As a child in India in the 1950s, Indra Nooyi saw firsthand how corporations could harm a community, robbing it of resources and leaving ruin in its wake. It doesn’t have to be this way, she thought.
Fast-forward 50 years. Nooyi is now the chairman and CEO of PepsiCo, the global food and beverage company. She is also the chief architect of PepsiCo’s multi-year growth strategy, Performance with Purpose, which focuses on delivering sustainable growth by investing in a healthier future for people and the planet.
Corporations owe “a duty of care” to every community where they have a presence, she says.
“We want to provide an environment where each person comes to the door bringing their whole self to work,” says PepsiCo chairman Indra Nooyi (right). “The only way we can do that is if we respect the whole self.” (view more photos)
“Many companies have forgotten that. They focus on the financial performance and have forgotten the fact that they owe every society that they operate in a duty of careâ€¦I felt PepsiCo could, as a company, do better by doing better for every society.”
Sounds great, but what does that actually look like? Is this another corporate social responsibility initiative that will be here today and gone with the whim of tomorrow’s CEO?
No, says Nooyi. “Being better by doing better” is the heart of PepsiCo’s culture. It encompasses every area of their organization, from procurement to HR, touching every constituent of the business: communities, individual customers, and employees.
Best of all, it’s profitable for PepsiCo and their constituents. It’s not a charitable endeavor, like many other companies’ attempts to spread wealth. Instead, it builds wealth in a sustainable cycle.
Take for example PepsiCo’s recent efforts in Peru, which will create an industry for subsistence farmers in the high Andes, growing specialty native-variety potatoes. These crops will be purchased by PepsiCo and turned into products tailored specifically to the tastes of the Peruvian customers (Lay’s Andinas and Lay’s Peruanisimas). A traditional corporate social responsibility program might see that these farmers are without adequate clothing during the harsh weather extremes and give them coats and blankets.
Nooyi says that PepsiCo’s initiative is far superior in providing the farmers with the means to buy what they need for themselves, making them independent, as well as useful to PepsiCo. “What we wanted to do was to give those people in the high Andes a sustainable way of making a livingâ€¦That’s how we build a whole sustainable cycleâ€¦That’s how we do business in every country where we operate.”
Obesity: a weighty topic
The idea of sustainability also touches on PepsiCo’s response to the childhood obesity epidemic, which is not only an American problem, but one many developed and developing nations face, including Nooyi’s native India. “This is something that keeps me up at night,” she says, noting the systemic problems that come with obesity, including rising health care costs for individuals and corporations, and decreasing life expectancy rates.
Some would blame her company for making children unhealthy, but there are many factors that lead to childhood obesity, she says. It’s lifestyle, diet, stress, genetics, access to nutrition and a safe place to exercise and play. Focusing on one element of the complex equation, such as sugared beverages, does not address the entire problem, she warnsâ€”it only creates frustration and confusion.
PepsiCo chairman Indra Nooyi (right) and Mays Business School dean Jerry Strawser ’83 take part in a discussion forum about PepsiCo’s sustainability efforts, corporate culture, the U.S. obesity epidemic, global business operations, career advice for students, and more. (view more photos)
Urban planners must join the discussion, so that adequate sidewalks and playgrounds are provided for communities. Physical education must be mandated in schools. Legislation must be reformed so there are fewer government subsidies for corn production and corn syrup, and more for nutritious foods.
“If we as a country want to address obesity, we have to do it on multiple dimensions. We have to educate young people and families on how to eat right. You cannot take away personal responsibility at the end of the day. I cannot tax you or mandate what you eat; I have to educate you and let you make the right choice.” Nooyi suggests greater emphasis on childhood nutrition, including school lunches. Also, labeling of all foods (at the grocery store and at restaurants) needs to be clearer, so that consumers can make better nutritional choices. PepsiCo has already adopted better labeling.
“Obesity is a multifaceted problem, but food companies like ours can’t sit back and say “because it’s a multifaceted problem, we’re not going to do anything about it.’ We decided we’re going to do our part. Because if every company in every industry started to do its part, we could make some change.”
It’s a challenge, but it’s also an opportunity, says Nooyi. In addition to better labeling, PepsiCo is improving their product line. “We are committed to reducing calories, sugar levels, saturated fat levels, sodium levels, in all our products.” Transfats were removed from PepsiCo products four years ago.
Nooyi says that they are also aggressively shifting the portfolio away from “fun for you” items (chips and sugared soft drinks) to “better for you products” (popcorn, baked chips, and zero calorie drinks), to “good for you products” (granola bars and fruit juices). They’ve recently acquired Quaker Oats and Tropicana to that end. They are developing new products, such as drinkable oats, that are delicious, healthful, convenient, and hopefully will have the same “cool” factor for young people as a can of regular Pepsi.
“We are going to sneak goodness into you in an authentic way,” she says, noting that the drinkable oats are so tasty that people won’t realize they are wholesome. “We have to break this compromise between taste and what is good for you.”
“We’ve got a line of products coming out of our global nutrition group that are going to be awesomeâ€¦We are very excited about what’s coming.”
Focus on the whole self, not the skill set
Part of Performance with Purpose is creating a great workplace for employees. Nooyi discussed the challenges of developing talent within the organization so that growth can be organic. Now that so many families have two career couples, or young people caring for aging parents, many employees are less willing to move for a job, though it would lead to their promotionâ€”perhaps to the c-suite.
PepsiCo approaches this dilemma through “future back planning.” They examine their talent pool, looking for the leaders of the pack, who in 20 years could be the leaders of the company. Then, they interview each of these hundreds of high potential employees for several hours, asking them about their goals and ambitions within the organization, as well as their limitations (such as unwillingness to relocate) and expectations. “We’re trying to understand this person more holistically, so that we can actually developâ€¦a career development program for them, which takes into account all of these aspects of a person.”
The goal is do what is best for the company and the individual. “If you think of employees as bodies and faces rather than emotions and what they bring with them,” then you’re missing a lot of potential, says Nooyi.
“It’s a very, very complex job, and I’m not sure we have all the answers,” she says, noting that no company is doing a great job on this front yet. It’s vital that they examine this area closely, though, as “When you do just-in-time career rotations, it’s too late.” You’ve likely missed the opportunity to fully develop that employee, and that is a loss for the company and the individual.
“We want to provide an environment where each person comes to the door bringing their whole self to work. The only way we can do that is if we respect the whole self.”
“We want to make sure our people can have a life and make a living at PepsiCo,” she says.
It all comes back to that emphasis on being good by doing good. An idea Nooyi has understood since she was that little girl in India. “We cannot deliver performance without purpose, and we cannot fund purpose without performance.”