(audience murmuring)

• Good afternoon everyone.

I’m Ann Harrison.

I’m the Dean of the Haas School of Business.

Welcome to today’s Dean’s Speaker Series

cosponsored by the Berkeley Culture Initiative.

This is an incredible honor to introduce today’s speaker,

Indra Nooyi.

There is so much that I could say about Indra

as the first woman of color and immigrant

to run a Fortune 50 company,

Nooyi is certainly among

the world’s most admired business leaders.

We are just so honored to have you here with us today.

As CEO of PepsiCo,

a role she served in from 2006 to 2019,

Indra was the chief architect of performance with purpose.

PepsiCo’s pledge to do what’s right for the business

by being responsive to the needs of the world around us.

This included limiting its environmental footprint

and empowering its associates and people

in the communities it serves.

For more than a decade, Indra directed

PepsiCo’s global strategy and she led its transformation,

leading a number of mergers and acquisitions.

Prior to becoming CEO,

she served as PepsiCo’s President and CFO beginning in 2001

when she was also named to the company’s board of directors.

Today Indra serves on a number of boards including Amazon,

Philips, the Memorial Sloan Kettering Cancer Center

and the Partnership for Public Service.

She has received, get this,

15 honorary degrees and numerous awards.

Including the government of India’s Padma Bhushan,

one of the country’s highest civilian honors.

In 2019, her portrait was inducted

into the Smithsonian National Portrait Gallery.

Indra has been named to the top of more lists

than we have time to talk about today.

Forbes World’s 100 Most Powerful Women,

Fortune’s List of the Most Powerful Woman.

Forbes Most Powerful Moms and the list goes on.

In 2018, she was named one of the best CEOs in the world

by CEO World Magazine.

Today she stands strongly behind efforts to initiate policy

for family friendly workplace initiatives

and a care infrastructure that addresses the needs

of essential workers for whom

it is not possible to work from home.

Thank you so much Indra for taking the time to speak today.

I am so looking forward to this conversation

and a very special thank you for providing a copy

for everyone in the audience.

Can you all raise the book so she can see that you have it?

• [Indra] Oh thank you, thank you.

This.

• So the audience have your new book,

“My Life in Full: Work, Family, and Our Future”.

So I’m now going to turn the conversation

over to Jenny Chapman and Samir Srivastava

who are the codirectors of the Berkeley Culture Initiative

and who will lead today’s conversation.

Thank you.

(audience applauds)

• Thank you Ann and good afternoon everyone.

It’s great to see you.

This is a really lovely day for me.

I consider myself to be an Indra Nooyi groupie

and I’ve tracked her career for awhile.

I hope this won’t make you creeped out, but.

And I talk about her career and her leadership all the time

in my executive leadership classes.

So it’s really a wonderful experience

to have a chance to interact with her directly.

So what I’m gonna do

is I’m gonna dive into the questions.

Samir and I are gonna trade off in asking questions

and at the last part of the hour,

we’re going to invite a couple of audience members

to ask questions.

Our first question really starts at the beginning

of your book really which is you know,

you moved from India to pursue an MBA

at the Yale School of Management and I’m interested

in how your early childhood experiences

effected your motivation to do that

and how you thought that,

how you identified that as a possible path

and then additionally, what was the biggest surprise for you

in moving to the U.S.?

• Jenny and Samir, thank you for hosting me

and it’s a privilege to be at the Haas School.

I’ve been reading all the rankings and the writeups

of all the business schools and I must tell you,

the Haas School is, flag is flying very, very high.

So thank you for inviting me to speak to your students.

In many ways, people who read my book say,

“Oh I can see myself in your story.”

And so I have a story that’s very common

for people who grew up in the time that I did.

At the same time, they go,

“How come you were allowed to do as much

“as you accomplished?”

So let me talk about both.

In many ways, I grew up in a very traditional,

conservative south Indian household in the 50s and 60s.

Because I was born eight years after independence

and the remarkable thing about my growing up

and where I won the lottery of life

was that I was born into a family

where the men in the household believed

women should be allowed to study

and do whatever they wanted to do.

And even more,

they kept pushing and prodding us to dream big, to soar,

to imagine anything you wanted to be

because they were gonna make it happen for you.

Now you would expect that the mother of the household,

you know in typical homes the mother is very strong

would put an end to all this and say,

“I’m sorry, I’m gonna get the girls married off at age 18.”

Which was a normal marriageable age.

My mother was conflicted.

She would’ve loved to have been a CEO herself

if she knew what it was

but she wasn’t even given the opportunity to go to college.

And so on the one hand,

she had her foot on the brake which said,

“I gotta get you guys married.”

On the other hand,

she had her foot on the accelerator which said,

“Hey why don’t you dream and soar

“and do whatever you want?”

So I think that heavier foot on the accelerator

from three people allowed me and my sister

to actually do whatever we wanted.

My sister took a very traditional path

of being a great student.

I was a decent student but I did wild things

like playing in the women’s cricket team and climbing trees

and playing in a rock band and doing all that stuff.

The interesting thing was in our family,

nobody knew what business was.

