In 2020, Waters Corporation, a Boston-area life sciences company that has been manufacturing analytical instruments since 1958, found itself losing ground to competitors. That year, the company’s newly appointed CEO, Udit Batra, engaged employees, the board, and other important stakeholders in a transformation effort aimed at rediscovering what he calls the organization’s “indomitable spirit.”
Udit is no stranger to either the life sciences industry or the complex nature of business transformations, having led large-scale M&A and change efforts at Novartis, Merck’s consumer health business, and MilliporeSigma. “Taking a step back, you never really know” if a transformation is going to succeed, he explains, “but if the brand is good, the gross margin is good, and the overall market has successful players, you can tell there is at least a path to success.”
Waters took that path and, five years later, is beginning to see its transformation pay off: The company has outperformed its peers over the past several years, including some that are considerably larger. It ended the first quarter of 2025 with five-year total shareholder returns of 102 percent, exceeding the peer average of about 60 percent.
In March 2025, Udit spoke with McKinsey Partner John Chartier and McKinsey Editorial Director Roberta Fusaro about the importance of having the right people, clear processes, and a simple (and memorable) storyline in place for transformations to take hold.
The conversation has been edited for clarity and length.
Seeding the ground for change
McKinsey: Tell us a little bit about Waters and how your background and experience prepared you for the role of CEO at the company.
Udit Batra: We’re one of the largest analytical-instruments companies in the world. We work in high-volume applications to ensure that the food you eat, the water you drink, and the medicines you take are safe to consume. There are roughly 8,000 of us globally, on nearly every continent, and we have about $3 billion in sales and a nice margin.
In terms of what prepares you for such a role? Nothing ever totally prepares you, right? But I have been a customer. I have used our products as an undergraduate, as a graduate student, as a researcher, and then as a leader of pharmaceutical and vaccines businesses around the globe. I understand how many of our customers make decisions. I’ve also had the good fortune to lead large, global organizations in the sector itself, be it a consumer business at Merck, the vaccines business at Novartis, or, most recently, the MilliporeSigma business of Merck. I’ve also had the good fortune to work with teams transforming different businesses from point A to point B.
McKinsey: How do you know that an organization can be transformed?
Udit Batra: It’s tricky to identify prospectively the characteristics that could make a business transformation successful. But number one is the brand. Is the brand still relevant? The brand is a representation of the customer’s perceived value of what you do for them. We knew that Waters was still a fantastic brand. When I asked my friends who were in labs, “What do you think of Waters?” they said the liquid chromatography was great, the mass spectrometry [mass spec] was great, the service was great—the prices were high, though.
Second is the financial picture, which also starts with the value of the brand. You can measure that just by looking at a company’s gross margin. Waters’ gross margin has hovered between 58 percent and 60 percent, which means customers are willing to pay for the brand, regardless of any challenges the company has had or the broader dynamics of the industry.
Third is the industry itself. You ask yourself, “Is this a good industry? Are things going uphill or downhill?” The analytical-tools sector is driven by secular drivers—the need for more medicines, the need for safer food and water—which suggests that this remains a growing market for Waters. Also, there were competitors at that time [during the transformation] that were performing extremely well. I also had personal experience working in this sector and knowing that companies can succeed in this sector. Of course, you can never tell until the story is finished.
McKinsey: You saw a viable path toward change. What were the next steps in Waters’ transformation?
Udit Batra: My team and I spent the first six weeks staring at and ingesting all the facts. Team members came into our office and reported to us about financials, products, customers, geography. We talked to external stakeholders, including the board, to find out what, in their view, needed to change. We talked to customers. We talked to shareholders. We read a lot of journals and other resources to learn about technologies and who was doing what. If you do that for weeks, discussing the facts together, you can establish a common understanding of the situation.
During those weeks, you learn a few things: Number one, you learn about the team, which is critical. Who’s with you? Who wants to be with you? Who do you want to have with you? You learn all that from the way they present and whether they opt out. At the consumer health business at Merck, for example, as people were presenting, I said, “No. This one, no. This one, no.” And virtually the whole team changed. Whereas at Waters, I said, “Everyone should stay.” People had so much passion and knowledge. Three of the most experienced people on the team told me they were prepared to retire, but, after I begged, they agreed to stay for six months while we began to orchestrate the transformation. Thank goodness they stayed, because the business transformed under their leadership as well.
The second thing you learn, based on that deep dive and the market context, is what the plan should be. You spend serious time trying to understand the success factors for the business, and you come up with a road map. For consumer health at Merck, for instance, we used to operate in 40 different countries. But we said, “We cannot succeed in 40 countries.” We narrowed it down to eight countries, with only two rules: First, you must have at least 3 percent market share so you can sustain your infrastructure. And second, you must have at least three leading brands so you can allocate marketing spend efficiently across them.
At Waters, we said we must replace instruments, and we need a higher service attachment rate, so we came up with some protocols. Simple rules help you develop the business model for the future and give you a plan. Then, of course, you need to implement the plan with a lot of feedback, keeping the context in mind and changing the plan as the context changes.
