Name: Indra Nooyi Talks Leading PepsiCo Through Disruption
Uploaded: 2020-01-02
Duration: 18 min 36 s
Description: The PepsiCo CEO sits down at Fortune's MPW Summit to discuss the challenges facing the retail industry.

Indra Nooyi Talks Leading PepsiCo Through Disruption

Leadership

The PepsiCo CEO sits down at Fortune's MPW Summit to discuss the challenges facing the retail industry. 

we did a really interesting Q and A with you in the, um in the in the most powerful women issue. And thanks to Beth Cohen for doing that, I found your comments about dealing with disruption and the Amazon, you know, particularly, uh, the Amazon acquisition of Whole Foods. Very interesting. So what? What is your main message to your troops? Uh, Amazon Vise Whole Foods and as, ah, lot more consolidation in the retail space is going to be coming. So before we talk about our message to the troops, first of all, I'm just glad to be here. Go ahead. Too many waves Moving to Washington, D. C. California was a hike. Well, way may go back to California, I think. Leaving that aside, I think before we get to the message to the troops, let's just talk about what's happening in the food and beverage space. Okay, I think is going through. Found changes. You know, we're used to going to the store, picking up what we want and coming back or ordering meals from a restaurant of picking it up. I think the whole industry is getting disrupted in every which way possible. There's a great article in this recent issue of HBR, which talks about only 10% off women and families. I like to cook from scratch only 10%. It's come down from, I think, 40% some astronomical chain in the last decade, so people don't want to go to the store, buy stuff and cook. In fact, that the number one says your grandmother bought ingredients and cooked. Your mother took it out of the can and you are ordering through the telephone, right? So life changing. Yeah, we talk about those trends, but for manufacturers, that has a profound implications for our business. Because retail, which used to be the predominant channel, is no longer the predominant channel or may not be the predominant channel retail itself is fragmenting. Food service companies, like blue aprons and a fresh direct are all becoming major factors. Restaurant themselves are becoming retail because they carry products in the front of the restaurant. And then you've got the big e commerce Companies like Amazon blast the click and collect models of Wal Mart or the delivery models of the retail stores, disrupting themselves. And so you're looking at an environment where you just have to dream about something, and it's gonna show up in your home because these companies have so much data on you, the big and almost anticipate what given order. And so, for companies like ours that our impulse driven which need for you to see a product, I want the product. We have to create impulse in different ways. So we're looking at this range of changes happening the marketplace and saying This is probably gonna be the most exciting time to be the CEO of food and beverage company or the most frightening time. And I think the muscle we have to develop it. Ability to anticipate these changes. Redo the company's business model for the New World, in which case you can reset the competitive equation but married that with the cost cutting culture, because the legacy model has to become more cost competitive while you build the new model for the New Times and you're building in e commerce business now for the first time, a big one And when did that begin? And how big is that point? And what is what are your plans for that? So it's about a $1,000,000,000 in retail sales. Right now, we'll end the Earth about a 1,000,000,000. So it's pretty big and it's doubled in size and China growing about 80% here in the U. S. We have about 200 people on dhe. We don't locate them in our officers because we want them to be a tech company, not a traditional. The water in the basin, Manhattan in California. So away from our main offices, we compensate them differently way higher differently. So they have a stake in that economists operation. Uh, and the thing with the commerce is we're not a B to C company. We talked to the consumer, but we sell through a retailer. We cannot compete with our retail partners. So we have to be very careful how we evolved the model. So we're working with all of our retail partners, including the pure play e commerce companies, as well as the dot coms of every retailer to figure out how to grow their e commerce business with appropriate silos. In between you, I think, tell me if I'm wrong. I think you avoided the Amazon whole foods question a little bit. No, no, not dying. I avoid nothing. Well, I asked you back that I had nothing. You know, one of the wonderful thing about being women, we do know duck issues. Okay, you know that. Okay. I asked you backstage. If you have talked with Jeff Base that I have your welding now? No. So if you were meeting with him, what would be your would be a question? Main questions for him. In your main message, I put that would take a long vacation. Pay for it. Give us time to get us through all the changes you're putting into the industry because he's a disrupter, every aspect of every vertical he's disrupting on. I'm not the only bus that feels everything every retailer would like to chip in for the baby. But he's a vision of visionary. True visionary. Tell you what Amazon has done so brilliantly. It's that Amazon Web service is that they built that data module that is the most