Nobody knew what it was.

So everybody was either an engineer or a lawyer

or a doctor or worked for the government

and that was a dream career.

Nine to five job, weekends off.

You have a steady paycheck

and then my sister gets admitted

to one of the best business schools in India

and then all of a sudden, life changes

because if she went to that business school,

I had to go to another business school

because otherwise I don’t want to be viewed

as the failed sibling.

So this inter-sibling rivalry

pushed me to do other things and then you know,

one thing led to another.

I went to business school in India when I was too young.

I graduated from business school in India when I was 20

which is impossible to mature.

So I worked in India for two years

and then watched how business

and society interacted constantly and how we are losing

that whole societal issues when we teach business

and Yale had just opened its Business School

to the Masters in Public and Private Management

and I applied on a whim knowing that I wouldn’t get in

and I wouldn’t have money to go.

And somehow I got admitted and got a bunch of loans

and scholarships and the rest is history.

• Great, thank you Indra.

So I want to fast forward now to a later point in your life.

One that many people here in the room can relate to

which is when you were at the Yale School of Management

and you were interviewing for summer internships

and at the time Indra

was under some significant budget constraints

and had to go shopping for clothes

and just on the budget she had,

couldn’t put together an appropriate outfit

for interviewing and for the job.

So she ended up wearing a sari

for that entire summer internship

and was the only person in the office dressed that way.

So thinking about that story Indra

which really stuck in my mind in reading your book,

I wanted to ask you to comment a little bit

about how you navigated the tension

between trying to fit in to corporate life in America

but also standing out and being true to yourself.

• Well it was interesting

because there’s an important part of the story.

I bought a really god-awful pantsuit

which in retrospect was just so bad but that’s all I knew.

That’s all I had the financial resources for

and I showed up in the interview room

with all the people dressed in brilliant business clothes

and everybody had a sartorial seizure

because they couldn’t believe

that somebody could walk in dressed the way I did

and I conducted myself

with great confidence in the interview.

The first interview I was in

and I was sure I wouldn’t get the job.

I came out crying and I spoke to the development office

and I said, “Why is everybody laughing at me?”

She said, “Have you looked yourself in the mirror?

“It’s quite a sight.”

I said, “Well, this is all I have.

“This is all the money I had,

“nobody taught me how to buy clothes.”

Because those days there was no support system

for international students and she said to me, she said,

“Look, what would you wear in India

“if you were going to an interview?”

I said, “I’d wear a sari and I have a whole bunch of saris.”

She said, “You know go ahead and wear the sari

“to your next interview

“and if they can’t hire you for who you are,

“then it’s their loss.”

So the next day I had an interview with Booz Allen Hamilton,

I wore a sari and the funny part is I got the job.

The first job I interviewed for

with those god-awful clothes, I got that job.

And I got the consulting job too.

So you know this again showed

I had come to a new environment

of meritocracy if you want to call it that.

So when I was doing my summer job in good ol’ Chicago,

I had no money to buy clothes.

Because you have to get a paycheck to buy clothes.

And I still didn’t know how to go shopping for clothes.

So I wore saris through the entire summer job

and I actually declined to go visit the client

because I said the client was in Indianapolis

and I didn’t want to create any jarring moment

where they focused on this exotic being

walking in with a sari.

So I chose to do all the work from the office

and let the rest of the team go off and meet the client

and I think the key thing Samir is,

I was drawing attention to the work I was doing

rather than how I was dressed and where I came from

or what I looked like or how I sounded.

I said those are all immaterial, I can change those things.

Let’s just focus on the work

and as long as I do a good job on the core assignment,

forget everything else.

And I must give credit to Booz Allen

because that’s the way they treated me.

I was the only person in, as they put it, costume

in the entire Chicago office and not once

did one person ask me any uncomfortable questions

or make me feel bad.

They really, truly were inclusive

and included me in every meeting in the office

and treated me like one of their own.

• So on the topic of inclusiveness which is a big one

and I think our students are feeling the weight

and the heaviness of needing really to,

to become leaders of inclusive environments

which is not straightforward.

It’s a very complex undertaking.

What advice do you have for business leaders

in terms of creating inclusive environments

where all people feel that they have a seat at the table?

• No I think you’ve gotta look at this whole issue

as a go for talent rather than saying,

“I’m trying to hire for quotas

“and I’m trying to hire just to be socially responsible.”

I mean we all want to go for talent

and if you’re looking for the best and brightest,

the only request I have is think like an economist

and cast your net wide

to draw from the entire talent pool and don’t start off

by saying, “I don’t want women.

“I didn’t want people of color.

“I’m just going to recruit from this group of people.”

Don’t say that.

Say I’m gonna draw from the entire pool

and I honestly believe that if you approach hiring

on a blind basis in terms of blindness to backgrounds.

Or ethnicities or looks or whatever,

you’ll end up with a very different workforce

than if you started off saying,

I don’t want group,

group that comes from this background or this gender

or this orientation.

I don’t know how we get there though, that’s my challenge.

I don’t know how we get people to really sort of put

a blindfold and interview people

but that’s the way we have to approach talent.

