Dean's Distinguished Speaker Series: Indra Nooyi

ladies and gentlemen already good morning to all of you I thank you for taking the time to come for this event for those of you who don't know me my name is Gaurav KL I'm a second year student in the class of 2013 and currently I'm serving as a president of the South Asian Business Association and it gives me immense pleasure today to introduce our very special guest mrs. Indra Nooyi mrs. Nui is the chairman and CEO of PepsiCo and has directed the company's global strategy for more than a decade she led Pepsi cos the restructuring including the divestiture of its restaurants into the successful yam brand the acquisition of Tropicana and the Pepsi bottlers the merger with Quaker Oats and acquisition of Russian dairy and juice company Wimbledon which was the largest acquisition in the history of PepsiCo she has also championed pet seekers performances performance with purpose approach to business which was defined as delivering sustainable growth by investing in a healthier future for people on our planet before joining PepsiCo mrs. knew he was at ABB Motorola and the Boston Consulting Group she was ranked as the most powerful woman in business by the Fortune magazine for five consecutive years from 2006 to 2010 in 2000 in 2007 she was awarded the Padma Bhushan award which is the third highest civilian honor given by the Government of India I'm very glad that today the Andersen community will get to hear from one of the most eminent business leaders of a time please join me in welcoming Padma Bhushan mrs. Indra Krishnamurti Nui well thank you girls and thank you everyone for being here and Indra and I would like to invite everyone who's in the back to come here in the front we because we've been eating Pepsi snacks all morning we will not devour you in the front here so please come on in first of all I want to thank you Indra for joining us not just today but as the recipient of the John Wooden Global Leadership Award the 2012 John Wooden Global Leadership Award and some of you are probably too young to know of John Wooden John Wooden was is the most winning coach in college history in terms of NCAA wins in basketball last one was in 1975 when he retired but more importantly from our perspective he was not just a phenomenal coach as a basketball player and as a coach of the team but really was a model of principled leadership and values-based leadership and he transformed his players not just about winning but about living life with values and principles and we honor a leader who represents the values and the inspirations that Coach wooden represented not just to sports but to management and leadership and we're so proud that you are this year's recipient Indra because everything you're doing embodies coach Wooden's goals Thank You Julie appreciate it thank you I want to also before we get to the questions remind ourselves of the real devastation occurring on the East Coast new jersey new york all of those affected by hurricane sandy and we have so many friends and family members and alumni there who need our help and I hope you will reach out PepsiCo has already done so much in distributing food and beverages over the past week and we'll be doing so truckloads trailer truckloads of food and it is that kind of dire need that is unmet at the moment and we need to help and thank you for leading PepsiCo to doing that in terms of what we're going to do here today I've gotten a lot of wonderful questions from students and faculty that I'll share with Indra some of them my own if I don't mention your name on the question it's because of the question that you gave us and then we'll have ample time for you to ask questions I'll certainly read half an hour to do that and I want you just to be mindful of the fact that PepsiCo and Indra Nui are incredibly visible public figures and public companies so please be aware and you know it better than most given the classes that some of the questions that we might ask can't be precisely answered because of the material information that would be of interest to the investment community so bear that in mind as as you ask questions and I'll certainly bear that in mind when I ask so let's start first from marketing strategy and social media and of course the world has been transformed to a world where we consume information through social media and consume it on mobile apps how has social media and mobile transformed how you go about acquiring and retaining customers that's from Professor Jiang thank you Judy and first of all it's a pleasure to be here um Bryan Cornell is Bryan Bryan where are you he will come up front here Bryan Bryan is one of the alumnus of UCLA and he runs the largest piece of PepsiCo and the most profitable the largest piece the frito-lay business in the Americas and Bryan has his office next door to mine used to run Sam's Club held a gun to his head and he came to PepsiCo but Bryan reminds me of UCLA everyday and Bryan is probably one of the best products of UCLA so I have great respect for this institution and thank you for the gift of Bryan to pet Seager and gifts and for the gift of Brian to our Board of Visitors so he has been shedding and sharing his wisdom in many circles yeah incredible incredible leader and if that's the kind of people that UCLA produces you should be very proud of the school let me talk a little bit about social media and how we deploy it everybody is talking about social media everybody is deploying it in different ways in their personal life the companies are almost being forced to go digital use social media all of