Indra Nooyi Talks Leading PepsiCo Through Disruption I MPW 2017

we did a really interesting Q&A with you in the in the moat in the most powerful women issue and thanks to Beth couette for doing that I found your comments about dealing with disruption and the Amazon you know particularly the Amazon acquisition of Whole Foods very interesting so what what is your main message to your troops as Amazon buys Whole Foods and as a 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 years we've miss ladee moved to Washington DC California was a hike well but we may go back by 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 it's going through profound 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 or 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 percent of women and families like to cook from scratch only 10 percent it's come down from I think 40 percent some astronomical change in the last decade so people don't want to go to the store buy stuff and cook in fact there's a number which says your grandmother bought ingredients and cooked your mother took it out of a can and you are ordering through the telephone right so life is changing yeah we talked about those as trends but for manufacturers it has a profound implication 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 the blue aprons and a Fresh Direct are all becoming major factors restaurants themselves are becoming retail because they carry products in the front of the red front and then you've got the big ecommerce companies like Amazon plus the click and Collect models of Walmart or the delivery models of their retail stores disrupting themselves yes 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 yeah because these companies have so much data on you that they can almost anticipate what you can order and so for companies like ours that are impulse driven which need for you to see a product or want the product we have to create impulse in different ways so we're looking at this range of changes happening in the marketplace and saying this is probably going to be the most exciting time to be the CEO of a food and beverage company or the most frightening time and I think the muscle we have to develop is 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 marry that with the cost-cutting culture because the legacy model has to become more cost competitive while you build this new model for the new times and you're building an e-commerce business now for the first time a big one and when did that begin and how big is it at this point and what is what are your plans for that so it's about a billion dollars in retail sales right now we'll end the year at about a billion so it's pretty big and it's doubled in size in China it's grown about 80 percent here in the US we have about 200 people and we don't locate them in our offices because we want them to be a tech company not a traditional so or in our case the based in Manhattan in California so away from our main offices we compensate them differently we hired differently so they have a stake in that e-commerce operation uh-huh and the thing with e-commerce is we are not a b2c company we talk to the consumer but we sell through a retailer uh-huh we cannot compete with our retail partners so we have to be very careful how we evolve the model so we are working with all of our retail partners including the pure-play ecommerce 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 so you you I think tell me if I'm wrong I think you avoided the Amazon Whole Foods question a little bit no no no I'm dying to answer I avoid nothing well I asked you back [Laughter] you know one of the wonderful thing about being women we do not duck issues okay you know that okay I asked you backstage if you have talked with Jeff Bezos since no so if you were meeting with him what would be your would be your question main questions for him and your main message at first I don't take a long vacation I'll pay for it give a shot I have to get used to all the changes you're putting into the industry because he's a disruptor every aspect of every vertical he's disrupting and I'm not the only buster that feels this way I think every retailer would like to chip in for the Jeff Bezos man but he's a vision a visionary true visionary tell you what Amazon has done so brilliantly it's that Amazon Web Services that they built that data module that is the most powerful engine because they have so much data on each consumer uh-huh but they can now sell you a whole range of stuff that they can source from different people they don't even have to carry it all that they are as a platform to sell it to you that's one the only challenge they had was the last mile which they're now solving through Whole Foods yes because everything could not come out of Amazon distribution centers can come through Whole Foods the third thing they're going to learn from Whole Foods is this whole natural organic that is a trend that consumers are increasingly embracing Whole Foods embraced that long time ago through brick and motar but sourcing for natural organic GMO free is very difficult Amazon is going to learn that through Whole Foods Whole Foods as a brand 365 I think which is successful 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 privately right so we have to pony you how do you become a 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 a consumer goes on the website and wants sports nutrition or sports fuel you don't think of how do I look for a sports fuel you say how do I find a Gatorade that is the brand of record in the sports hydration space so big brands like Gatorade or a Doritos or a do have to be front and center in Amazon and we have to make sure the navigation tools highlight these products constantly second we have to innovate because if we don't innovate to create excitement online the brand's will start losing relevance in the search order so our strategy is not about shelf space physical shelf space but it's about how to get the right click so that our products move up in the whole search process right so brands big brands innovation and I was like this would win 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 years over the next few years I think that actually started about seven eight years ago because small companies started emerge and 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 these small companies has not been easy that's been the challenge we've all had to I'm going to open it up to the audience in a minute so Indra has been CEO for 11 years and you've kind of seen it all and done it all you I went back Indra and looked at a story that we did in early 2008 which was not too long less than it was like a year and a half or so after good story