Especially at a point when we are so short of great talent

and women in particular are just killing it in schools

and colleges and universities and professional schools.

Getting all the top grades.

They’re hungry, they want economic freedom,

they want the power of the purse.

Why not let them soar

and why not draw from the whole population?

I just think the whole mindset has to change.

And I think we all have to accept

that having people who look like you and think like you

and talk like you around the table

may lead to easier decision making

but not necessarily rich decision making

and I think we have to focus on

what kind of voice around the table leads

to a rich decision outcome?

And I think that’s diverse voices.

Research has showed that.

• Great, thank you.

So now jumping ahead a little bit further

to the time when you were CEO at PepsiCo.

Among the most consequential sets of decisions you made

had to do with mergers and acquisitions

and the integration of acquired companies.

So Tropicana for example, Quaker Oats.

And as you thought about those processes,

I’m curious if you could say a little bit more

about what role culture played in your assessment

of a target organization

and then how you thought about

and what lessons you learned about cultural integration

post-merger?

• Well that’s an interesting question.

Let me start with Tropicana

which we bought way back in 1997 or 1998.

PepsiCo was what they call a fun for you company

and as we launched diet products,

we’re a little bit of a better for you company

but at that point we had nothing

that fell into the area of good for you.

Anything with positive nutrition.

So Tropicana was our first foray into good for you.

And the biggest fear we had was

we would make the good for you a fun for you product

and I’m gonna talk about the mistakes we made.

So when we bought Tropicana

which was based in Bradenton, Florida.

The first thing that Roger Enrico said is,

“Nobody from Frito-Lay or Pepsi should go visit Tropicana

“because you will destroy their culture.”

So he was very judicious

as who was allowed to go to Bradenton and visit them

and talk to them and give them ideas

because if you start to deploy the fun for you culture,

pretty soon it’s buy one get one free.

It’s changing the packaging

to be more fun for you kind of packaging.

Now let me tell you the bad part of the story

and then what we had to do to reverse it.

For the first two or three years,

we managed to keep it inside

and not allow people to tinker with it.

A couple of years after the acquisition,

in the context of people movement,

we moved some people from Frito-Lay to Tropicana.

Overnight we went to dropping prices,

buy one get one free.

A lot of trade spending.

I mean literally,

it’s remarkable how a strong culture can go in and destroy.

Well I shouldn’t say destroy.

Radically change another culture of a smaller company

which had years of a good for you culture.

First thing they did.

Second thing is when you let the Pepsi guys go in,

they look to that Tropicana brand and say,

“Wow, if you could only launch

“a Tropicana soda it would be awesome.”

And they launched a Tropicana soda and guess what?

That business became several hundred million dollars.

Now all of a sudden,

Tropicana was in the fun for you and good for you space.

And no brand can live in two diametrically opposite spaces

as Tropicana existed.

In fact it confused the consumer.

So one of the things I had to do when I became CEO

was shut down the Tropicana soda business

and take Tropicana back to its good for you credentials.

So I’ll say to you,

it’s not just what you do to an acquired company

right after an acquisition.

It’s what you do to nurture it and sustain it

and enhance it over time.

There’s a reason you bought the company

as opposed to starting it on your own.

So you’ve got to be very cognizant

of what you paid the acquisition premium for

and how you amortize the premium

and what part culture plays in that premium amortization.

• Thanks, that’s super interesting backstory.

A major theme in your book is

the role organizations can and should play

in supporting working parents.

Right, something that you know personally.

And so a question is,

what would you have leaders do

to foster this support within their organizations?

• We’ll rewind a bit and then hit play.

I just look at corporate pyramids okay?

And I look at how steep they are.

I mean that’s the reality.

Anybody who thinks it’s a cylinder is wrong.

It’s a very steep pyramid.

If I look at PepsiCo, at the entry level,

there’s about 15,000 managers.

Entry level managers.

And by the time you get to one level below the CEO,

there’s about 15 or 16 people.

One person becomes the CEO.

So think of how the pyramid narrows

and in every stage in the process,

you’ve got to outdo people to last right?

The world is changing.

You’ve gotta be a lifelong student

and while being a lifelong student within the job,

you have to outperform the other people

who are all trying to move up the pyramid and last

and get to the top.

Now between the second and third layer is the prime age

where people have to really show their mettle.

But it’s also the age at which people

who want to have families will often have kids.

So I often say the biological clock

and the career clock is in conflict with each other.

Especially for women.

So what happens is we have the biggest attrition

in the second or third layers of the company.

Which is a tragedy because we bring in

such outstanding women but lose them

because they have to choose between career and family,

is a problem.

You don’t parachute in women CEOs.

You have to grow them.

Which means you’ve got to build that pipeline

and right now the pipeline is broken.

So the big aha for me was when people said,

“Why didn’t you replace yourself with a woman CEO?”

I have two problems.

One is I had brought up women CEO, built the pipeline.

They left early to take on the CEOship of smaller companies

which is much less of a challenge

than a big global company like PepsiCo.

The second is there weren’t enough of them.

