Indra Nooyi on Leadership, Culture, and Success

Motley Fool co-founder and CEO Tom Gardner talks with Indra Nooyi, ex-CEO of PepsiCo, to discuss:

• Other CEOs she's learned from.
• Building a culture of ownership.
• Decision-making as an art and a science.

Nooyi's best-selling book is My Life in Full: Work, Family, and Our Future.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Dec. 4, 2022.

Indra Nooyi: But I will say something. This is based on my biases from my past. I don't know how you build a corporate culture unless people come together, I really don't know. There's something to be said about the human interaction. I don't know how you do leadership development unless you have people coming together. How do you judge people unless you have people actually physically coming together? The first thing I did when I was CEO across the world, I visited people. I met them, I shook hands with them, talked to them, saw them in action. It was just an unbelievable feeling. 

Chris Hill: I'm Chris Hill and that's Indra Nooyi. She joined Pepsi in 1994 as a Senior Vice President of Strategic Planning. Over the next decade, she rose to become President and Chief Financial Officer, and in 2006 was named CEO, a position she held for 12 years. Motley Fool, Co-Founder and CEO Tom Gardner caught up with her for a conversation at our company's recent Annual Meeting. We're bringing you part of that conversation today. They talk about the business leaders she's learned from and her path to the corner office at Pepsi.

Tom Gardner: What was the process like for you in becoming CEO at Pepsi? How was the idea introduced? Were you an applicant? Had that been something that you've considered part of your pathway at different stages along the way at Pepsi and what was that onboarding like?

Indra Nooyi: Well, all PepsiCo CEOs at run big businesses. I was through strategy, the CFO job than I was President running all the corporate functions and Steven Reinemund my predecessor CEO, did something very interesting, he said, look, in all the work you've done, you've operated left of the decimal in big numbers. I want you to learn the right of the decimal small pennies. How you extract value from small pennies applied over many things and you get cost-savings. He had me do a project of Frito-Lay to improve the distribution system. I had done projects on operations but never really run a P&L in its entirety day to day. There were lots of other extraordinary people in PepsiCo that the board could have picked. We were not told there was a succession race going on, but some of us were on the board at that time so the board knew us. I honestly believe Tom, that if you decide you want to be CEO and you start to run for it, you actually work against yourself because you're so obsessed with becoming CEO, you forget that you have to do the work. I was focused on doing the work because at the end of the day I didn't think my boss was going to retire when he did. I thought the two of us were going to retire at the same time because he was a young person and I enjoyed working with him. When he walked into my home one day and said the board would like to tell you on Saturday that you're going to be CEO. I said why are you leaving? That was my first reaction because I was enjoying working with him. He said, "I'm going back to Dallas, my family would like to relocate". I think the board felt there was a strategic repositioning that was needed of the company. Companies go through ebbs and flows. You have great operational leadership then you need a strategic tweak then again you get a great operational leadership and other strategic tweak. I think Roger Enrico did all the strategic transformation. Steve extracted phenomenal performance from that transformation. I came in, strategically repositioned. The new CEO is extracting operational benefits from all that repositioning. I think the board was very clever in deciding what CEO you needed for the times. I was surprised I was picked, but I'm now in retrospect, I understand why I was picked.

Tom Gardner: What are the biggest differences between being a CFO than being the president and running all the corporate functions and then being CEO. What does that progression look like as we each look at our own career journeys and what it means to level up to that next spot?

Indra Nooyi: There are two kinds of CFOs is what I call the control and numbers-oriented CFO. Then there is the strategically focused numbers CFO. PepsiCo typically had CFOs that came from a strategic focus, became the partners to the CEO. I came from that ilk, big picture strategy, but I was also good at zooming in to the numbers and running the finance function. Because I was President also, and because I was part of so many of the transformations, I knew every new can corner of the company around the world. I knew everyone of our bottling partners, our joint venture partners, employees knew me. The CEOs before me gave me a lot of visibility because that was the first immigrant women of color in the executive suite. I was given a lot of visibility by my predecessors and pushed and promoted. I thought I was totally prepared when I was told I was going to be CEO. But then when you become it like you're doing a game of tag Tom, the view is completely different because when you are President and CFO, your CEO is the first-line for the shareholders, for everybody outside, when you become it, you're the first line of attack and you're fair game. CEO is a fair game for anybody who wants to attack a CEO. You couldn't retool your mind to say, I thought I knew everything about the job, but now I am the one making all the decisions. I get great input, but I'm making the decisions. I have to think about my 250,000 employees, their families to suppliers, the partners. You have very different sense of responsibility, and boy I tell you I came to work every day with a little bit of butterflies in my stomach saying, I hope I do right by this company.