The three C’s of transformation
McKinsey: What sort of team is necessary to implement a transformation, whether it’s an executive team or a broader work team?
Udit Batra: I think you said it: The word “team” for me refers not only to the executive team but also to colleagues across the organization. I often talk to people who are direct reports of my direct reports, so people who have critical roles in the organization, sometimes cohorts of sales teams, cohorts of R&D folks. One needs to think more broadly than just the executive team.
There is an individual component to teams required for transformation, as well as a collective component. At the individual level, we wanted people who are, of course, competent in their discipline. If you’re in finance, you’d better know how to add. We also wanted people who are courageous, who are not coming back to leaders each time and asking, “What should I do?” Because if I’m going to spend time trying to figure out what you have to do, then who is going to figure out what I have to do? Having the courage to act is critical once you’ve shown competence.
We wanted people who showed compassion. Compassion is important for understanding teams’ and customers’ points of view, and with that understanding, the implementation of transformation initiatives becomes much more robust. We measure this rigorously across our teams: Are you competent? Are you courageous? Are you compassionate?
At the collective level, at the executive-team level, I’m the first among equals. There is no number two. Every one of my eight team members is equal to me. There’s no one else you have to go through to get a point across to me. We emphasize extreme transparency in the group. Whatever you have to say in a meeting, say it in the meeting. Don’t come to my office afterward, close the door, and say, “Well, here’s what I wanted to say in the meeting.” If you have something to say to someone, say it to them directly. Don’t come and talk to me about it. In this way, we can create more trust and respect.
McKinsey: How exactly do you measure individuals against these three C’s—competence, courage, and compassion?
Udit Batra: Competence is the most straightforward to measure. There are facts. Did people do what they said they were going to do, and did they do it with excellence? Courage—you could consider it a bit more squishy, but it’s hardly that. The key question is, do people make decisions on their own?
Here’s an example. At Waters, we said very early on that we would invest in five growth areas. One of them was to set up a clinical business unit, and in that business unit, we said, “We’re going to give you disproportionate resources, but you’ve got to grow beyond what you’ve done in the past,” which was in the low single digits. We asked the team to come up with the plan. In response, the leader of that team went out and struck collaborations with a bunch of other companies in the space. Because of those collaborations, the clinical business unit was able to add automation and sample prep capabilities to its mass spec business. The business unit leader and his team went off and did this without really consulting a lot of people internally. And the business unit went from being a low-single-digit grower to a double-digit grower. They had the courage of their convictions, and they had done the analysis. Had they come back to me and the executive team, we would’ve asked for lots of data, but we might not have added any value to the decision.
Keeping it simple
McKinsey: Besides getting the team structure right, what are the most important focus areas for organizations to succeed with transformations?
Udit Batra: The biggest, by far, is simplification. In every transformation I’ve been involved in, we were doing too many things. As I mentioned earlier, in Merck’s consumer health business, we were operating in 40 countries, and we had 16 brands. We narrowed it down to eight countries that we wanted to be in, with three brands for each country. At Waters, we had an ongoing initiative in whatever area was interesting and hot—pharmaceuticals, life sciences, you name it. We had to pause and ask ourselves, “What are we really good at?”
It turns out we’re very good at simplifying complex instrumentation for high-volume applications. We specialize in simple yet sophisticated instruments that you and I can use with simple training. Many of those instruments are powered by our informatics software. In fact, about 80 percent of the drugs filed with regulators use Waters software to ensure compliance.
We are also the world’s experts in developing separations using high-performance liquid chromatography. Our consumables are manufactured in-house and range in complexity from small-molecule to large-molecule separations. We have a completely vertical value chain that, again, reassures our customers and industry regulators that there is complete lot-to-lot consistency in the columns.
We also have a great service team. Even though these instruments have been simplified, you still need people with engineering and science backgrounds to help you run experiments in the right way.
Looking at all that, the business model is simple and repeatable. It’s a framework we have developed, and we have consistently mapped our transformation plan back to each part. It’s replacing instruments, it’s providing the software to ensure regulatory compliance, it’s providing the chemistry, it’s the idea that the columns we develop should be in the hands of every customer through e-commerce, and it’s ensuring that the service team is excellent in attaching the service to more and more instruments. We put it all on a piece of paper, using the symbol of a flywheel. This type of simplification is the most important thing a leader can do for an organization.
Keeping employees engaged
McKinsey: Given the time it takes to see tangible results from a transformation, how do you keep employees committed?
Udit Batra: Again, it starts with simplification and symbols—and communicating your main points again and again. Repetition and consistency are critical. Let me give you an example. Back in the early stages of the transformation, we said we wanted to regain our commercial momentum behind five initiatives. We wanted to replace instruments. We wanted to ensure that our service attachment rate went up. We wanted e-commerce to go from 20 percent to 50 percent. We wanted to increase our share in contract manufacturing organizations. And we wanted to launch products effectively. Five initiatives. We disseminated those at the JPMorgan Healthcare Conference in 2021. And every year since, we’ve repeated the report card. We’ve said, “OK, how far along are we?” Not just externally, but internally with our board.