Because they too had left the company.

Earlier to go have you know,

a family which I appreciate and I support

but here’s the problem.

We say family is female.

So a female always leaves to go have a family.

First problem.

Problem number two is we never have good return ramps

to bring women back if they took time off to have kids.

We have on ramps and we have off ramps,

the return ramp is not well-developed.

The third problem we have is we somehow think

that you have to separate family and work

and there’s no way to integrate the two.

I beg to differ.

I actually think if you provide support strategies

for young family builders, so they can keep their job,

their paid jobs while caring for their families,

you can actually deploy all the extraordinary talent

in the growth of the GDP.

So what do we need to do?

Paid leave is something, it’s a human issue.

It’s not a political issue.

I don’t know why it’s being tossed around

like a political issue.

It’s a human issue.

We need children, we need families.

If we don’t have children, we won’t have population growth,

we won’t be able to support the aging.

So we ought to look at having children

as a national imperative.

Not as a discretional activity.

So paid leave is essential.

Flexible work hours.

The great thing about COVID

is it taught us what flexibility is.

But let’s not jump to say

you can have infinite flexibility

or everybody comes home.

We don’t know yet what the resting point

for the future of work is.

We have to experiment and figure out

what the right resting point is

and of course the third thing that I am just shocked

we don’t have enough of is quality,

affordable, available childcare

and if we don’t really think about that

in a more systematic way as a country,

I don’t know how we’re going to enable young family builders

to have a family and engage in paid work.

Now I’ll be honest with you.

Some people would say families should figure out themselves

what childcare they want.

They can’t,

whether it’s the executive level or the front lines.

You know, even the executive levels,

we have a choice to be flexible.

You take a factory worker or a nurse or a senior caregiver,

they don’t have any flexibility.

They have to show up at work.

If they have kids,

how are they supposed to take care of those kids

on a salary that is just below living wage?

When the childcare costs as much as 70%

of your salary sometimes.

You know, it doesn’t work.

So I think this is a moment of reckoning.

Everybody knows we have a problem.

But nobody is willing to act on it

because it keeps getting pushed down the priority list

but I think as a country, we have to think through,

between companies.

Small and medium size enterprises, between government,

between NGOs, every entity.

We have to think about how to make childcare

a national priority

if we want to fill the 11 million jobs

that are open right now.

And more importantly, as the population ages,

if we want a workforce to take care of the aging,

we better start worrying about childcare

for women in particular who do most of those jobs.

• Thank you.

So if one reads your book,

one will see there are several themes

that you are really passionate about.

We’ve talked about working parents.

There’s also healthier eating.

The climate and then the environment

and in each Of these cases,

you as a leader had some personal passions

but there were also external forces operating on PepsiCo

and I wonder if you could talk a little bit

about how these two forces,

the internal and the external came together

in helping you choose when and how

to tackle these issues in the context of Pepsi.

• Well you know, PepsiCo has certainly undertook

a fairly significant transformation

in the performance of purpose.

But the first thing I’d say to you is

transforming a company when there is a problem

is much easier because the burning platform

gives you a reason to transform,

than transforming a successful company.

And my observation is that

transforming a company in trouble,

you can articulate the case inside out.

Transforming a company that’s successful,

you have to make the case outside in, or future back.

So in our case,

I looked at, I had teams looking at the big mega trends

that are going to impact

the consumer products industries,

food and beverage and PepsiCo in particular

and based on 10 mega trends I thought

were going to be significant we went about saying

how we were going to transform the company.

The were three mega trends that were significant,

that were gonna take time, money, capabilities

and risks to make happen.

The first was transforming the portfolio

to have an equal mix of fun for you

as is better for you and good for you.

So really transforming a portfolio that was iconic

but was perhaps a step behind the times

because a consumer was shifting to health and wellness.

That was a risky move.

Required new R and D because we were tinkering with formulae

but I must say that was perhaps the most important part

of the transformation we had to get done.

The second was the environmental issues.

You know, our products are sold in foil bags.

They’re sold in one way plastic.

You know one way plastic was the dominant lay filter

for a company like PepsiCo

and most of the beverage companies.

Yet, there were real concerns about landfills,

about plastics washing up on shores, littering,

the sides of roads

and we had to commit to reducing plastic,

reducing water use in our plants.

We had many, many plants in water distressed areas.

How can we justify using two and a half of liters of water

per liter of Pepsi?

It just doesn’t work.

So we had to reduce the water usage

and with as many trucks we had on the road,

we have to reduce our greenhouse gas emissions.

Interestingly, putting in solar fields

and going to renewables for our plants, piece of cake.

Going to hybrid trucks, easy.

For Pepsi it’s harder because the package is heavier,

so you can’t go to hybrids.

But Frito-Lay, overnight they went to hybrid trucks.

Plastics, we went on a longterm plan

to reduce plastics consumption in our facilities,

in our packaging.

And water usage,

you know we put all the scientists to work

on waterless washing, using light and things like that.

All kinds of interesting technologies came about.

The third big plank that was a big work in process

was people.

You know, people didn’t for consumer products.

