Starbucks’ new boss, El Narasimhan, is used to feeling like a stranger

Laxman Narasimhan was the CEO of Reckitt Benckiser. (a file)

The next Starbucks CEO used to feel like an outsider. Laxman Narasimhan, who will head the world’s largest coffee chain despite not running a retail or restaurant business, was a newcomer when he took over at British consumer goods company Reckitt Benckiser Group Plc three years ago.

The first outside CEO appointment in the history of the Lysol and Nurofen maker, and with no background in consumer healthcare, joined a company reeling from a turbulent decade as it shifted from one scandal and crisis to another and failed to achieve financial goals.

Mr. Narasimhan, 55, was not afraid to make changes quickly.

Within the first three months of the official start, Mr. Narasimhan replaced the Chief Financial Officer and laid off the services of the Head of Household Hygiene, who had worked at Reckitt for 32 years. He hired a senior executive from his former employer PepsiCo Inc. , for a new position as CEO of Transformation. As he prepares to leave, Reckitt’s entire executive management team is different from the team he started with in 2019.

By the six-month mark, Mr. Narasimhan came up with a performance-changing strategy for Reckitt that prioritized growth and investment in its health, nutrition and hygiene divisions while eliminating non-core brands. The dispositions included the Chinese division of infant formula maker Mead Johnson, an unfortunate $17 billion market cap by former CEO Rakesh Kapoor that was more expensive than all previous Reckitt deals combined.

Analysts, investors and others who know him don’t expect Narasimhan to avoid big strategic moves at Starbucks. However, he will work closely with long-time president Howard Schultz, who has turned the coffee chain’s management and strategy on its head since returning to the post for a third term.

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Alicia Fury, an analyst at Investec, said Mr. Narasimhan is a quick decision-maker and it didn’t take long to enforce Reckitt’s “mega-turnaround strategy”.

“It only took about two quarters to come up with, connect and deploy. It’s very effective,” she said in a call with Bloomberg, adding that his biggest achievement was the development of the company’s entire supply chain infrastructure.

The CEO, who prefers one shot of espresso a day, is given the most credit for changing the culture at Reckitt.

This was a company that was not only trying to digest a disastrous takeover when it started, but was also recovering from a serious cyber attack, manufacturing problems, a failed product launch, and a health scandal where hundreds of people in South Korea died of a fatal lung disease. Illness caused by exposure to a moisturizing disinfectant sold by the group.

Mr. Narasimhan met with a panel representing survivors of the toxic air purifier scandal shortly after joining and wrote a personal letter of apology to the South Korean Independent Commission for Social Disaster Investigation.

He visited factories and warehouses to gain a better understanding of the business and improve Reckitt’s relationship with its major retail customers.

“After joining in late 2019, he made it clear in third-quarter results that he was touring all the major markets and talking to people on the ground, talking to clients to see where the business needs to ramp up investment,” Fulvio said. Cazzol, an analyst at Berenberg. “He proved that he was very willing to get entangled and understand the business.”

Mr. Cazzol adds that when Mr. Narasimhan joined, he prioritized a focus on customer service for its largest retailer partners, demonstrating the kind of understanding he would need when running a consumer-oriented business like Starbucks.

Two-Bedroom Apartment

Mr. Narasimhan, who has a degree in mechanical engineering from Pune University in India and an MBA from the University of Pennsylvania’s Wharton School, started at Reckitt less than a year before the world went into lockdown with the spread of Covid-19. At first, this kept him away from his wife and older children while he worked at Reckitt out of a two-bedroom apartment in Britain he shared with his elderly mother.

Narasimhan’s early media calls often included pausing to help his mother answer the door for grocery deliveries, or closing the door when he talked about Reckitt’s performance of Durex condoms.

In the midst of trying to make a turn, Mr Narasimhan, who speaks English, German, three Indian languages ​​and speaks Spanish, has overseen the explosive growth of Lysol disinfectant during the pandemic. This was followed by an unprecedented increase in its US baby milk business, which was for sale, after massive shortages earlier this year.

However, Mr. Narasimhan departs before Reckitt’s transformation is complete, leaving the company with its caretaker in charge while it searches for a permanent replacement. With ambitious growth targets and facing a period of unprecedented inflation and turmoil, the final assessment of his short tenure at Reckitt may look different in a few years.

Not everyone is a fan of the CEO, who will face major challenges as he advances to a company that employs more than 383,000 people and handles the first-ever union effort across the United States. Bill Campbell of Paragon Intel, a management analytics firm, said the due diligence it conducted when Mr. Narasimhan took over at Reckitt showed he was “a solid strategist, but not an operator and lacking the ability to execute on a long-term strategy.”

Mr. Narasimhan, a famous hard-worker, fell down the stairs, broke his elbow the night before Reckitt announced the results – and went on with business as usual. Colleagues say it’s not uncommon to receive emails before sunrise. Mr. Narasimhan can be a tough task manager but he strives to bring a difference with him.

“Laxman is definitely a great job. He’s an excellent communicator,” said Martin Debo, an analyst at Jefferies, who said Reckitt’s entire experience was a “roller coaster ride” for Mr. Narasimhan. “He’s very charismatic and obviously has an excellent resume for being at McKinsey and Pepsi. My instinct is he’d get better at Starbucks.”

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