So consistently communicating the main points of the transformation and its progress again and again and again, and then using the symbolism of the flywheel again and again and again, helped create confidence and credibility in the transformation. Equally, magic happens when people start using that language, and it gets internalized in the organization. Culture is not something that you impose. Culture is lived by repetition. And that becomes part of the DNA of the company.
McKinsey: Talk a little more about the role of culture in the transformation.
Udit Batra: One of the mistakes companies make is assuming that they are going to change the culture, but it’s more important to have the humility to understand what the existing culture is and what its trends are. Waters is a deeply technical organization. We love technology, and we collaborate with everyone, including our customers. You’ll find Waters’ name on all the seminal publications that were used to detect and separate mRNA molecules. I don’t know how much we gained in terms of revenue, but for sure we were solving the most difficult technical problems in the industry and the world. That is in the DNA of the company. Rather than change it, we simply built on it. We said, “OK, we’re going to amplify the technology focus and the collaborative nature of our teams with customers.”
We had to acknowledge that a few things had gotten in the way of our growth. First, as scientific folks—and I’m an engineer myself—you get distracted by anything that looks interesting. We had a challenge with staying focused. Second, if you get distracted, you are probably not that fast. The world moves around you, and you’re still working on 15 other things that are not relevant anymore. And third, because we are so collaborative, we don’t necessarily want to take responsibility for things; we want to work as a team.
So when looking at our culture, we decided to amplify the need for focus, urgency, and accountability. Focus on the elements of the flywheel. Focus on replacing instruments. Focus on developing the next generation of chemistry and informatics. Don’t worry about setting up a service organization for contract manufacturing. That’s something we will do 15 years from now. Right now, let’s just focus on a few key priorities.
We also put a premium on action. As soon as you have an idea, act. If it doesn’t work, try again. Act. And in the case of accountability, we have something called the deletion experiment, including for me. And that is, “How would the world be different if you didn’t exist?” We love our purpose, which is to accelerate the benefits of pioneering science. We want to solve big problems. We want to detect diseases earlier, get medicines to patients faster, ensure that food and water are safe—and we want everyone to have a role in all that; everyone should understand their specific role in solving these big puzzles.
McKinsey: What’s the role of the board during a transformation?
Udit Batra: I keep them, particularly the chairman, fully informed on the changes in context, changes in earnings—they should hear things from me first before they read it somewhere else. They’re also a huge resource when it comes to transformation, given their experiences in finance, strategy, and industry. At Waters, we bring them into the problem-solving—we’re not always going in with the solution, but sharing the situation and the ambition, asking for guidance, and debating alternatives. With the board, you need to create a collaborative environment where you are learning from each other and having fun with each other. It’s no different than working with your own team—you want to be with people you like, respect, and trust.
Why context matters
McKinsey: What other lessons can you share with CEOs and organizations pursuing transformation?
Udit Batra: The most important lesson from these past four years is to keep an eye on the context and make sure you understand what your assumptions are in the initial plan and how they need to change as the context does. Think about it: Since I joined Waters in 2020, we’ve had a pandemic. We’ve had an explosion of demand postpandemic. Then we had a supply chain crisis, because the demand went through the roof. Then we had a deep slowdown with biotech and the crisis in China.
But in the fourth quarter of 2024, we started to see some growth. All through that period, we clarified how the context was changing, how the demand was changing, how the supply chain was changing, how our R&D programs were changing, what was working, and discussed all this regularly with teams. We continue to have a standing meeting once a week where a team reports on changes in the external environment and their potential impact on Waters. We do this every single week.
Most important, we had the humility to change our assumptions. Four years ago, for instance, we said biologics would grow, clinical would grow, batteries would grow, and sustainable polymers would be an investment area. Three out of the four assumptions were fine; sustainable polymers are growing, but not as fast as we had anticipated, so we took those resources and put them into the other three areas. During the past four years, GLP-1 [glucagon-like peptide-1] testing became a big opportunity. Genetics in India became a big opportunity. PFAS [per- and polyfluoroalkyl substances] testing became a huge opportunity. So we redirected resources in those areas.
Context matters as you traverse any sort of transformation—that’s the main lesson. Spend the time and do the deep dive on context, create a common understanding of the situation in your team, and then trust your team to react.
McKinsey: When we spoke in 2019, you explained that your approach to leadership is focused on logic and love.1 Has that changed in the intervening years?
Udit Batra: No, not at all. It sort of reflects what I was saying about culture. Logic and love must work in parallel. Logic is setting the context, having the facts to make a change, ensuring that the organization is aligned. This is logical. You can write it on a piece of paper and say, “This is where we’re going.” Love is about understanding what matters to a team; it’s about creating and amplifying certain behaviors in the organization and adding new ones that you feel are going to make everyone more successful.
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