They wanted to work for tech, financial services.

So we had to attract them into PepsiCo

and what we did when we talked about performance

and purpose and talent sustainability

being a part of purpose was,

it gave people a reason to come to Pepsi

because we said to them,

“We’re gonna create an environment

“where you can bring your whole self to work.”

The cost of hiring pales in comparison

with the cost of losing somebody after you’ve trained them.

So we wanted to retain people in our industry,

in our company and we wanted to get the best and brightest.

And we wanted to allow them to have a family,

still work in PepsiCo.

So we set up onsite and near site childcare.

We gave people flexible hours.

You know we did everything possible to make people feel like

they could have a family.

They could have a life and a livelihood,

that’s what I would say.

And that worked well.

You know, all the feedback one got was that

people loved the onsite and near site childcare.

They loved the flexibility we gave them.

To a certain extent, not infinite flexibility.

We still needed them in the office

so that we could get to know them,

build a culture, have innovation thrive

but on the margins we gave them enough flexibility

to make home life happen and had I stayed around longer,

I might have tried putting it in all our factories

but I was exhausted.

• So I wanted to stay on the performance with purpose focus.

We at the Haas School

developed four defining leadership principles that,

that we really focus on and adhere to.

They’re actually etched in our building

if we can ever welcome you to the Haas School.

Confidence without attitude, students always,

beyond yourself and.

(audience laughs)

Did they say it?

What did I leave out?

• Question the status quo. - Question the status quo.

• Question the status quo. - Okay, times.

• I just was testing, making sure.

• [Samir] Jenny did all of them by the way.

• All of our students know about these and there’s a,

we took a stand and it actually differentiated us

among the top 10 business schools

and our students who are there now

had to write part of their admissions application

about the way that they connected with

our defining leader principles

and we have about 180 of our processes

connected to the defining leader principles and so forth.

So there is a you know, a brand component to it.

An external reputation component

and also an internal culture component.

I guess I want to understand how performance with purpose

played that kind of role at Pepsi.

Can you talk a little bit about your motivation

for creating this orientation,

how the organizational culture fit with this redirection

of Pepsi’s strategy

and really how you led through the establishment

of performance with purpose

and kind of embedded it into the organization.

• Performance with purpose did not fit with PepsiCo culture

because it was a radical transformation

in so many dimensions

and I was not sure if it was going to succeed

but I knew that it was the right thing to do.

And I think, as I looked at the mega trends

and looked at the whole issue.

Future back.

For the company to remain successful

for decades into the future I knew we had to change.

There was no, no doubt in my mind

and I made the case to the board

in a well thought through document

and they bought into it and they said,

“Absolutely, this is the way you’ve got to go.

“We are behind you.”

Then I had to sell it inside the company.

Typically when you sell these big transformation programs

that are longterm in nature,

that could go through some bumps along the way,

you’ve got to appeal to people’s heart

as much as to their heads.

So I framed the whole agenda,

not just as you know, mega trends and future back.

I related to every one of them.

I would say to them,

“Look, look at the products you consume.

“Have you shifted your consumption to health and wellness?

“What kind of products do you feed your kids?

“Would you like a landfill today

“to be the foundation of your home tomorrow?”

‘Cause that’s the way you’ve got to think about it.

So when you start to make it very personal to people,

all of a sudden they go,

“You know, I want to make the world a better place

“for my children and children’s children

“You’re right, we have to make changes.”

This is the only way to go.

So even our skeptical divisions got on the bandwagon

and said absolutely, fully buy into it.

So when you’re articulating the rationale

for a change program,

you can’t just make a presentation

and just deliver it deadpan.

You’ve got to make your missionary zeal

come out of your body and you almost have to go there

and make such a passionate case for it

and you might just have one or two chances, not too many.

And if you can’t story tell,

if you can’t really get to people’s innermost feelings,

you’ll never be able to get them to change.

In the first, I would say four to five years

of the transformation.

Inside the company I managed to convert most people.

Not just me, I had a whole bunch of opinion leaders

who were, my senior management.

Walman and Adam did it.

Our investors were more skeptical

and this is where you know,

it confused the hell out of me.

We teach corporate finance in business schools.

We teach discounted cash flow.

DCF has three parts.

Short term cash flow, longterm cash flow and terminal value.

Yet we only focus on the first three years of cash flow.

Investors only care about the first three quarters.

What has happened?

It’s the same people who come out of business schools

and go on to be in investing jobs.

Why have they forgotten the longterm cashflow

and the terminal value?

Which unfortunately has a disproportionate impact

on the valuation of a company

and if you deliver extraordinary short term value

without investing for the longterm,

there’s gonna be a boom splat.

Investors like boom splats

because they sell out before a splat

and they buy before the boom and ride the alpha.

That is a wrong way to create shareholder value.

So we have to drill that into all new students.

So I come back and I say

if you’re gonna manage all three pieces

of the discounted cashflow which we all celebrate,

how do you ensure that the company’s cash flows

stay robust for a long time.

It’s by judiciously balancing level and duration over times.