that stuff herein lies the challenge the challenge is that companies are run by boomers and Gen Xers and social media is a Gen Y phenomenon so we have the first problem in that we have leaders and companies in all companies ok who are terrified about how the world is changing around us because all of sudden knowledge is democratized excessively we can't reach consumers the way we used to reach them which was we held you captive in front of a box and we got you and now all of a sudden you may be watching TV but you have a second screen and a third screen yo you are deciding what our brand should be doing or not doing and so we have to engage with consumers in such a rich 360-degree way we're all working our way through it so what are we doing the first thing we're doing is using social media we are monitoring what you say about our brands so give you an example in Gatorade we have something called Gatorade Mission Control so if you go to the Gatorade office in Chicago there's a room with multiple screens and we have people who are sitting in front of those screens 24 hours a day 7 days a week they're monitoring the talk about Gatorade and sports nutrition all the time and there's any miscommunication or wrong information about our brand they go in and intervene and say what you said about Gary was not accurate can they provide the scientific background so the first thing we do is we monitor all the language and all the chatter that goes on in social media about our brands about our business second thing we do is we facilitate what do we mean by facilitate we provide a forum and tools that gives people an opportunity to talk about our brands and our business so Pepsi pals I don't know if any of you have had a chance to go on the Pepsi website it's trending constantly stuff that's cool and what's being talked about around the world so we provided for them so you can go in there and have your own conversation about trends in the world and what you think should matter around the world so we do visit we use social media as a facilitating device and the third thing we do is we actually participate in the dialogue through social media for example earlier this year we had Twitter concerts you know Katy Perry there was a Twitter concert I don't have any of you are Katy Perry fans but it was a Twitter concert on social media we are developing new food service equipment for dispensing beverages but through that machine you can actually gift a Pepsi beverage to somebody in some other location okay so okay here's an interesting way where through your iPhone you can actually go on this device and using some social media you can gift a Pepsi to somebody in some location anywhere in the country where there is another machine of that like available so we are trying to use social media in different ways but the key thing to remember this is a nascent area there's a lot being talked about the return on investment of this particular area is not yet clear but all of us are spreading our knowledge base are sort of tentacles wide and we're trying to learn as we go along but the key thing to remember is it's not about Facebook it's not about number of likes that's not social media social media is baby on Facebook and we have to think about how to get consumers into PepsiCo how do we get them to engage with PepsiCo in a much more deep and meaningful way and then figure out a way to spread that message out instantly using social media so we're learning as we go along so I'll come back to that credible example of gifting elsewhere under the performance with purpose mantra that PepsiCo is it is really advancing in in a very unique way for corporate for corporate America in the world but let's just refine that question a little bit and ask is there your newest customers a Gen want hmm and they of course we're born with an iPad or a mobile device right out of the womb hmm is there something different about how you're gonna reach them we have to reach them differently because the first question we have to ask ourselves take brands that we have a lot of our brands appeal to Gen Xers and boomers but what we'd like to do is talk to the Gen Xers and boomers but also bring the new gen riders into the fold so the first question they have to ask ourselves should we be talking to the existing consumer consumers of our brands or the future consumers of our brand tough question because how you talk to the existing consumers are very different now you talk to the future consumers all with the same brand so whenever you have an immediate budget now you have to divide up between the old line traditional media and the new tools that are digital social media we have to figure out a allocation mechanism with uncertain returns an investment in the short-term so there's a long term brand building first point second is we have to figure out how to advertise differently because you just can't take a TV commercial that was developed for X Factor and just plunk it on digital media and say you know this is the new way we're going to reach you you guys will reject it so we have to talk to you completely differently we almost have to let you interact with the brand as opposed to it being a one-way conversation so what we're learning to do is hire new people allow them to experiment allow them to experiment in ways that says you don't have to adhere to the old rules that existed in PepsiCo which is all difficult for us you know as I said when you have boomers and Gen Xers running the company and you allow you actually think they're sort of Cowboys because they want to do things that are so alien to we