Tom Gardner: Thank you so much for that. As the CEO at Pepsi, you introduced Performance with Purpose, PwP. That was maybe quoting directly, a plan to put environmental goals and customer and employee well-being on par with financial goals. I was wondering to what extent your pathway to becoming CEO and CFO background for example, and running businesses. I'm wondering to what extent you think anyone any level of any company anywhere inside the Motley Fool or inside a Pepsi or any other company. How important do you think it is to work with a purpose and understand the business realities to see both of those things together? Because naturally, some people come to work and they're like, I'm the transactional, I'm the numerical, I'm the money side of it. They'll figure out how to make it all come across the right way in the world and others will say, I'm the one who's out front interacting with you. I don't really know how the pricing works. I'm not sure distribution costs. I don't know what the cost of acquisition is for new customer. I don't really know those details. How important do you see it to continually try to bring those two things together within an individual's career, no matter the company?

Indra Nooyi: In my experience, I've come across two kinds of people. People who come to work saying I got to do a job, I've just got to go do the job, get a paycheck and go home, which is perfectly good as long as they do a job well. Then there are those who go to work saying this is my company, even if it was a big public company, this is my company. They have an ownership culture about it. They feel they're part of this company and whenever they have to do whatever job they are in, they redefine the job to be more expensive. Thinking about all the linkages with the job to other functions. I'll give you an example, but let me start off by saying, I was a second type. Whatever I was given to do, I would do it well, but then I would ask the question, who's going to use the output of my work? How is it going to be used? I always thought about people two levels above me. How would they use it? If it was a board, I'd say what's the board going to say when they see this document? What can they do with it? What information I'll be trying to give them? But by doing the work at ground level, but then levitating about 10,000-15,000 feet and looking at the work and impact on others, you have a different perspective of the work. That's the way I was trained at the Boston Consulting Group. That's a skill I brought to PepsiCo. I think in many ways, that ability to zoom in and zoom out constantly is what got me the attention of all the leaders in PepsiCo saying, here's an unusual person. I've said to anybody, those that do that zooming in and zooming out, have an ownership culture about the company and want to make the company a better place are those that develop a sense of purpose about coming to the company. Getting up every morning and coming to work, whether you're doing remotely or in person. There are other people get up every morning saying, I care deeply about this company and I care deeply about PepsiCo. I mentioned in my book saying I had an irrational love for the company and till this day, I carry that irrational love. When you have that love and think it's you-all company, the way you act is completely different. You cared about everything. Everything I do I worried about the broader impact of it. That gave me a tremendous purpose.

Tom Gardner: How about having the business detail alongside that sense of purpose? You essentially shared your thoughts on that with the zooming in, zooming out. Then how about somebody who zooms in, zooms out but just doesn't quite yet understand the business implications of decisions. What would you advise to them?

Indra Nooyi: It's a tenable thing, Tom, because if you make decisions in a vacuum without knowing how it's going to land on people and businesses and processes. You might actually make big blunder. Because the whole idea of leaders making good decisions is that, they're not just making a good decision on what do you think is the right decision for the company. You're thinking about how it's going to be implemented. That's why they say people who've actually run P&Ls know-how is going to land and how people have interpreted and act on it. I think anybody who's CEO or in a C-suite has to know what the impact is and how it's going to land on businesses, functions, people, regions, any decision you make. For example, Performance with Purpose as a overarching strategy, we had to take it on the road to see how is it going to land in various countries? How are they going to interpret it? How can they execute Performance with Purpose. Should we tweak Performance with Purpose at the margin for certain countries. We had to go through that exercise. I think anybody who thinks decisions can be made up on high and miraculous land is making a mistake. You've got to constantly think about all of the pitfalls when it lands, then go back and tweak the decision. Not to much, but enough to make it work. Is it an art and a science?

Tom Gardner: An art and a science. We are obviously in a very tough market environment now with a lot of unexpected factors that few people would have imagined the collection of them five years ago. I don't know that anyone in the world would have been able to put together the scenario that we're in. I want to hear a little bit about how you managed through change, and through crisis. I would just say for the Motley Fool, we face a unique challenge in that even though our assertions in our advice may be right in the long term, it can look very wrong in the short term. You could recommend what could end up becoming a great company, or is a great company, could be a great investment seven years from now, but in the next year it's down 58 percent. For a member coming in to see that and experienced that and not be able to process that harsh early experience doesn't mean a long-term failure. Although of course in investing, you do also make mistakes that do end up being long-term mistakes. The complexity of laying that out for our members in an environment like this, obviously, there are plenty of things that are analogous in your work career and at Pepsi, and Pepsi facing recessions, how do you suggest managing through change and through crisis for the employees and making sure everyone understands the mission and why we're here and what we're working on, but for all the stakeholders that are suffering at different points along the way as well?

