Indra Nooyi: the CEO who never misses the fizz

After Indra Nooyi was made CFO, the company's profits soared from $2.7 billion to $6.5 billion.
HIGHLIGHTS
  • Indra Nooyi prepares to step down as PepsiCo SEO on October 3
  • Nooyi took over as CEO replacing Steven Reinemund in 2006
  • She had been vocal of her role as a 'mother and CEO'

Sometime in September 2007, a 14-year-old girl sent her mother an e-mail seeking an hour's appointment. Interestingly, both lived in the same apartment, seldom seeing one another. The young girl's request for audience captured media attention because her mom was Indra Nooyi, the high-profile CEO of PepsiCo.

As Indra Nooyi prepares to step down on October 3, after being at the helm for 12 years, the oft-asked questions are 'what next' and 'why.'

US journalist, author and former hedge fund manager James Cramer told CNBC that Indra Nooyi 'could be found in a more ambassadorial role.' He said she was a 'globalist' who had been vocal of her role as a 'mother and CEO.'

From start

Nooyi is known as a 'globalist'.

Nooyi took over as CEO replacing Steven Reinemund in 2006. After she was made CFO, the company's profits soared from $2.7 billion to $6.5 billion.

Skipper's strategies

Indra Nooyi became skipper of the world's second largest beverages and snacks company at a time when the tastes of the world was more aligned to health than with anything. She was quick to realise that fizz alone was insufficient to keep consumers coming back.

Three food baskets

Indra Nooyi with PepsiCo's Nutrition ambassador chef Vikas Khanna.

Indra Nooyi reoriented PepsiCo's foods on its 'effective impact factor.' She put them in three baskets – 'fun for you' (including chips and soda), 'better for you' (diet and low-fat versions), and 'good for you' (healthy foods like oats).

Nooyi cuts the sweet

Apparently driven by her instincts as a mother, she diverted corporate money into healthy food. Going a step ahead, she combined fun with health and refilled the Pepsi offerings with liberal dozes of health, making sure not to loose out on the fizz entirely. In a critical and decisive move, Nooyi removed aspartame, an artificial sweetener, from Diet Pepsi in an apparent bid to project the company's image as a 'wholesome foods' provider. There was but no evidence to prove that aspartame was bad for health. But, the removal certainly made a statement.

For women

Nooyi planned and implemented a snack line for women, deciphering the difference in the way women preferred their favourite munch.

India tales

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The story of PepsiCo on the Indian turf was but not very rosy. It was one ground which Nooyi could not garner in her strategy. By late 2017, the company was struggling on multiple counts – the most important ones being changing customer preferences and a rebound of players which appeared local and acted global.

Stats for India

The prospect was a tad grey as the company's fiscal year 2017 ended with a revenue of Rs 6,540 crore, lower than the 2012-13 figure of Rs 6,994.8 crore. The figure was Rs 7,216.7 crore for 2014; Rs 8,130 crore in 2015, and Rs 6,626 crore in 2016. In 2014, PepsiCo India's books showed a loss of Rs 280 crore. The loss was Rs 177 crore in 2015 and Rs 538 crore in 2016. Nooyi's 2013 announcement of a $5.5 billion investment in India by 2020 was apparently not finding favourable ground. But the company told a major Indian business newspaper that the figures were not comparable as it was partly due to 'one-time changes in accounting practices.'

More crises

The company again faced a crisis as its 'something for everyone' portfolio failed to reap substantial benefits from the world's largest growing market. Its core brands were fumbling. The healthy beverages and holistic food offerings like oats also were not being mouthed by people. All this in the cupboard, the India CEO of the company, D Shivakumar, exited.

Comeback

Indra Nooyi was not one to give up. Multiple reports in newspapers and other accounts state that Nooyi redrafted a comeback by ascertaining 'key asset capabilities.' She placed the best bet on her resources in spite of having severe pressure to cut down jobs. She effectively created an eco-system of confidence and simultaneously reduced costs and time of inventorying and logistics, including bottling and packaging.

The specifics

She is known to be a task master. But all her admonitions are governed by the quintessence of care and concern. In 'Indra Nooyi: A Biography,' the author says she 'created an environment that attracts the best of people.'

The author says Indra Nooyi knows well that a happy family will get her happy employees. It says she throws dinners for employees and spouses, garnished with a Q&A session where she refuses to sit down unless she gets questions from spouses.

Pens for a statement

Her deft use of pens and her remarks in red ink are epochal. She says she underlines words three times to accentuate the gravity of the error or the import of a proposition. She keeps red, blue, green ink pens on the desk.

Initial struggles

Indra Nooyi recollects her struggles in the US in the book. She says she was 'dirt poor' when she landed up in the US first. "At Yale, I worked at the reception counter from midnight to 5 am to make money. When you don't even have clothes for job interviews, all of a sudden, life gives you a wake up call," she says.

Mom as icon

Nooyi will remain the chairman of the company until early 2019.

Indra Nooyi's mother is a perennial presence in her life – the one influence she relishes and revisits often like a valued talisman.

Her mother's advice to 'leave the crown' as she pulls into the home garage has kept Indra Nooyi grounded even as she managed a company with 1.60 lakh employees across 190 countries.

Losing sleep

And what keeps the CEO up at night. In Nooyi's own word,"My kids." Probably, that is why fizz never dies down in the 62-year-old CEO who is also a mother, wife, daughter, and daughter-in-law.

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