were brought up with the same time we are allowing a lot of the young people to experiment with new ways to reach consumers the thing that's interesting and we're finding is even Gen Xers and boomers and are using social media a lot more and even older people of my generation now get recommendations from people of their cohort group through social media before they even shop so what was originally thought of as a a Gen Y phenomenon is quickly becoming Gen X and a Boomer phenomenon because especially as boomers retired and have more time on their hands they now becoming prolific users of social media so we have to learn to talk to them using different cues but using social media as a common vehicle so new territory I don't believe any company has gotten it right but we are all experimenting and learning as we go along how to do sort of a 360 degree activation you can't give up one media the other you're going to have to do it all for a while you know you mentioned and this is something that is a theme that corporate leaders grapple with you talked about the short term versus a long term brands are long term brand managers often operate in the short term and are rewarded for the short term the investment community is short to him and yet you're reinventing the brand for the long term the the company for the world how do you deal with those differences in those tensions difficult very difficult question is what a short term okay I'm always struck when I go to China when they talk about a quarter they're talking about 25 years okay when I come here we're talking about 25 percent of one year right I was talking to a financial reporter the other day just having a quiet conversation he was saying the notion of short term has changed it used to be 3 years with short term then it became 1 year with short term then it became one quarter was short term and now traders would say I had a bad morning okay had a bad morning you know who cares or so the fact of the matter is the definition of short-term has changed stocks which used to be something you bought and put in your portfolio for a pension fund is now your short-term money-making device because in advanced computer trading has allowed you to make money on the margin in nanoseconds and remember a company's stock price is set by the marginal trader okay we have 1.6 billion shares outstanding in any one day we might trade 5 to 7 million shares the entire market value of the company is set by this marginal trader not by the core group which may never trade and so the short-term trader decides how when you're doing so as CEOs we have to learn to manage the short term the long term but let me just say something about short term versus long term if you manage the company only for the short term ok there will be a disaster because you will run the company too hard and at some point you're going to have to you know crash the company before you come back again and run it very hard it's like a running a race in a written a in an in a NASCAR race you know you can run about 20 laps you've got to stop and refuel ok on the other hand if you run a steady pace you know you can get more laps out of the car now we're not in a race we are not in a race we are in a long-term sustainable enterprise building business if it's a race it's a different phenomenon so I'd say that this conundrum between short-term and long-term management is a real challenge and I'd go so far as to say if we don't as an industry as economic enterprises in the United States take a pragmatic view of this and say companies cannot run for a quarter companies have to think of duration and level not just level ok if you think about duration and level you would run the company differently than if it was just the level and boards of directors have to get more Courage's CEOs have to get more Courage's and that has to be the next wave and that has to be the next wave if we have to keep the great American companies great and functioning that way well into the future it's a very very important message in the context of your mission which is just so admirable about creating a healthier product portfolio there are still some external pressures mmm from a regulatory and sometimes tax tax standpoint on taxing foods that are somewhere deemed unhealthy or for example Mayor Bloomberg's ban on very large sodas in fast food and some other establishments how do you respond to that and would you propose an alternative thing they're trying to address a basic problem of obesity okay that's what they're trying to address but what they're trying to do is address it by looking at a little piece of the problem as opposed to the problem itself and if you're going to address obesity address it holistically let me tell you what we are doing and then what we're doing as an industry what we're doing is we said okay our products were for bringing fun into people's lives in 1997 we said we have to diversify let's have a series of products that are fun for you better for you and good for you what do I mean Pepsi Lay's Monde and you all fun for you better for you or Diet Pepsi baked Lay's Diet Mountain your diet Sierra Mist and good field Naked Juice Tropicana Quaker Gatorade for athletes remember Gatorade is for athletes who are an active thirst not for somebody watching TV of somebody in a sports very careful that's what Gatorade is for okay so that's the portfolio we have but what you know why do I think we can be part of the solution companies like Pepsi Co said let's take our fun for your products and make them more permissible so we started reduce the sugar levels and sodas we