The Exchanges

Q From the outside we hear these stories about how CEOs pay attention to the top 50 of the top 100. How many people inside were you really monitoring and trying to develop and having a personal, a real one-to-one personal relationship where you're doing this and you're in the weeds and you're in the performance report and you're trying to build them?

A I think there's about three or 400 that were corporate assets, and one watched them all the time, because these are people who in 15 years could be CEO. There's something about them that, you know, you sort of caught your fancy when you were in a meeting, or in some project that they were on, they had brilliant ideas. Not brilliant ideas that reinforced your thinking. Brilliant ideas that challenged your thinking and took us to a better place. Because you don't want yes people around you. Um, you want people who say, why don't we push the boundaries of our thinking? What if we approach this creatively? And people who put the company before themselves. I look for that all the time. Uh, and so, there were three or 400 people that we actually called them corporate assets, and we tracked To make sure that we game plan them, give them the right assignments, and even if they couldn't move, could we give them interesting assignments so that they could get the experiences without constantly moving? So that's the number of people that we tracked.

AI assessment note: “I think there's about three or 400 that were corporate assets”

Q I love that. After Yale, you went into the consulting business. What did you love about that?

A It was a sink or swim place. I went to the Boston Consulting Group in Chicago. We had just opened up, and I'd never been in consulting before, and so this was a new experience. First of all, the caliber of people is just fantastic. Each one is pushing the other. You're operating at the highest level of a corporation, and in BCG, you worked on two different assignments at the same time, so you had to understand two industries, the value drivers, Two non-competitive industries. What are the value drivers? How do you think about adding value to the client in the assignment you're working on? And so it challenged me in profound ways, first to learn industries, learn the economics of the industry, the value drivers, think beyond the industry to see what insights you can bring to the industry, and learn about dealing with leaders at very high positions, which I'd never done before. In the United States, I mean, I looked at these leaders as, my God, so and so is the CEO, and now I'm sitting in the same room with the CEO. How do I behave? How do I, uh, you know, articulate my point of view without sounding like I'm a know-it-all? There's so much I had to learn. In my six and a half years at BCG, I think I grew 10 or 15 years. It was tough, it was a tough learning curve, but man, I would never trade that experience for anything in the world.

AI assessment note: “First of all, the caliber of people is just fantastic. Each one is pushing”

Q You had a conversation once with Steve Jobs where he told you not to be too nice. How did that candid conversation influence how you ran PepsiCo?

A I think he taught me a valuable, first of all, it gave me time, which was just so generous of him. I think the biggest lesson I took away was, he said, if you care about something, and you should care about a few things, show your passion, ok? For example, the guy who ran TVWHI Day, the ad agency, which was doing work for Apple, would always say, when you go to see Steve Jobs, the campaign, if he didn't like it, He'd throw the stuff all over the room and say, I want to see a new campaign by the morning, and you scream utter profanities, do whatever. But he wasn't doing it to destroy the place. He was doing it because he cared so much about Apple that he wanted the absolute brilliant right campaign for Apple. And his way of showing his frustration at himself and at the group was to Act the way he did, ok? Now, as a woman, I'm not the kind that utters four-letter words and throws things around, but all that Steve Jobs was telling me was, people have got to know what you're really passionate about. When you're really passionate about something, don't sit here going, God, I don't want to send them back three times. It's ok to send them back three times. Get it to a point where you're really comfortable this is going to be good for the company. Show your passion. Push people back. So I got to a point when design as a discipline was set up in PepsiCo. Um, when they'd bring me somethi…

AI assessment note: “So I got to a point when design as a discipline was set up in PepsiCo.”

Q When you look at an aisle of Frito-Lay or PepsiCo products, what, what draws your attention? What do you notice?

A Well, I look for new products today. Have they been slaughtered? Are the existing workhorses like Alley's or Doritos got enough facings so the consumer knows that they should grab it? Is each package neatly crisped and put on the shelf? Because that's the media you own, right? When your consumer sees the product on a shelf, that's the media talking to you. So to me, the media you own is very important to the consumer because the media you rent is your TV and your advertising. Many people don't see it. But they see that billboard effect on the aisle. So how does your package show up on the shelves? Is the right assortment there? Can they shop it easily? For example, is there a corporate block called Frito-Lay, or do you have potato chips, corn chips? How would you prefer having it? Are there dips next to the chips? If something is on deal, is it on an end aisle? There's so many things we look at. The Frito-Lay guys do a great job.

