision-making, and issue resolution, ensuring alignment, pace, and performance throughout. Integrating these efforts avoided prolonged disruption and ensured the business continued to perform while being fundamentally reshaped.
This shift was reinforced through changes in day-to-day business rhythms, simplifying reporting, standardizing templates, and refocusing leadership discussions on forward-looking decisions rather than retrospective analysis.
“We moved away from explaining the past to focusing on making decisions by simplifying the required business intelligence, aligning cadence, and making discussions sharper and more consistent,” says Renata Moraes, Reckitt’s senior vice president of finance.
David Romero, vice president of global transformation at Reckitt, explains that “the combination of strategic clarity and disciplined execution was decisive. Reckitt did not treat transformation and separation as parallel workstreams, they designed them as one integrated program with a single source of accountability.”
Throughout, leadership anchored execution in shared purpose. As Radhakrishnan emphasizes, “Two things trumped everything else: clarity about where the company was going, and pride in what Reckitt stands for.”
The three-pronged Reckitt transformation had almost immediate results in Reckitt’s performance. In the first year, the shift to market accountability and greater focus on the core growth platform helped deliver more than 8 percent operating profit growth, while sustaining positive like-for-like revenue growth.
As a result of its transformation, Reckitt is now on a strong path toward delivering around 250 basis points of margin improvement.
Reckitt’s new operating model has enabled measurable progress across the organization: a lower structural cost base, faster decision cycles, clearer governance, and a performance backbone designed to reinforce accountability. Today Reckitt operates with governance aligned to its geographic footprint, a cost base tied directly to growth priorities, and a portfolio focused on higher-growth, higher-margin power brands.
Importantly, the transformation also reshaped how the organization approaches change itself. As Radhakrishnan reflects, “If a plan isn’t uncomfortable, you’re probably not changing enough.”
In choosing to reset rather than recalibrate, Reckitt restored focus where complexity had crept in and showed that bold, integrated transformation, when anchored in clear business choices and executed with discipline, can unlock both performance and sustained competitive advantage.