powerful engine because they have so much data on each consumer, Huh? But they can now tell you the whole range of that they can source from different people. They don't even have to carry it all that they are a platform to sell it to you. That's one. The only challenge they had was the last mile. We're not solving through Whole Foods because everything could not come out of Amazon. Distribution centers can come through whole foods. The third thing they're gonna learn from Whole Foods is the whole natural organic. That is a trend that consumers are increasingly embracing. Whole foods embrace that long time ago through brick and motor. But sourcing for national organic GM will freeze very difficult. Amazon is gonna learn that through whole foods Whole foods as a brand 3 65 I think which is successful Amazon can now learn how to do private label. So in a way, you put all the manufacturers on notice to say, If you don't service me well, we will do private label, Right? So we have found you. How do you become a, uh, how do you get an advantage in that situation? So it's critically important that our big brands are represented on Amazon because at the end of the day, when the consumer goes on the website and want sports, nutrition, sports, you'll you don't think of How do I look for sports fuel? How do I find the Gatorade that is the brand of record in the sports hydration space. So big brands like Gatorade or Doritos Or do I have to be foreign center in Amazon? And we have to make sure the navigation tools highlight the spot of constantly. Second, we have to innovate because if we don't innovate to create excitement online, uh, the brands will start losing relevance in the search order. So our strategy is not about shelf space. Physical shelf space is about how to get the right click so that our products move up in the whole search process. So Brad's big brands innovation, and I like this one, wouldn't it? Sounds like you're gonna be in a situation where you're almost forced to speed up your innovation cycle over the next couple of over the next few years. I think that actually started about 78 years ago because small companies started emerge on take away a lot of the growth of big companies. So the only way big companies could be successful and keep the growth going was to create small company mentality inside our companies and constantly innovate to compete against the small companies has not been easy. That's been the challenge we've all had to. I'm gonna open it up to the audience in a minute. So Indra has been, uh, CEO for 11 years and, um, kind of seen it all and done it all, um u I went back Indra and looked at a, um a story that we did in early 2008 which was not too long. It was less than it was like a year and 1/2 or so after Julia Notes of George. It was that story that Bessie Morris dead back in 2008 and it was about you had announced performance with purpose. And I mean, it really was ahead of her time at this age in this age, when CEOs are stepping up on social social issues a lot more and I there was a quote in that story you had told Condi Rice, I think adopt us that that January it's critically important that we use corporations is a productive player in addressing big issues facing the world. So you were talking about that back then. So something happened yesterday. So Pepsi is that is, that is a supplier or a partner. I'm not sure what terms is from the Dallas Cowboys. And Jerry Jones sort of sparked up the social media yesterday by saying that either players stand for the National National anthem or they're benched. Do you take a stand on that? Look when we partner with sports teams, we wanted to just one thing we want to fight about. Which team is gonna been on the field, All other issues. You know, we have many stakeholders, everybody has a point of view, and we try not to get into that debate. Do you have a personal viewpoint on this? No. How do you decide, as a CEO, as a public company CEO, what you take a public stand on and what you don't the patio? In the past, we could say the company has a moral code, and we always take a stand consistent with the moral code of a company that used to be the past. Today, its moral code, as interpreted by which faction of the population. So a moral code that sounded like it was a good moral code 57 years ago has gotten increasingly polarized. So we have to be careful that any Stanley take does not alienate one consumer base of the other. So the best thing is, I have a company code of conduct, which is published. You know, I wonder company in a journal to that court of conduct and try not to get into any political debate because it doesn't have a real consumer brand. Yeah, we want to sell all the consumers. You represent everyone so as a question and wait for the mic. And please identify yourself. Esther Dyson over here. Right. Thank you. So I won't ask this as a question, but could you just reflect on all the issues around obesity and diabetes and sugary foods and snacks versus meals and so forth? Do you want me to reflect on it? Okay, um, let me just say that, um, lifestyle diseases are a major part of society. Major challenges society globally. And it's something that people have to address, no question about it, whether it obesity, whether it be smoking related stuff, whatever. Okay. And then the secondary and tertiary impacts off those non communicable diseases. Um, I think it's critically important that we address the issue holistically because, you know, I speak about, uh you know, my country of origin. India. Uh, I look at you very