AI assessment note: “Well, I look for new products today. Have they been slaughtered?”

Q That's incredible. I want to go back to your childhood in India. Are there memories or lessons that stand out from your mom that you still carry with you today?

A It's mom, dad, grandfather, the whole extended family. It's not just the mother. And I think that it was a focus on excellence and doing well. It was, it was sort of beaten to us. If you're going to do something, do it well. If you can't get good grades, then, you know, what's your value to society? What are you going to do for society? So it was always this thing about push yourself. Don't sit idle. Satan has work for idle hands. If you can read in every spare minute, do it. So that's the environment we grew up in. And we couldn't go complain to somebody else because our entire community was that way. And so you sit there going, who am I going to complain to? If I complain to an aunt or an uncle, they'll say, oh, I'm doing the same with my kids. So we grew up in an environment where everybody was being pushed. And we were being pushed because We were growing up in an environment where India had just come out of 350 years of British rule, and it was trying to find its place in society. And we were looking at other countries and saying, wow, you know, there could be growth, there can be innovation, the economy could get a whole lot better. And so everybody needs to pull themselves up to contribute to the country in order to make the country better. So that was the goal to push Young people. And so, you sit there going, I have to pull myself up. The family pushed you, but you hav…

AI assessment note: “It's mom, dad, grandfather, the whole extended family... focus on excellence and doing well”

Q and you were listening to the line workers talk about the problems in the business, and you were getting insights from that, and I thought that was, like, so unique, and I'd never, I've never seen anybody document that before, and I'm sure people do it. Are there any other ways that you went about learning that were sort of off The beaten path that provided valuable insight like that?

A Well, one of the most interesting ones was, um, I was working for a particular industry, and, uh, a competitor was building a big plant, and we wanted to know how big the plant was, how many, how many bays they're gonna have, and what kind of bays, what kind of transportation, and we couldn't get enough information from the local filings or whatever, and the plant was being built in a very wooded area. Um, so it was a highly wooded area, but the middle was cleared for the plant. And a big lesson I learned is that in the United States, don't ever say the data is not available. Say you didn't look hard enough, because the data is available somewhere. So I kept digging and digging and digging to see where I could get this data. Until, and the U.S. government has got fantastic data available. Somebody from one of the departments said, oh, I know where you can get the data. If you did an FOI, a Freedom of Information request to the Intelligence Department, and ask them to give you satellite photographs of the plant from different altitudes, they can give you a pretty good picture. And I did that, and in a few days, I got the pictures at, like, 5000 feet and 3000 feet, and I now know from the top what the plant looked like, the size of the plant, you know, what kind of bays, You know, what kinds of products they might be considering manufacturing there. And so the valuable lesson is …

AI assessment note: “If you did an FOI... ask them to give you satellite photographs”

Q What were the signs that somebody was putting the company ahead of themselves?

A They would put their hand up for difficult assignments, and, um, if something went wrong, they didn't look for somebody else to blame. They would take the blame and say, hey, you know, I could have done a different job, or I could have led differently, or I could have staffed my team differently. Um, these are people who would come to me and say, you know, whatever's going on in this other part of the company, I think may be Putting something in jeopardy. And I'm not throwing them under the bus. Would it be okay with you if I went and worked with them to perhaps write things? And I said, be careful how you do it, but go for it. And I will tell them that I didn't send you there, that you were doing it out of your own, uh, good nature. Otherwise people say, oh, the CEO's got some pets that she's sending our way. So you've got to be very careful how you deal with organizational dynamics, but These are people who look around themselves and are constantly looking for ways to improve the company as opposed to how do I get the next promotion, the next raise.

AI assessment note: “They would put their hand up for difficult assignments, and, um, if something went wrong”

Q I think this often with, you know, uh, being ambitious and driven and working hard, and then also holding myself to an incredibly high standard as a parent, and it motivates me, and it simultaneously, like, having those standards can also be, um, counterproductive, um, because you're so hard on yourself. Is there any advice?

A You got to start off by saying, look, the job is a selfish thing. Ok, we love the job, we love, you know, working on challenges. Um, but when you have kids, you've got to understand it's a tether. It's a beautiful tether, but it's a tether. It's a loving tether, but it's a lifelong tether. And so, uh, I think you should have kids only if you love having kids. I mean, I adore my kids. They may not think that always, but I just adore my kids. Um, I love them more than anything in this world, and so does it cause angst at times? Yeah, it does. Do sometimes I sit down and say, God, I wish I could just work on this problem uninterrupted? Yes, but that tether comes with some responsibilities, and so I have to have the resilience to balance all of those things, so Each of us as parents, working parents, have to find a way to manage all of these priorities and not lose ourselves. So what you end up doing is giving up some of the things that you want to do for yourself. Just forget them, because you've got to see it through the eyes of your kids, through the eyes of your spouse, through the eyes of the job. You have to morph into a new being. That's a reality.