started to reduce the eliminated trans fats we're reducing sodium levels and all our snacks we don't advertise it because the minute I tell you that we've reduced the sodium levels to say oh I can taste the difference but as long as we don't tell you you'll never know the difference okay so we're not judging behavior in to the right way we dial up the better for your products offer you more great tasting zero calorie products and then we make good for you products aspirational okay in the past you know I always joke with my team we'd have Britney Spears on Pepsi then we'd have an old lady in a doctor shop advertising Tropicana why you know why completely Spears say I start my day with Tropicana and sort of dance to Tropicana also as opposed to dispenser you know so how do you make good-for-you products more aspirational so that's what we're doing so industries and companies can be solution to issues we can actually do it better so we form the healthy weight commitment foundation as an industry and we said we would take out calories from our diets from what we offer to consumers and we've been incredibly successful but we're doing it in a way that's sensible that will last that's sustainable and if if governments would work in public/private partnerships with companies I think it'll be a much better solution than trying to get some point solutions which will never address the problem holistically so that brings us to performance with piranha how what are the metrics that you use to judge the success of performance with purpose do you use community based nutritional or environmental metrics or is a measure of success also the extent to which the brand's sell better because of the positive image so we've been very clear so let me step back a little bit and explain performance and purpose be dressed very important we all understand what it is performance with purpose came about because we started off when I became CEO I said we want to create a sustainable enterprise remember I talked to you about level and duration I want to make sure as a company we delivered performance but we delivered it at a level that made it sustainable for a long time ok again when we talk about level over any three-year period this company should be delivering a good running store good cash flow a good return to shareholders and we want to make sure the level and the duration was forever what shouldn't happen is the company performs a certain way and then certain forces come in and we have to redo the entire business model so how do we develop a sustainable Enterprise for PepsiCo the first thing we looked at the consumer trends out there we looked at the aging population developed markets we looked at you know lifestyle changes and we said hey we have to make sure our portfolio has a range of products from fun for you to better for you to good for you and even the fun for you products we had to make them more permissible and there and came about human sustainability goals how do you create a balanced portfolio second thing we said supply chains are becoming extremely volatile commodity costs are going up in many societies and communities we don't even get a license to operate because 40% of the world is water distressed when we make beverages we need water to make beverages but how can I go into a community that has no water to drink or live with and say guess what I want to put a Pepsi plant in there makes no sense because I can dig deeper and deeper into the aquifer and draw as much water as I can but every time I do that the community has no water to drink or live or even function so environmental sustainability goals were born out of the fact that we need to reduce plastic usage in our bottles we need to send less stuff into the landfills we needed to use less energy because it drives the bottom line and it reduces volatility and most importantly our environmental goals are written such that we allow communities to say it's good to have PepsiCo in our backyard not look at they a sort of a wart in the community but then we couldn't do all that until we had the best people and how do you attract the best people you attract the best people by saying hey you can come to work at PepsiCo and bring your whole self to work your husband wife daughter mother whatever you are but when you come to PepsiCo you don't have to park all that at the door and then come in and be a PepsiCo employee we want you to come to PepsiCo saying I am all of these stuff I'm at home plus a citizen and the community and the country so bring all your sensibilities to PepsiCo and we will make sure we create an environment in the company that makes you feel wonderful about coming to work in the company and if I can tap into all of your capabilities because you're bringing your whole self to work I can create a better company so the combination of these three is what created the sustainable enterprise for us which will then deliver performance and the combination of these three sustainability planks human environmental and talent sustainability is our purpose and that's what drives performance so performance at purpose is how we run the company it's not corporate social responsibility because in our mind corporate social responsibility is coming to work to make numbers in the morning and doing some charitable deeds on the in the evening it's like confession you make the mistakes and then go for confession evening that's not what corporate social responsibility is about it's really not having to go to confession because you don't make a mistake in the first place okay and corporate social responsibility