So you’re reinvesting in the company

and you’re constantly renewing it.

I would love Samir for you to teach a course

on the failed corporations and why did they fail?

That’s not a course that’s taught anywhere that I know.

One semester, take every failed corporation

in the last 30 years and ask the question,

“What did they do wrong?”

Study it and it’d give you volumes

about how they knew a technology was going to upend them.

Yet they didn’t invest

because they had an old model they had to protect.

The toughest thing to do, old model you have to protect.

As they would say, if it ain’t broke, don’t fix it.

That’s what they kept telling me.

So the first three or four,

maybe five years of my CEOship were very painful.

Because people didn’t understand

why I had to make the change.

Even though I articulated, I’m talking about outsiders.

But they did not want to go through this transition.

Give me, give me, give me everything you can today.

That was the sentiment.

In the second five years they said,

“My God, she was so prescient.

“She did everything right.

“How come we didn’t see these trends?”

You did.

Except you practiced them,

you just didn’t want companies to practice them.

And then the last two years, they handed me all the awards

but I wish they supported me in the first four or five years

because those were the toughest years.

You know, when you’re a new CEO

and you’re trying to make change

and that was a time that no, I had enough criticism.

That’s okay.

If you want to make major change happen,

you’ve gotta be resilient, you’ve gotta be courageous,

you’ve gotta be able to face the criticism.

And our board faced it, I faced it

but we stayed resilient and together.

• So we have a great idea for a new elective course

on failed corporations.

• Can I just add,

also you might want to add into that course

exotic financial instruments doomed to die.

• [Samir] I think that might merit its own elective.

• Well that is true too, absolutely.

• So Indra, just sticking

with the performance with a purpose,

I think we can all back at the changes you made

and acknowledge that you’ve moved Pepsi

in a positive direction.

Both in terms of society, health and so on

and yet you could imagine a skeptic or a critic saying,

“But did Pepsi go far enough?”

We still have an obesity epidemic in this country.

We still have a climate change crisis and as you look back,

do you think that you pushed as far

and as hard as you could have or do you think that maybe

there were some opportunities left on the table still.

• PepsiCo cannot be the only company doing it.

The industry has to change

because this is an industry that has been pushing for years

to process food more and more and more for several reasons.

One, it improves shelf life.

It reduces costs

and by adding more fat, sugar and salt

you can add more flavor.

That’s been the formuLa forever for industry.

So you know,

here I am coming to this industry

and people are already calling me Mother Theresa

and I go in front of the manufacturers

and retailer organization

and I make this impassioned plea to them saying,

“We have to change as an industry.

“What if we committed to reducing the calories

“that we put out to the consumer without sacrificing taste?”

So after a lot of tugging and pulling,

the industry comes together.

Manufacturers and retailers.

We agree to take out one and a half trillion calories

from the U.S. diet in five years.

And in three years we take out

four and a half trillion calories.

In five years we take out six trillion calories.

Measured by the Robert Wood Johnson Foundation

which was our biggest critic.

So as an industry we did the right thing right?

But as PepsiCo,

I would have loved to reduce the sugar even more

but at the end of the day I can’t tell consumers

how to eat and drink.

What you can do is nudge them to the right behaviors

and you know we had Cass Sunstein come in

who wrote the book Nudge

which I will honestly urge you all to read.

We had Cass Sunstein come and tell us

how to nudge consumers to better choices.

I mean I’ll give you one experiment we did.

In a city with a bunch of stores

where there was a very high obesity level,

this is PepsiCo doing it on its own

even though we were a fraction of what people are consuming.

We decided to price up the regular Pepsi by 20%.

So the Diet Pepsi had a much lower value and we thought,

“Hey, pricing is a nudge.”

So people look at this and go,

“Oh, I’ll buy the cheaper product.”

People would go searching in the store

for the regular Pepsi at the higher price

and before they used to be line priced.

You see, it’s nothing to do with price.

We almost have to educate people

how to eat and drink healthy

and when they’ve been in food deserts

for as long as they have,

all of a sudden overnight

you can’t just turn on this lever called pricing and say,

“Here’s a new choice for you, low price.”

Can’t do it.

So it’s a comprehensive change that has to be done.

Fix the food deserts.

Teach people how to cook and eat.

Improve the quality of school lunches.

So I would say PepsiCo could’ve gone further and we did.

The amount of salt we reduced in our salty snacks

was astounding but if I told you, you’d say,

“Oh yeah now I see why it tastes different.”

Although it doesn’t.

We reduced sugar in all of our cold products

but the real thing is to make a difference in society

companies have to come together like we did

but more importantly,

I think it’s critically important that we educate consumers

about eating right, living right.

The pandemic should’ve been a wake up call.

• Interesting, thank you for that.

We have one final question

and then we’re going to hand it over to two students

who are going to ask questions.

So our final question is kind of a catchall.

You’ve already talked about some of these

but given your success in so many different industries,

in so many different roles.

Is there anything else you want to say

about your biggest lesson in building

and sustaining a strong, effective culture.

This is our focus in the Berkeley Culture Initiative.