AI assessment note: “Each of us as parents, working parents, have to find a way to manage”

Q Coming back to the board just for a second here, what's the difference between a good board member and a great board member?

A A good board member probably does governance well and, um, knows all the board rules and can show up at a meeting reading the material. A great board member reads a lot more than the material that's provided to you. You know, go read everything that's available outside of the company, its businesses, its competition, technologies, whatever. So when you come to the meeting, you don't just do what the basic stuff required to get through the two days of board meetings, but you're adding value over and above the The basic requirements of the board. Uh, and so when you provide insights that are, you know, really, uh, cause the company to pause and say, God, she's got a great point there. Let's call her back and say, Hey Indra, can you tell us more about what you meant by that? Now you're really a value-added board member. As opposed to, yeah, so-and-so's a good board member. Read the board material. Made sure that governance was ticked off. I think that's the table stakes to be on the board, but a great board member does a lot of work themselves to read way beyond what the company gave you to read.

AI assessment note: “A good board member probably does governance well... A great board member reads a lot more”

Q How did you go about learning about industries you knew nothing about?

A It's surprising, you know, for example, let's say that I was working in the tissue business, all right, paper tissue. I would actually go to factories, I'd go to manufacturing lines, I'd go to R&D laboratories, talk to everybody that was willing to give me time, because consultants can't just sit there and articulate a point of view or provide direction without really understanding the details. So my philosophy was Zoom in before you zoom out. So in everything I've done, I always went deep into whatever the business was, the company was, tried to understand things from the ground level. Then I'd zoom out and say, what's missing here? Why is the strategic direction in need of a re, a tweak or a reset? And then I'd go back and say, if we did reset it, how would it sit in the front line? What changes would we have to make? Then go back out. So this constant telephoto lens that I had in my head is what stood me in good stead through my entire life. Zoom in, zoom out, zoom in, zoom out.

AI assessment note: “I would actually go to factories, I'd go to manufacturing lines, I'd go to R&D laboratories”

Q there's a natural entropy to these large organizations to hire somebody to do this job, and then they, they make that job important, and Parkinson's law takes up all this time, and, you know, you're distancing yourself from it, and if you let it go, it just becomes, you know, at the extreme, it becomes government, uh, and you go bankrupt, and how do you, how do you fight that?

A Companies like PepsiCo, at least in my time, I can only talk about the time when I was there, um, you know, we had very good scorecards to measure productivity, uh, spans and layers, uh, and we monitored that constantly. You know, is our output per employee going up? How many spans? How many layers do we have? Are we adding layers for no reason? Uh, you know, we monitored all of that carefully, and that's why the company was successful, because No, it's like an accordion. Sometimes you end up adding a couple of layers, and then you say, hey, wait a sec, how did this happen? Why did we drift there? Let's get the number of layers down. Uh, you know, we see certain levels of people have to have at least eight reports or 10 reports. So we have different ways we triangulate on organization, hierarchy, levels, bureaucracy, overhead. We look at all of that. And, uh, because our target setting process Uh, for the businesses and for the company as a whole is always reasonably stretched. It's never, um, easy target. It's always a reasonable stretch. And then we always promise the street a number that's lower than what we said ourselves to do.

AI assessment note: “we had very good scorecards to measure productivity, uh, spans and layers”

Q pointed out in your book, and correct me if I'm getting this wrong, because I'm just going from memory here, is when you started listening in on the performance reviews, with the men it was, they did all these things and this, but with the women it seemed like they did all these things but this. Was that like a bias within the organization, or what was going on there?

A So, performance appraisals for men is like, you know, he didn't deliver on all his goals. Yeah, I agree, but the guy's got really, he's got great potential. With the women, it was, she delivered on all her goals, but I think, you know, her future trajectory is not that great. You go, why not? Well, I don't know, something about her tells me that she won't be successful. Sometimes it was just ineffable. Not with all people, but some of the people, that's how it The dialogue would go. You have to stop it at that time. Let's, let's not just leave this discussion. Let's really have a conversation about this, because maybe it's true, maybe it's not. And sometimes, it used to be issues related to her style, or the way she dressed, or how she showed emotion, or how she gesticulated too much. Only because, again, I'm not criticizing, the original idea of the executive was a certain kind of male.