programs if I see your changes or you run into budget difficulties you cut it with performance and purpose it's part of the fabric of running the company what do we do we published goals we said we're going to reduce sodium by so much reduce sugar by so much we're going to take down so much plastic usage reduce energy efficiency water consumption and then we report on that progress every year in our sustainability reports I'm going to ask one more question and then hand it over to you there I see two microphones lower and upper so please line up so what one of the issues I think for a company that has such laudable goals is how much ROI you constantly have to demonstrate to shareholders and the question is whether some of your philanthropic activities like Pepsi Refresh I don't know how many of you remember the 2010 Super Bowl Indra made the decision and caught a lot of flack by the way on that decision to not advertise for the Super Bowl and put the 20 million into pets II refresh which was voted on by about 6 million people to decide into which community projects they would invest these 20 million dollars and and the question is other than feeling great about it not just good but great about it do you have to demonstrate as a public company to shareholders that are oh I or does a public company have an obligation regardless of the era why to do good yeah so this I think was 2009 oh I think it's 2009 we just come out of the worst economic crisis the country was in disarray a lot of people without jobs and most importantly what we found was the number of applications to our PepsiCo foundation for grants these were not big grants five thousand ten thousand dollar grants just went up through the roof we realized that lot of good deeds that needed to happen around the country were not happening at that time we made a decision which I still stand by so I have no regrets that instead of advertising in the Super Bowl which we always do just for brand Pepsi Doritos Justin on Super Bowl everything else was on Superboy the Super Bowl is the most expensive venue to advertise but you get a lot of viewership that one year we would take the brand Pepsi advertising budget for the Super Bowl and instead give it as refresh grants so people could apply for grants and of other people voted on it and thought it was a noble cause we gave me the brand could be anywhere from five dollars 200,000 and I think there were $2,500 ground maybe ten five thousand about five and we'd give these out every month based on the voting patterns and a phenomenal grants out any one story which sort of the first grant that was given out I still remember this because the team came to visit me there was a girl in Florida or I oh I don't remember which town so I may be getting this wrong had a sister who had Down syndrome and she always wanted to be a cheerleader but you know you know all about cheerleading and her sister could never be a cheerleader yet she was a cheerleader and she decided she was going to start a national movement for people with disabilities to be Chile okay she did it in her little town but she wanted to scale it out from the country and the whole cost of the scale up was ten thousand dollars and she couldn't raise it so she applied for a Pepsi Refresh grant and she got it and she scaled it up it's now one of the most successful cheerleading programs for people with disabilities I thought it was a fabulous way for Pepsi to say we always lead pop culture Pepsi is always a sort of a timely brand not a timeless brand we were a timely brand that always led pop culture and Pepsi Refresh was our way of saying society is hurting this is what we should do now we took flak and said hey when you go on the Superbowl sales has to go up guess what in a down economy where people were economizing it would've mattered had the advertised in the Superbowl sales wouldn't have gone there were consumer trends going one way and consumers budgets were going the same way which was down but at the end of the day people are not going to accept those kinds of logical arguments they're going to say had you advertised in Super Bowl sales would have gone up but that's what courageous leadership means you know sometimes you've just got to do what feels right and of course you'll take flat but at the end of the day you know there's a great John Wooden statement says worry about your character and reputation later reputation is what people choose to write about you characters who you are I think at that point we made the trade often said characters more important than the reputation at that point so from the audience so if you don't mind introducing yourself hi my name is Ronnie Seawright and my focus is neuro economics and I applaud you for your focus on sustainability and that's at the heart of my question have a has Pepsi thought of you have the fun for you good for you and better for you reducing the carbon footprint by bundling packages together say for example Pepsi beverage with a snack and it would reduce the packaging it actually increases the carbon footprint I'll tell you why because the snack is already in a package the beverage is already in a package if I now put an over us that adds to the carbon footprint however let me tell you where we can do things together where we have Sabra hummus and Stacy's pita chip we have the same package where the two come together but one of the things we do is accompany we're one of the few companies to actually start measuring our carbon footprint okay the thing that we have to be very careful about Stacey's is made in a dry plant Sabra homeless is