I'm not so charged it was that story that Betsey Morris did back in 2008 and it was about you would announce performance with purpose and I I mean it really was ahead of her time and 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 at Davos that that January it's critically important that we use corporations as 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 the is the is the supplier or a partner I'm not sure what term you used for 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 win 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 personal point on this no how do you decide as a CEO as a public company CEO what you take us public stand on and what you don't you see patty in the past we could say a company has a moral code and we always take a stand consistent with the moral code of the 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 five or seven years ago has gotten increasingly polarized so we have to be careful that any stand we take does not alienate one consumer based on the other and so the best thing is have a company code of conduct which is published you know run the company in adherence to that code of conduct and try not to get into any political debate because it doesn't help it's been a consumer brand yeah we want to serve all the consumers you represent everyone mm-hmm who has a question and wait for the mic and please identify yourself Esther Dyson over here 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 you know snacks versus meals and so forth do you want me to reflect on it okay let me just say that lifestyle diseases are a major part of society major challenge of society globally and it's something that people have to address no question about it whether it's obesity whether it be smoking related stuff whatever okay and then the secondary and tertiary impacts of those non communicable diseases I think it's critically important that we address the issue holistically because you know I'll speak about you know my country of origin India I look at you know very often when we I read these obesity reports I go back and reflect on my own diet diet that I grew up with the amount of fat salt sugar in my diet is unbelievable in terms of my core diet and so I think rather than addressing how diets have contributed to lifestyles if we start just picking on one category at the end we're never going to address the core issue so I think that this whole non communicable disease issue has to be addressed in terms of how should diets change and diets need to change not because they need to change because we grew up in century that diet lifestyles have changed lifestyles 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 your Pepsi one Pepsi every two weeks and then it start to malign that product it makes no sense all right because if you look at many of those countries that's the per capita consumption and what it translates to so I think it's very very important that all of the people who think of these n CDs whether it's the you know WH or 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's 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 impose sensible regulation on anything you want to do sensible regulation so that you don't do something to generate short-term revenue but you do something to fundamentally alter trends in the society that's my honest belief and that's what performance and purpose is all about when we talk about human sustainability as a part of the performance and purpose pillar it's exactly to focus on this issue okay another question right here hi I remember when you were here several years ago and you talked about the impact of water for yourself when you're growing up and how important it was and what you had done is a leader in 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 and what they should or shouldn't do is it so embedded are the good things to do the right things to do so embedded in your moral culture of your company that they'll continue regardless of whether it's a government requirement to do so so I tell you Maxine one of the things we've done as a company is not only have we recommitted to our goals we've wanted these few companies that lays out the goal lays out the actual metric and lays out a date by which we will get to that metric which is unusual because people usually talk about goals they're not specific and they never give you a date by which they'll get to it we've done all three and 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 in the plant of the communities to get to those goals when it comes to the carbon footprint water usage where there's recycling for all of those we have not backed off those goals because at the end of the day if we don't have those goals and fulfill them we will not get a license to operate in many societies in which we do around the world before I want to say something you know paddy you said you know you've known me for 20 years oh I don't think anybody has given you the credit because you started this mpw issue you started this whole most powerful movement most powerful woman movement and I think we all owe paddy a big round of applause for what she's done [Applause] oh my gosh I mean I think of 19 years ago when we started this most powerful women list and I kind of was selected and decided to you know kind of stay onboard and have stayed with fortune this whole time but I mean what it has given me in return is at least as much as we have given this community so thank you Andrew the next person to come out before I announce before I introduce her but is Arianna Huffington I know awesome Ariane how and she has very kind of strict rules and opinions strong opinions about something you don't do very well deep plate Hut talks to be all the TEL interests leaps up for the phone on next to her bed yep absolutely and gets text throughout the night now is this why you're CEO still like you you you're the survivor after 11 years is that your real secret I don't know if that's my own see only secret but I have to tell you look I have two daughters and they have moved away from home and I have this clock in my head which says unless I've gotten a text from my kids they're both in the house and door locked I cannot sleep first point point number two when my operations around 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 kids and my how many times a night 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 keys many keys to your success Thank You Patti thank you so much Indra

Channel: Fortune Magazine

Views: 91,475

Rating: 4.8212876 out of 5

Keywords: Journalism Franchise, Fortune, business, wall street, finance, PepsiCo, Indra Nooyi, Disruption

Id: J5Sk2zesFy0

Length: 18min 35sec (1115 seconds)

Published: Tue Oct 10 2017