And any additional thoughts

that you’d like to leave our students with.

• I think the single biggest challenge for any leader

is developing pipeline of leaders.

And that’s one thing people don’t do very well.

I think you know, we don’t take

the performance appraisal process seriously enough

and we do a perfunctory job giving feedback

as opposed to a sincere, deep feedback process

where we write down what they do well,

what could they do better?

What do they have to demonstrate next year?

How are you going to help them get to this next stage?

Because a leader’s legacy might be the business

or the financial performance they leave behind

but a much more lasting legacy

is the pipeline of leaders you’ve left behind

and I think that that’s not getting the attention

it deserves unless you have a failed CEO succession.

That’s where it gets the time and attention.

So one of the things I would plead with boards of directors,

I plead with senior executives is

really focus on pipeline building

and it doesn’t happen

the last two or three years at succession,

when succession starts.

You’ve gotta build a pipeline for 25 years and say

“Here’s a group of people who could be CEO in 25 years.”

Watch them, nurture them, develop them,

put them through assignments and then take them out

when you don’t think they’ll make it

and put others in into the pipeline.

It’s a funnel that has to be managed for multiple years

and handed off from leader to leader

and if that is not embedded in the DNA of a company,

I think CEOs are being let off the hook.

• Great, so let me go ahead and invite Conso and Drew,

our two student speakers to come up with their questions

and we’ll have some time after their questions

for audience Q and A.

So if you have a question for Indra you’d like to ask,

please queue up behind the microphone at the back

and we’ll turn to you next.

Conso.

• Should I look here?

Or should I look up there?

• [Samir] You can look out to the audience.

Yeah. - Okay, cool.

Awesome, so first I just wanna say

thank you so much for coming to speak with us.

I really enjoyed it.

My mother went to medical school in Uganda in the 70s

and one thing she reflects on is how women

in her class on average outperformed the men

and therefore a steerer too

but then as both began to get married, that flipped

and something you talk about is the importance of you know,

helping women in lower levels of management

move up the pyramid to senior management

rather than falling off.

So what is one thing or two,

that you would like to tell the women in this room

and listening in

as we embark on our own managerial pursuits,

especially in the context of balancing family and career?

• The first thing I’ll say to all the women in the room

and all the young family builders, not just women

is that family, having a family is a wonderful thing.

Teaches you about love in a profound way but it is a tether.

It’s a tether for life.

It’s a lovely tether but it’s a tether.

So you’ve got to go into it

knowing that that’s what families are for.

Great support mechanism but it’s a tether.

Do not say that,

“I wish I could’ve had a family

“but I really wanted my career.”

I think companies you know,

government organizations, NGOs,

everybody has a responsibility

to provide a support system for you.

You do not have to make that choice

because we need you in the workforce.

We have a huge gap in available people and talent

to you know, power the economy.

So we need all of you in the workforce.

So no longer think of yourselves

as a discretionary pair of hands,

you are a necessary pair of hands.

And therefore you know, demand, dialogue

with all the people that need to be talked to

about providing the support structure.

Whether it’s childcare,

whether it’s flexible work hours, whether it’s paid leave.

I think it’s incumbent on leadership

to put these mechanisms in place

because we need all of you in the workforce.

I sincerely believe it.

Now if you don’t want to be in the paid workforce

and you choose to be a stay at home mother,

that’s also okay, that’s your choice.

But don’t do it because you don’t have a choice.

• [Samir] Thank you, Drew.

• Hi Indra.

• Hello. - One thing that I find

extremely problematic is that most of the burden

to create change and dismantle the unfair systems

that we have in place in our society

fall largely on women and people of color.

So I’m interested in your perspective

on how we can get buy-in from those in power

to uplift and sometimes even relinquish their own power

to make way for those who have historically been excluded.

• Tough one.

You know, you have to be very secure in senior levels

to allow people to push you off your perch.

And you say,

“Push me off my perch because it’s the right thing

“for the company or it’s gonna make the company

“a better place.”

I will tell you one thing, how can we make change?

I think women can be more united in working together

to make change happen.

I think in many ways,

women tend to be competitive rather than united

and I’d say that for different ethnic groups too.

If everybody spoke with a voice,

at least the majority spoke with a voice

and advocated for change,

I think we’d see change faster

than having splintered points of view.

Then people exploit those differences.

And so I don’t disagree with you that

there are enough barriers rather than tailwinds

for people to move ahead.

But the only way to address them is the power of unity

rather than divisiveness.

• Thank you. - Thank you.

So let’s go ahead and take some questions from the audience.

If you could just tell your name

and then go ahead and ask your question.

• Hi my name is Rajiv Mashar and I’m currently a senior

studying computer science and business here at Cal

and my question for you is you know,

consumers often don’t really know what they’re looking for

or they may have unconscious realization of needs

and may not actually be able to you know,

correctly express them.

So how do you listen to consumers

and to what extent do you even listen to their needs?

• Oh that’s a fascinating question.

You know, I spent years at Motorola

and when I was at Motorola in 1986 to 90,

the cellphone had just been launched right?

