Indra Nooyi's Lessons on Leadership

Indra Nooyi's Lessons On Leadership

Cornelius Susanto

Asian Institute of Technology

Author Note

This critical essay was prepared for SM80.1705 - Leadership and Organization Management, taught by Prof. Sununta Siengthai

Introduction

“Leadership to define and good leadership even harder. But if you can get people to follow you to the ends of the earth, you are a great leader”.^[1]

        Indra Nooyi is one of the 100 most influential people in the world and was named as the most powerful woman in business from 2009 – 2010. However, what does make her as one of the most recognized leaders in this 21st century? Born on 28 October 1955 in one of the biggest cultural, economic and educational centres in South India, Chennai, she now holds a critical position as the Chairperson and CEO of the world second largest F&B business, PepsiCo. Indra Nooyi was raised under a Tamil-speaking middle class family. She received her bachelor degree in chemistry from Madras Christian College of the University of Madras in 1976. Further, she holds two master degrees, one was from Indian Institute of Management in business administration in 1978, and another one was from Yale School of Business in public and private management in 1980. Prior to joining PepsiCo in 1994 and named as the CEO in 2006, Indra Nooyi had previously held a certain strategic position in some other large multinational companies, namely Johnson & Johnson, Boston Consulting Group (BCG), Motorola, and as well as Asea Brown Boveri.

        Since 2004, PepsiCo under Indra Nooyi’s leadership has been able to almost doubled its annual net profit from $3.6 billion to approximately $6.3 billion in 2016. PepsiCo has also shown impressive Compound Annual Growth Rate (CAGR) of 4.3% by 2016 and as well as market capital of more than $158.4 billion. All of these impressive facts about PepsiCo’s development under Nooyi’s leadership has been a reflection of her dedication and hard work to the company. She is the one of bravest leaders in PepsiCo taking the risk to restructure the company by doing a spinoff of Tricon (known as the holding company of KFC, Pizza Hut, and Taco Bell) in 1997. She also took the lead in the acquisition of Tropicana in 1998 and the merger with Quaker Oats Company, which also brought Gatorade to PepsiCo.

At that point, the benchmark of Nooyi's grand strategy were coming into view. She believed that PepsiCo's core products, its soft drinks and Frito-Lay salty fried snacks, faced flat or declining sales as in the future customers demand healthier consumption of foods and beverages She believes that the company needed to diversify into new products within the field of packaged foods. Her grand strategic view has been successful. In her earlier time as the CEO, she reclassified Pepsico’s products into three categories: “fun for you” (such as potato chips and regular soda), “better for you” (diet or low-fat versions of snacks and sodas), and “good for you” (items such as oatmeal, juice, and healthy drinks). Her initiative has been endorsed with ample funding. She shifted corporate spending away from junk foods and into the healthier alternatives, with the aim of improving the healthiness of even the “fun” offerings. Also just recently in 2016, Nooyi removed aspartame from Diet Pepsi, furthering the shift towards healthier foods.

Furthermore, Indra Nooyi’s achievements in PepsiCo are not only endorsed by her strategic views toward the growth of the company. The successes are also supported by her leadership style that has been admired by all people in the world especially young thriving leaders in business. Likely addressed by Indra Nooyi’s quote within the beginning of the essay, as a great leader she was not only focusing on the strategic achievements but she was also learning how to favor her followers to comply with the corporate vision and making it as great strategic achievements. More on Indra Nooyi’s qualities of leadership will be addressed in the following chapters.

Indra Nooyi’s Leadership Styles Uncovered

In her life, Indra Nooyi has been leadership role models to many groups, she is a wife, a mother of two daughters, a strategic leader, and also as an inspirational leader not only to her corporate colleagues and subordinates but as well as to many young leaders in business all over the world. According to Tannenbaum & Massarik, leadership is “interpersonal influence, exercised in a situation, and directed, through the communication process, toward the attainment of a specified goal or goals”^[2], whereas Indra Nooyi has been possessing the role of leadership for many groups of people. Within her role as a corporate leader, Indra Nooyi achieve PepsiCo’s great financial bottom line through the application of leadership’s causal chain of effects. This chain of effect consists actions to “articulate appealing vision, increase followers’ commitment, increase followers’ efforts, increase quality and productivity, and finally to increase sales and profit (financial bottom line of the company)”.^[3] Further, below is an illustration of Indra Nooyi’s causal chain of effects in the company.