AI assessment note: “the original idea of the executive was a certain kind of male.”

Q I'm going to ask a question. I want to hear your sort of rapid fire response of other behaviors or traits. If somebody had an unfair advantage in PepsiCo and they were just constantly like knocking it out of the park all the time, what would be the behaviors and traits that that person would have or the skills?

A They've got this uncanny ability to zoom in and zoom out. Um, they draw, they ask people for opinions and ideas and incorporate them. Um, they, um, put their hands up for difficult assignments and learn from difficult assignments. They've gone through failure in the past. People who hit it out of the park have been through a lot of failure and learn from that failure. They haven't allowed it to get them down. They've learned from those failures. They pick themselves up. Talk about what they learned, fix it the next time, and move forward. These are people who are typically humble. You know, people who hit it out of the park rarely beat their chest and say, I hit it out of the park, I hit it out of the park, look at me, I gotta move forward. These are people who say, hey, this is what the company needed, I did it. And PepsiCo had a lot of them.

AI assessment note: “They've got this uncanny ability to zoom in and zoom out.”

Q Well, even he said that that was an important moment because it reset him as well to not being a holdover and to, to being there. Is it, when you mentioned you sort of like the old CEO around, if a CEO goes to the board, how does that impact the new CEO?

A The outgoing CEO is never in the deliberations. You provide your perspective, then you leave the room. The board picks the next CEO, because remember, the outgoing CEO doesn't have to deal with the new CEO, right? And so, uh, that's what happened when Steve was stepping down, and that's what happened when I was stepping down. I told the board what I thought the company needed going forward. I gave them the dossiers of four or five people and said, these are all the pros and cons of each candidate based on what the company needs. And this is how these people have evolved over time, the trajectory of their development over the last five or seven years. But it's your decision. You need to deliberate, you need to interview each of these people, you need to do your assessments. Because at the end of the day, I'm gone. You have to make sure the company stays successful based on the choices you make. And so the board deliberated, diligently met each candidate one-on-one and got to know them and Spent almost two years deciding who should be CEO. So that's a, that's the way to do succession. And so I think outgoing CEOs can develop people, but they don't select the person.

AI assessment note: “The outgoing CEO is never in the deliberations. You provide your perspective, then you leave”

Q Often, activists want a board seat or demand a board seat. What are the pros and cons from your point of view as a CEO of letting an activist investor onto the board, and at what stake do you think it makes more sense, even if you disagree with it? What ownership level?

A Well, it depends on the board member they propose. You know, Bill Johnson, from who we used to run Heinz, came on our board, um, and Nelson actually suggested Bill Johnson, but what Nelson didn't realize is that Bill Johnson and I knew each other, and we were friends already, so when Nelson recommended Bill Johnson, it was a welcome thing for us, because he came from the consumer world, knew us well. Now, had he recommended somebody who was disruptive, we may have paused and said, don't want that board member, because you don't want to spend our time answering activist questions when we should be running the company. Bill Johnson was hugely accretive to the board, and, ah, ah, you know, he'd known Nelson forever, But he knew the consumer world, he knew PepsiCo, and so, you know, he actually added a lot to the board.

AI assessment note: “Well, it depends on the board member they propose.”

Q You've spent your life in strategy. What is strategy?

A You know, it's a nebulous concept, but it's a very clear concept on the other hand. The strategy in my books is crafting a path forward for an entity that allows it to execute on that path forward with superior results. Can you never craft a strategy so that your results are diminished? You always craft a strategy to improve your results. But if you craft a strategy which is not implementable, it's not a strategy. So strategy requires implementation with it, and a place that's better than where you are today. Both are difficult to, because you have to almost anticipate what the outcome of the strategy could be. It can be implemented, and you're going to get to a better place. And that's the challenge with strategy. You've almost got to have a 360 degree view of the environment, of competition, of the markets, of customer revolution, everything else, and then you're crafting a path to say, this is how we should proceed. This is why it's going to be better for us than it is today. And incidentally, if the world around us changes, we're going to zag a little bit, but we're still going to focus on getting to a better place. That's why I think strategy requires unique skills. Zooming in, zooming out, being able to have peripheral vision constantly, learning from other industries. That's where consulting was a huge benefit, because that's what consulting taught you, strategy consulti…

AI assessment note: “The strategy in my books is crafting a path forward for an entity”