made in a very different plant because there's no baking or frying involved in Sabra homas now if we have to transport both the products to another facility to pack them we've just increased the carbon footprint so we are very cognizant of that what do we what we do do is install promotion of the two but that does nothing for the carbon footprint okay so we do look at ways to reduce the carbon footprint what we are looking at is in frito-lay for example can we reduce the bag size because when we ship our product the air acts as a cushion but can it reduce the air in the bag and still maintain the integrity of the chips and reduce the carbon footprint that way so we're looking at all of these methods thank you thank you thank you run rather second here a student I actually have a question that has to do with kind of management I'm a lot of us you're going to be general other general managers or put in a management role bracing after business school as we're going what advice you'd give us in terms of things to strive for and common mistakes to avoid did you see mistakes to avoid oh I'm gonna say something which is don't take it as a generalized statement I have kids your age so I feel like a mom here so just take it for what it's worth okay when I was your age I worked my tail off oh my god I mean when I was given a job perfection was the only thing I could accept 24 hours a day was not enough no she was just working all the time I somehow watch my kids and they also want to have a life here and I think in today's world which is more volatile it's more difficult it's more difficult to operate in today's world you guys are gonna have to get even more of a wide perspective on issues not in sound bites from your social media will actually go deep and learn issues and really engage with them the first piece of advice I'd give all of you is there's no substitute for deep engagement and hard work you're going to have to put in the hours doesn't matter if stuff is packaged for you and bite-sized pieces it's not good enough you're going to have to put in the hours you're going to have to learn more issues you're going to have to engage with them so don't think that the world of the future is going to mean less hard work it's not unfortunately ok so that's a piece of advice I'd give you the second piece of advice I'd give you is very early in your life invest in communication skills how to motivate people small groups medium sized groups large groups how do you write in a way that's pithy and to the point today's world of writing and texting has actually created a problem because you think writing and twenty characters can convey what a good document can okay I'm sure to you all the same twenty characters can read the same message that I don't know the Gettysburg Address but unfortunately that's not true you have to learn how to communicate because when you're communicating with large groups of employees I'm assuming that you want to move up the ladder how you communicate and motivate them is critically important and if you don't learn it early in life you're never going to learn it later on in life the last thing I'll tell you is when you go to work don't keep don't go to your job aspiring for the next job don't run for office don't waste your time running for office if you do the job you're doing very well the next job will come to you okay I appreciate the ferociously hard work you know I think that every leader is a product of her background and bring something of their roots to their leadership philosophy you have a remarkable story coming from a dress from a very unprivileged environment that one that had great values in a strong mother talk about how that background brought you to where you are today and influences you and your leadership philosophy are they I was very blessed because I was brought up in a family where everybody in the family said you can be whatever you want to be okay um dream I mean why can't girls be you know big figures why does it have to be just the boys I always tell the story of how we sit down to dinner table my sister and I with my parents and my dad would eat in like five minutes and disappear and my mom would sit down and make the two girls give speeches at the end of dinner to say if you were President of India what would you do the next day to be with your Prime Minister of India what would you do your Chief Minister of the state what would you do and at the end of dinner she would decide who she's going to vote for and my god we one of my mom's worth so badly and we would ferociously through dinner instead of focusing on the meal think about the speech we will get it up in advance yeah she then the meal started she'd say tell me this at the end of dinner and you know to me it's not the speech of the vote it's what she told us was you can be anything you want she would give us a blank sheet of paper and she'd say sign and right there president why she said because one day you can be that why not why can't you dream I couldn't I was married too early you should dream so by curiously she lived her dreams through us so that helped all right and the rest of the family with his grandfather father everybody supported that and said the daughters have to get as much of a break as the Sun so and I've been having just aunt that interes sister is as spectacular as she is and I have asked her to send me the water that they would dress yes the good news is there was no water in Madras when I grew up the water distressed area yeah no but you know it was a hot it was not hard work going back at the hard work but I think one big