Question

Leading with Purpose: Changing the Way We Make Money to Change the World

• Published on July 11, 2018

Indra Nooyi

Former Chairman and CEO of PepsiCo

Twelve years ago, we embarked on a journey at PepsiCo that we call Performance with Purpose. Since then, much has changed—at PepsiCo and around the world—but the underlying principles behind Performance with Purpose remain the same.

We know we need to deliver the kind of top-tier financial results our investors, associates, and all our stakeholders expect. And we also know something else. We know we need to do it with a sense of purpose, a moral compass, guiding our way.

For me, and all of us at PepsiCo, Performance with Purpose is—and always has been—about the way we make money, not the way we spend it. About who we are, the character of our company.

We’ve tried to adhere to the idea of a social contract once defined by British statesman Edmund Burke as a partnership between the living, those who’ve come before, and those yet to be born.

And that means managing PepsiCo with an eye toward not only short-term priorities, but long-term priorities, not only the level of returns, but the duration of returns, as well, recognizing that our success—and the success of the communities we serve and the wider world—are inextricably bound together.

Much of our early work on Performance with Purpose required us to think differently about our business and the kinds of long-term investments—from researching and developing new, more nutritious products, to finding ways to reduce water and energy use across plants and farms—that could help us deliver on our vision of making our growth, our operations, and our impact more sustainable.

Sustainability has been defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Over the last dozen years, we’ve tried to meet the needs of the present while strengthening the ability of future generations to meet theirs, integrating that aspiration into our goals for what we originally called Human Sustainability, Environmental Sustainability, and Talent Sustainability—today known as Products, Planet, and People:

When it comes to our Products, we’ve built on our legacy as the first company to voluntarily remove trans fat from our snacks by reducing added sugars, sodium and saturated fat in many of our products, launching a revolutionary nutrition-focused vending option, Hello Goodness, and growing our portfolio of Good for You and Better for You options from about 38 percent of revenue in 2006 to roughly 50 percent last year. We also teamed up with others in our industry to form the Healthy Weight Commitment Foundation, removing 6.4 trillion Calories from our food and beverage products, surpassing our collective pledge by more than 400%. And through Food for Good, we’ve provided 80 million nutritious servings to low-income U.S. families since 2009 to date.

When it comes to our Planet, we’ve raised the bar for what it means to be a responsible corporate water steward, earning the prestigious Stockholm Industry Water Award. In fact, we achieved a 25 percent water-use efficiency improvement between 2006 and 2015 in our legacy operations. And we’ve invested more than $40 million since 2006 to provide safe water access around the world, benefiting nearly 16 million people in some of the planet’s most water-stressed regions.

We’ve also made our delivery fleet more energy efficient, eliminating the need for over 1 million gallons of diesel fuel since our electric vehicle initiative began in 2010—the equivalent of keeping more than 2,000 passenger cars off the road for a year—while also making our beverage coolers and vending machines 60 percent more energy efficient. And we are one of the largest users of food-grade recycled PET in the U.S. In fact, if more recycled PET were available, we’d buy it. We’ve also launched the first 100 percent compostable chip bag in test markets, while diverting more and more of our waste from landfill—approximately 95 percent as of the end of 2017.

When it comes to our People, we’ve reimagined what it means to support our associates, from ushering in on-site and near-site childcare at campuses around the world, to expanding PepsiCo University’s online course offerings to help associates upgrade their skills to navigate a rapidly changing world. And we’ve also helped lift up the communities we serve, playing a critical role in disaster relief efforts, from Texas to Florida and Puerto Rico, Mexico to Ecuador, China to the Philippines.

So, while we still have work to do in certain areas, we’re incredibly proud of the progress we’ve made. Our aspiration of being a good company—good ethically and good commercially—is now coming to fruition, yielding a broader, more lasting impact than we ever imagined, and setting a standard that companies across our industry and beyond aspire to meet.

Looking ahead, we’ll continue viewing our work through both a microscope and a telescope, focusing on the most granular details—grams of saturated fat, parts per billion of greenhouse gas, the number of women in management roles—as well as the larger ambition of building a business that acts in accordance with our values, each of us striving to do what’s right for the company and what’s right for our communities. Because at the end of the day, there’s no separating the two.

Leading this company remains a source of incredible pride. In my first sustainability report letter in 2007, I opened with a story:

“When I was a child in India, my mother would ask my sister and me a simple but compelling question: ‘What would you do to change the world?’ Today, I know my answer would be that I want to lead a company that is a force for good in the world. A company that delivers strong financial performance, while embracing purpose in everything it does.”

That is still my answer. And I know that if we stay focused on our mission, if we engage the head, heart and hands of our more than 260,000 associates, and adhere to the idea that how we make money is as important as how we spend it, we’ll continue doing more than advancing the heritage of a great and iconic company. We’ll keep changing the world.

Indra Nooyi

Former Chairman and CEO of PepsiCo

Help answering the questions please

Consider Nooyi’s ideas (untraditional more than a decade ago when she launched her initiative and still not mainstream!) about the purpose of the corporation. What effect might her views be influenced by being raised in a developing economy and her exposure to social inequality and extreme environmental pressures? Would you deem her an ethical leader? What are your thoughts about her views of and attitudes toward stakeholders (such as investors, consumers, employees, critics and civil society) and how she interacted with them? What about her three planks of sustainability (people, planet and products)? She said she knew at the start that to be successful she would need to fundamentally change PepsiCo's corporate culture and that it would take years to do it. Recall she patiently gave people time to "come around," but planned "retirement parties" for those that could not. Is she a leader you would aspire to work with or for? Why or why not?  

Answer 1

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Answer:

The fact that Ms. Nooyi was raised in a developing economy and had social inequality and extreme environmental pressures would have had a significant and profound effect on her views and opinions. Ms. Nooyi, in her growing up years, must have seen and experienced companies focusing on profit maximization without having an eye for the environment from which they obtain resources or for the people on whom they are dependent to manufacture and then to sell to. This experience would have prompted her to ensure that PepsiCo. focuses not only on profits but also on people and the planet equally.

Yes, I would deem her to be an ethical leader. Her vision for PepsiCo. is driven by her ethical beliefs and values for the rights of others. It is due to the ethical standards that she believes that consumers of Pepsi’s products have a right to consume healthier products and products that have no trans fats and saturated fats and have low sugar content.

My thoughts about Ms. Nooyi’s views and attitude towards stakeholders are a holistic one. She is interacting with them in a meaningful manner and this has led her to take actions and decisions by integrating the best interest of each stakeholder. She is rightly focusing on all aspects of operations of the company and all the people impacted by the operations.

Her three planks of sustainability – people, planet, and products – is the outcome of her holistic view of the company’s operations. A company does not exist for the sole purpose of maximizing wealth for the shareholders. It should also focus on ensuring that it is using resources in an optimal manner and not abusing the environment. It should also focus on the betterment of people. By people here I mean its employees and its customers. The three planks of sustainability are what makes a company a morally and ethically responsible company.

Yes, she is a leader that I will aspire to work for. This is because I have come across very few corporate leaders in my lifetime who had such unrelenting focus on making their company a better, more responsible and more committed company. Ms. Noyi’s focus on making Pepsi a company that had a strong sense of purpose was unrelenting. She wanted the company to have a strong humane and moral side to it and very few corporate leaders have dared to tread in this direction. Hence I aspire to work for her.