Indra Nooyi: Let me give you three scenarios, Tom, because I think it's important in a very different. When we are transforming future back, which is what you're talking about, we know what the future is going to be, we have to change the company. It behooves me to paint a beautiful picture of the future in vivid terms to people, tell them why we need to change and make the change happen. Those that stand in the way, sometimes when you try to change them and they don't, you got to move them out, because you have such a clear idea of what changes need to be made for the future. That's one kind of change. The second kind of change when you've got force measure, War in Ukraine, geopolitics with China, you've got inflation. You've got stuff that you don't control. Financial crisis. All these you didn't make happen, but they happen around you. You've got to navigate the company through that. When you have something like that, just had to bring their employees together and say, "you know what, we can do it". Give them confidence when they are feeling nervous, give them stability when they feel like the world is spinning out of control.

Just give them stability, tell them we go through a tough time, but we will come out of this. The third kind of change unsettling aspect has been an activist comes into this talk and demands you do all kinds of things. But this is not stuffed you're planning, this is not stuff that happened to you, this is an activist who thinks they know lot more about the company than you do, even though they don't. What do you do then? At that point again, is when the best of a CEO has to come out and say, our strategy is clear, this is what it is. We're not backing off of that. Our board is not backing off that. You guys keep running the company and delivering results. I will take care of the activist with the CFO and the legal camps. You have to have separation of roles so that everybody is not worried about the same issue. I think in each of these cases, you have to behave differently. You've got to really understand what you're trying to do and behave differently. I'll be honest with you Tom, one of the things that I was blessed with, I ran a company like PepsiCo which made products to eat and drink them. If I was running a company that made products that are based on bits and bytes which is being disrupted every which way to Sunday, I don't know how I would have run that, because anything that's bits and bytes and digitally movable is going through massive disruption at this point. Just like what you're talking about. All different ballgame.

Tom Gardner: I guess in the difference between ideas and products, some of the way the pandemic played out would naturally be different because in the product world, there are maybe a point-of-sale with a customer or a necessity to have somebody at a distribution point. 

Indra Nooyi: Manufacturing the product.

Tom Gardner: Exactly. In the world of ideas, perhaps every one can be in their home office because there are gaps and differences in the way you work. But for the most part, you were actually able to make your way through, learn as you go but continue to work remotely. I'm wondering if you were running Pepsi now or looking at any company, what advice would you have for how to think about how work is going to be different and not in a temporary way, a longer-term bet on the way work will be different now because of what we've been through?

Indra Nooyi: I'm glad I'm not the CEO now because this is a confusing time in some ways, but I will say something. This is based on my biases from my past. I don't know how you build a corporate culture unless people come together, I really don't know. There's something to be said about the human interaction. I don't know how you do leadership development unless you have people coming together. You judge people honestly if people actually physically coming together. The first thing I did when I was CEO across the world, I visited people. I met them, I shook hands with them, talked to them, saw them in action. It was just an unbelievable feeling. The thing that I always worry about in PepsiCo, but I'm sure you're doing some shape of form in Motley Fool is, if you're a servant leader, really servant leader, you wouldn't allow some people to come into work and all other staying home. People who have figured out a way to come together because you're solving the people that work for you. So net that, what I'd say is conducted few experiments and see what works best. My biggest concern is productivity, I think is not where it should be given the lack of clarity on hybrid working. I'm all full flexibility. Don't get me wrong. It makes for good family building, but what we should agree on is x number of days of the week you're going to come in. We can actually build a community, We can build culture, we can build a leadership team, we can get to know people so be it, we can put name and face together in a human way and shake hands. There's a lot to be said for that. Talk about productivity if we work at home or in the office, just talk about all that. Then do experiments in different parts of the company. Two days, three days, everybody coming in, some coming in rotation, do that. But do not disadvantage any group. Don't say women didn't come and therefore they disadvantaged, men came and therefore they're advantaged. Be very careful about favoring or not favoring one group of people.

Tom Gardner: I thank you for that. I want to respect your time. But I also have three more questions.

Indra Nooyi: Go ahead.

Tom Gardner: Good. You've expressed that you feel like career wise, you won the lottery because the journey of an immigrant women of color was not a well-worn path into the executive suite at a company like Pepsi or any other Fortune 50, Fortune 100, Fortune 500 company or many companies. I'm wondering to what extent you think that is different now, how far along are we that the odds are not so long and so stacked against, let's specifically take an immigrant women of color, but in any other forms of obstacles that exist to the merited rise of talent, to create the most dynamic marketplace with the greatest rate of innovation and enthusiasm. Impossible to achieve perfect setting, how far are we today versus when you began your journey inside a Pepsi?