often than me. I read these obesity revolts. I go back and reflect on my own diet, died that I grew up with. The amount of fat, salt, sugar and my diet is unbelievable in terms of my core diet. And so I think rather than addressing how diet have contributed to lifestyles, if we start just picking on one category the end, we're never gonna address the core issue. So I think that this whole non communicable disease issue has to be addressed in term. Self. How should diets change? Diets need to change not because they need to change. Because we grew up in centuries with that diet, lifestyles changed. Life styles have changed because we've gone from a active lifestyle to a sedentary lifestyle. What do we need to eat for a sedentary lifestyle? What do we need to do in terms of the new products that are coming in? Whether it's Western habits permeating the rest of the world or not, what kind of products should be part of the diet or not part of the diet? And how much of it you know when you drink a Pepsi one Pepsi every two weeks and then you start to malign that product, it makes no sense, right, because if you look at many of those countries, that's the per capita consumption, what it translates to. So I think it's very, very important that all of the people who think of these NCDs, whether it's the W h o, the World Economic Forum or the World Obesity Foundation, whoever I think we should convene all the players to talk about. How are we going to address it? As a society, as government, as medical practitioners, we should get rid of all of the noise around it, get to the facts, get to the science and actually address it, and then imposed sensible regulation on anything you want to do sensible regulation so that you don't do something to generate short term revenue. But he do something to fundamentally alter trends in the society. That's my honest belief. And that's what performance of purpose is all about. We talk about human sustainability is a part of the performance of purpose, Biller. It's exactly to focus on this issue. Okay, Another question right here. Hi, I'm Maxine Clark. I remember when you were here several years ago, and you talked about the impact of water for yourself when you were growing up and how important it was and what you had done its leader and Pepsi to make sure that we're taking care of our water. Now, as government is loosening a lot of rules about the energy and the environment and corporations what they should or shouldn't do, is it so embedded are the good things to do the right thing to do so embedded in your moral culture of your company that felt continue regardless of whether it's a government requirement to do so. I tell you my scene one of the things we've done is the company is not only have we recommitted to our goals with one of these few companies that lays out the goal, lays out the actual metric and lays out a date by which we will get that metric, which is unusual because people who talk about goals, they're not specific and they never give you a date by we still get to it. We've done all three on. We've also done something else in the company. We've actually tied people's compensation to those goals. And we put the appropriate capital expenditure and funding to make sure we do those things. The plant of the communities to get to those girls. But it comes the carbon footprint water usage of the recycling. For all of those, we have not backed off the schools because at the end of the day, if we don't have the goals and fulfill them, we will not get a license to operate in many societies in which we do around the world. Before we go to the next question, I want to say something, you know, batter. You said, You know, you've known me for 20 years. I don't think anybody has given you the credit because you started his M. P W issue. You started this whole most possible movement, most powerful woman movement. And I think we all owe Patty big round of applause for what he's done. Thank you. Thank you. Nice of you. Oh, my gosh. I mean, I think 19 years ago, when we started this most powerful women list and I kind of was selected and decided tow, you know, kind of stay on board in a state with fortune this whole time. But, I mean, what it has given me A and return is at least as much as we have given this community. So thank you, Indra. The next person to come out. Mmm. Before I announce before I introduce her butt is Arianna Huffington. Time off. And she has very kind of strict rules and opinion. Strong opinions about something you don't do very well. Sleep. Talk to me all the till. Interest for a phone on next to her bed. Absolute. And just text throughout the night. Now, in this why you're CEO still like you're the survivor after 11 years. Is that your real secret? I've been on that mound. The only secret I have to tell you. Look, I have two daughters and, uh, they have moved away from home and I have to talk in my head. Said under have gotten a text on my kids. They're both in the house. Dolo. I cannot sleep. First point boy number two when my operations and I'm the world open. If they want to reach me, I want to make sure that I'm awake. So I have this inner urge to make sure that I'm always available for my kid's on my apology. Times a night. Do you wake up? But I'm not the benchmark. So don't use me as a benchmark, please. Because they say sleep is a gift God gives you. He gave me lots of gifts. Sleep is not a gift he gave me. I wake up every hour, every hour, every hour. One of the cases. Many case to your success. Thank you, Father. Thank you so much, Indra.