How PepsiCo promotes transformation
How PepsiCo promotes transformation
As part of BSR's ongoing series of conversations with leaders in sustainability, we asked BSR Conference 2014 plenary speaker and PepsiCo Chairman and CEO Indra Nooyi how her company incorporates transformation into its work.
Nooyi is chief architect of Performance with Purpose, PepsiCo’s commitment to sustained growth with a focus on performance, human, environmental and talent sustainability.
BSR: What has been PepsiCo’s most significant transformation over the past year?
Indra Nooyi: At PepsiCo, we look at transformation not as an achievement, or as an initiative that can be measured within the constraints of a given timeframe. Rather, we see it as a state of being. We are constantly pushing ourselves to transform, because in a world defined by increased volatility, complexity and speed, it is the only way to succeed. Accepting the status quo is simply not an option. And in fact, if we approach transformation the right way, it is a process that never ends.
BSR: Has transformation always been part of the culture at PepsiCo?
Nooyi: Transformation is now ingrained in our DNA at PepsiCo, but back in 2006, we needed to embed it formally into our culture. At that time, PepsiCo was an iconic company with culturally significant brands and a history of delivering solid financial returns. But we could see then that times were changing — and we needed to change along with them. Consumers were moving toward healthier lifestyles and more nutritious products. The information age was educating and empowering consumers in profound new ways. The demographic balance of power — economically and culturally — was shifting. Natural resource constraints were no longer something to be dealt with in the future, but a significant concern in the present.
What this all meant was that how we made our money as a business needed to change. We needed to move to a model that had transformation at its very core, in line with the changes of the world.
So in 2006, I instituted a companywide vision for PepsiCo called Performance with Purpose. The idea was simple: We would continue to deliver strong financial results, with sustainable practices powering and accelerating our long-term growth. In short, purpose would fuel our performance.
BSR: How does Performance with Purpose work in practice?
Nooyi: We began by setting goals in three specific areas.
First, as we saw consumers shifting toward healthier products, we knew that we had to diversify our portfolio to include more “good-for-you” foods and beverages, while using our R&D capabilities to improve the nutritional profile of our existing products.
Second, as limited natural resources were diminishing, reducing our environmental impact became a critical business imperative — both in terms of cost savings stemming from reduced resource usage, and in terms of maintaining our license to operate in communities around the world.
And third, as the competition for talent has become more intense, we set a goal to invest in our talent by creating a diverse, inclusive and engaging workplace where employees could bring their values to work each and every day.
BSR: What kind of impact has this change had on your company?
Nooyi: With Performance with Purpose as our guide, over the past eight years, we have achieved amazing results.
For instance, we’ve reduced sodium, saturated fat and added sugars across our portfolio, and in 2013, our nutrition business made up 20 percent of our net revenue, which we believe positions us well in the marketplace now and in the future.
In India, where water scarcity is a persistent problem for local communities, PepsiCo has been water positive — conserving more water than we consume — for five years running. It’s been a huge win for our business in India, helping us maintain our license to operate, and it has provided a model for how to reduce water usage across our operations.
And around the world, PepsiCo employees are empowered to make a difference for the business by making a difference for society — which serves as a critical tool for attracting and retaining the very best talent.
These are just a few of countless examples that reflect our company’s larger, ongoing transformation, and you can read more about our work led by passionate teams around the world in our 2013 Sustainability Report. While we celebrate the progress we have made, we know our work is far from complete. Even as we reach one milestone, we are setting new goals to make our business stronger and more sustainable.
BSR: What are your plans for the future?
Nooyi: As we move forward in the years to come, it is clear that the rapid change and volatility that has defined recent years is only going to accelerate. And that will require unusual, innovative solutions to interlinked business and societal challenges, collaboration across sectors and continuous reevaluation of how we do business.
In other words — constant transformation.
If businesses and organizations truly take that philosophy of transformation to heart, there is no limit to what we can accomplish for both our bottom line and for society all at once.