Indra Nooyi: My time when I first came to the US to now, I'd say that my journey would have been possible only the US, not in any other country in the world. I still think we have to pat ourselves in the back as citizens of this great nation and say, we're still one of the wonderful meritocracy in the word that gives everybody a chance. On a relative basis, we are out there phenomenon. Now, let's talk about what could be improved. I think that we are making progress on saying the most talented people should rise to the top. We're making progress, but there are biases, there are barriers that exist to people like women or as diverse people rising. It doesn't happen overnight, you've got to build the pipeline very methodically and get them up. It's not just we say we need CEOs who are diverse and then all of a sudden CEO show up. You've got to build a pipeline very systematically. I will say one thing, Tom, because I was only one of a kind when I was early in my life and corporate America and then when I became CEO, a lot of people saw me, my hard work and how much I felt ownership about the company and stepped up to support me, push me, mentor me, critique me, and really give me a leg-up. Now there's more like me that are more diverse people in leadership positions. They now being viewed as competition, normal competition is happening. While I was singled out for help because maybe it's a combination of my hard work and the people I was surrounded by I think I was given a real push and pull up. Today I think the environment is better, but there's more people like me and the competition is more intense. On balanced, different issues, but still issues, but we're making problems I'd say overall, we're making progress [inaudible] at all but I think in mainstream, we're slowly making progress.

Tom Gardner: It's unfair to do this, but I always love to play the game scale of 1-10. What would you say in terms of relative to other countries you identify the US in a very positive way relative to the potential within the US of what could be if we addressed biases more effectively and really looked at the system. You could begin in the schooling system, you can begin anywhere you want, all the way through. Where do you think we are at a scale of 1-10 on fulfilling the true potential of the talent of the US.

Indra Nooyi: I think there's some of it in a a seven and eight because it's a relative thing. We don't know what the absolute is because it isn't anybody that much better than us. Relative to what I know we have in our country, we have talent pools that are not fully utilized because there's no child care for them to come to work. I think that if wee taught stem in a very different way in schools and colleges, more people will stay in stem and we can have more people homegrown who become quantum physicist or software engineers, or all these advanced technologies. I think that there are changes we can make if we invested more in our own country like we're doing now, that'll open up more jobs for people here. I think our potential is endless. I think there's somewhere between a seven and eight. A little push here and a little tug there we could just be unbeatable, really. I think we underestimate what a great country we live in. We underappreciate.

Tom Gardner: Thank you for that. I'm wondering if there are a few CEOs alive or not that you either looked to as you were running the company. In many ways, I would say the vast majority of my useful ideas for our company and I've plenty of bad ideas as well and the vast majority of the useful things that I've done in my role and their mistakes that I've made have come from other people that I've been able to sit and study because at the Motley Fool, we're studying other companies all the time so we're able to see what Pepsi does and its culture and introduced that as a test and our culture, see what that CEO did in deciding whether to make an acquisition or invest in R&D or not, etc, to just constantly be looking at the playbooks of other companies has been so helpful for me and I'm wondering if there are a few leaders today or when you were beginning as CEO at Pepsi, or at any point in your life that standout as people that you admire and learn from, loved and why.

Indra Nooyi: All of us say Steve Jobs. I had a chance to meet him and talk to him. I think he was a difficult person, but an extraordinary person. How passionately felt about Apple, that was his company, the sense of ownership we had, and the changes he had to make you just face the world head-on and said, I've got to make changes. The reintroduced design thinking into Apple, the way he invested in new technologies we're all fantastic. Anybody who had the opportunity to meet Steve Jobs, lucky them and if you didn't, I feel sorry for you because he was such an unusual person. Albert Bourla of Pfizer impresses me too, the way MRNA was developed for COVID and Monster and what a humble guy he is. I just like him and I think people like him are hard to come by and I've liked Albert Bourla. Recently I've run into a woman called Penny Pennington who runs Edward Jones private company, but extraordinarily smart in the way she runs the company. How she's made the Edward Jones culture her own, and how she acts like the owner of Edward Jones in this partnership is spectacular and that's what you really need people who say, I might be one of the partners or the managing partner, but I'm going to make it one of my own, very important. I'd be remiss if I didn't mention Jeff Bezos. He built one of the most consequential companies of our times from the back of his car. Let's not forget from the back of his car. People like me stepped into an existing infrastructure and processes and systems and made it better and so somebody like Jeff Bezos transitioning to Andy Jassy today. I'm an often so I never learned from one I look at many people and then I'd take a little nugget from each of them.

Tom Gardner: I think there's a wonderful, it may be a Seneca quote I can't remember the philosopher, but it's essentially the idea that you may not love the author, you may not love the book, but you probably can find a really good line-

Indra Nooyi: Agreed.

Tom Gardner: Or a really amazing paragraph and is a wonderful way to study other leaders. You don't have to and evaluate whether check every single box.

Indra Nooyi: Exactly. Only one message to you that is profile.

Chris Hill: If you're interested in learning more from Indra Nooyi, pick up a copy of her New York Times best-selling book, My Life in Full: Work, Family, and our Future. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.