difference is growing up in India then as opposed to today the country was relatively closed so everything you could learn about the rest of the world you did so even when we left India we had an incredibly global perspective because I still remember GK how many of you kids know what GK is you know general knowledge questions every week there was one three or four hours slot where the grandfather was sit with the GK book and it said today we are going to do pages one through fifty and if you didn't know what you got wrapped so you better study your GK questions you need a capital of every country in the world you know the flag near the language you know the currency today what happened to those kids they don't wanna know anything about anything all right they don't know I mean I'm sorry maybe you all do but many kids don't know the languages the currencies but is not knowing the languages and currencies you can google it you developed a global perspective you devoured the news I used to go to the u.s. embassy library the British Council the aliens from says the max Miller above and you just studied languages you devoured everything because you are in a country which was not powerful and therefore you want to learn world I come here and I say one of the big issues we have is we are in a country that's so powerful that's so big you don't need to know the rest of the world or you didn't need to know the rest of the one now we have to we didn't need to know the rest of the world so perhaps we grew up a little bit more insular and so many of the leaders we develop for CEO positions if you only grew up in the US you have less of a global position the perspective then if you grew up in Asia or a smaller country and so what we having to do now is develop people for this global perspective so in a way I'd say even though I came with a disadvantage of not having grown up in the system I came with the global perspective I came with an emerging markets perspective I came in here saying a business has to and can be done in different ways and it was easier for me to assimilate this model and bring the two together if I were to just summarize extract what you said obviously you had the self-confidence that you could be what you could be secondly and this is the term we use here you develop global brain mmm and third and and I think this must be part of performance with purpose that your empathy for those in less privileged environments is something that you really care about not just from a personal standpoint but from a business and corporate obligation standpoint I feel it I mean I tell you having grown up in a watered distressed area myself and we have a Pepsi plant very close to my hometown in Madras and I always worry about the water situation in that town and whether the Pepsi plant is putting the right amount of water back or has the right amount of recycling and water conservation efforts because the town is still water distressed many times many months of the year so now when we build any plant we make sure we have a environmental sustainability list to make sure we're doing all the right things to deal with water so I think when it comes to issues just portfolio transformation environmental sustainability talent sustainability it is not a head and a hands issue its head heart and hands and anything that you feel deeply you can courageously make the change if you don't feel it deeply it's a shallow commitment and you can change based on the press that's being written about you my name is Simon Hama second year MBA and I wanted to ask you besides the the main product lineup for Pepsi if you see kind of a trend moving away from carbonated soft drinks a little bit uh what is Pepsi doing to kind of address that are they looking at kind of interesting new products in an emerging market um or different types of food and beverage drinks that are kind of popping up a good question so let me tell if the liquid refreshment beverage business which is all beverages culminated non-cognitive bottle water that's still growing so it's a big market so there are a couple of three things we're doing the first thing is we are playing in the entire LRV space liquid refreshment beverage market that's still growing we have a very diversified portfolio we play in teas coffee sports drinks energy drinks carbonated soft drinks water enhanced hydration we plane everything and there's no question that consumer trends are making it go in a way that we don't like why is that the case let me take it apart there are three things about carbonated soft drinks that make it fun one is the caffeine many companies often have caffeine it's a great you know small dose of caffeine people love it people love bubbles especially in the United States people love bubbles okay so two of the three work great they love the taste of Cola which is great they love the taste of Dew or lemon lime orange what do they have a trepidation about it's sugar and they have the trepidation about the level of sugar and some people have some reservations about consuming artificial sweeteners so what we have to do is address these two issues okay in a way that makes sense so we invested heavily in R&D to discover or to go search for a zero calorie natural sweetener zero calorie to sweetener so in the product that did bubble up with stevia Stevie had been around for a while but unfortunately stevia and carbonated soft drinks does not work to it okay so there in you see all good intentions go alright but we didn't stop we kept searching we kept looking for what other natural sweeteners are out there that could you know be a zero calorie sweetener that could work in carbonated soft drinks and while we're doing that we also said is there a flavoring agent out there okay that can make five teaspoons of sugar taste like 10 teaspoons because one of sugar it's a sweetness that sits on the tongue right if I can give you a flavoring agent that lingers that makes the taste of sugar linger longer in the tongue it could work so we started invest in two Pat's make sugar at a lower level tastes like it's at a higher level and then invest in natural zero calorie sweeteners the good news is all of the big irony investments we made are beginning to pay off we now have a clear path for both these to start yielding dividends and sometime in 2013 or 2014 I think you'll start seeing new products Thank You Megan field thank you and I'm going to ask the last question to be short because we're getting up against the witching hour of classes here huh thank you for coming on my name is Angela second year MBA student here so we studied a lot of cases about the competition between Pepsi and Coke and as the consumer has evolved the market has evolved how do you view the competition now of the two company has evolved which company okay seriously I think the beverage business especially a carbonated soft drink beverage business is fantastic because it's got two iconic companies competing in the space all right so I'm going to leave some generalized practical business lessons for you guys right first in any industry that you look at any industry sector any business sector you look at okay two companies competing the exact same way doesn't happen you'll have one company competing one way and the company competing another way and there's a great Darwinian statement which says no two species and successfully coexist making their living the exact same way so we compete on a very different basis and even the beverage space in the US where a full line beverage company as opposed to just a family a software company so we compete very differently second the core brand of Pepsi versus Coke fundamentally different and the way to describe is Coca the timeless brand we are a timely brand you know we write the rules of pop culture if you go back you guys are too young to remember Judy you and I'll remember Pepsi you know Pepsi generation all right we define the Pepsi generation right the first african-american and a commercial in the United States wasn't a Pepsi commercial just the civil rights movement happen people like Michael Jackson Britney Spears Madonna all made their fame appearing in Pepsi commercials so if you go to the Los Angeles to the music artists or to the producers they'll say if that person can appear in a Pepsi commercial they'll have their future made so we wrote the rules for pop culture for music you know we did all that stuff so we were an edgy brand so we've sort of we live for the now we live for the excitement one and zero you open happiness and they're quite happy about it okay so one is a happy with status quo kumbaya one is let's make the world a better place let's go to the future so I think we have very different brands and we are both very exciting brands in a space that is an exciting and evolving space so I would look at these industries and say fierce competitor two very different companies but by learning about these two companies you learn a lot about competition learn about marketing advertising brand position how to ferociously compete for a fairly small pie now that's what you love so enjoy yourself while you thank you question we're celebrating the wooden award and your seat of the Wooden Award and I know that before this and now you I've looked at some of Coach wooden leadership values and principles what do you take away from what you have learned you know it's interesting home I've heard about coach wooden but I'd never read all the books that were written by him about him around him people who picked up the wooden isms and written incredible books about him and what's very very amazing about his leadership principles how he set up this whole pyramid is that is really not less and leadership is lessons in life it's how you live a better life how do you live a life where you can believe in yourself how do you live a life where you believe in others because you know he emphasizes the virtuous circle as opposed to a vicious cycle he says positivity breeds positivity so if you believe in people you bring out the best in them and they become better and I think that's a very good lesson for leaders because sometimes we rule sometimes sometimes through negativity you know we take out the stick and he says emphasize the character with the stick emphasize the team believed in others so I think reading all these books that wouldn't has put out you know if it didn't make people better leaders I'd be surprised I'll speak from my point of view there's lot lot of things about my own playbook that I'm going to go off and tweak well I want to thank you Indra for a marvelous insight set of insights a window into your courageous and bold leadership you an inspiration because of the values you bring to corporate America but also to making the planet a better place we have a book here that's quite heavy but it's designed to be showcased on your coffee table it's about Los Angeles oh we want you back oh I look forward to coming back thank you so much thank you you you

Channel: UCLAAnderson

Views: 49,507

Rating: 4.8214288 out of 5

Keywords: PepsiCo, Indra Nooyi (Organization Leader), Business

Id: 1WhnyfWhtNc

Length: 49min 55sec (2995 seconds)

Published: Mon Feb 09 2015