And the cellphone that we had,

the DynaTAC was this massive device

that weighed about a ton

and it was just like a spacecraft telephone.

And all of a sudden one day, one of the marketing guys,

brilliant marketing person in Motorola

comes to see us with a flip phone.

This tiny little Razr, you know the flip phone?

Compact and all of us looked at it and said,

“Oh come on, the consumer will reject it.”

Because they’re used to carrying out this DynaTAC.

They like the weight of the phone.

They like the untethered device.

This guy kept saying,

“No, as long as you can get the semiconductor technology

“and battery technology to progress,

“this is the phone of the future.”

And this gets to your point.

How do you know what the consumer needs are

and how do you develop a product?

My general observation is the following.

When it’s technology-driven.

As long as you know there is a way

to make consumers’ life easier, you lead the consumer.

If it is not technology-driven, but more style-driven,

then the consumer leads you.

So you almost have to think about what you’re doing.

Again, you’re not gonna offer a product that’s flaky

but as long as you think

it can make a consumer’s life better,

go off and take a chance with the product.

• [Rajiv] Thank you.

• Next question.

• Hi, this is Ushing.

I’m currently a full-time MBA student

for a Haas Class of 2022.

And it’s a very humbling experience today.

I actually wrote about your achievement

in my application essays to Haas.

So. - Okay, thank you.

• So my question is, in your.

• [Indra] And you still got in, okay.

(audience laughs)

Okay.

• So in your sharing you mentioned a lot

about the power of storytelling and I could still remember,

in one of your interview was about the CSR responsibility

and water usage of PepsiCo.

You weave in the story when you grew up in India.

There was extreme water supplies

and that story continued to stalk in my head right now.

So my question is how do you actually cultivate

the capability for storytelling

and then make it impactful enough

to nudge people to transform their actions?

• All right, that’s a great question.

Stories that come from the heart,

that come from lived experiences, that are authentic

are real stories.

If you pluck your story from a book

or take somebody else’s story and just say it,

it’s contrived.

So you have to be very careful how you choose a story.

You have to be very careful how you choose humor

because sometimes a joke falls flat

because you haven’t internalized it and contextualized it.

So what you need to do is journalize your stories.

You know, make a journal of interesting stories

that you know, you have from your life

from which you can derive a lesson just keep it.

You’ll never know when you can use it okay?

And just collect a history of stories

and don’t borrow stories from others

unless you’re using a story somebody told you

to illustrate a point.

Always talk from your own experience and you know,

I remember when we had our shareholders meeting.

These water activists would show up.

From Boston or outside of Boston.

They’d come with hundreds of letters

to say PepsiCo is using too much water,

you’ve got to change.

And they would demand time in the shareholders’ meeting

to make a point.

And I would look at all of them and say,

“Have any of you lived in a water distressed area?”

They’ll say, “No.”

I said, “Let me give you my experience.

“What I lived through my entire childhood.

“Who do you think cares more about water, you or me?

“I live it, I feel it every day

“when we use too much water.”

So trust me,

I’m gonna reduce this water footprint enormously.

So you’ve got to have that level of conviction

coming out of your story.

• [Ushing] Thank you.

• Thank you.

• Hi, thank you so much for speaking with us today.

My name is Suyesh, I’m a fourth-year undergrad.

I’m studying industrial engineering and business

at UC Berkeley.

So I know you’ve had a career that’s spanned

more than 40 years

and you’ve worked across companies like Motorola,

BCG, Johnson & Johnson and obviously PepsiCo.

I’m very curious to know a little bit more

about one piece of feedback

that you probably got in your early career

that has maybe shaped or even defined

the rest of your professional journey.

• You know one of the things I had to learn very quickly

is how to give feedback and for anything.

I remember when I was at Motorola,

we were in a meeting and a presentation was done

and everybody gave their feedback.

When it came to me I said,

“Oh that was a terrible strategy presentation

“because the strategy and the financials don’t link.

“So obviously this is a failed presentation.”

Or something like that.

And I was so proud of myself

because I made the point in an impactful way.

I got on the plane to go back home, the CEO said,

“Hey, come back to the back of the plane.

“I want to talk to you.”

So we went there and he said,

“You know what you did in the meeting?

“You took the student meeting

“and you destroyed it in the last five minutes.

“The way you gave the feedback.

“You threw a hand grenade in that whole meeting

“and those people are going to hate you for life.”

I said, “But that’s the fact right, what I said?

“The strategy and the financials didn’t relate.

“What’s the point?”

He said, “There’s nothing wrong with the content

“of what you said, it’s how you said it.”

Because I came from a cultural upbringing

where everybody said it like it was.

All right?

Now even right about the fact when we were kids,

we would put on plays for the parents,

halfway through the play they would walk out saying,

“Do better the next time.”

That’s what we’re used to.

We were never told we did a good job.

So you sit there and now the CEO is telling me,

“What I would have said is the following.

“I would’ve said, you know so and so,

“your strategy was very well thought through.

“And really it’s disruptive

“and this is the right way to think about the industry.

“But have we from corporate

“put too many constraints on you through the financials

“that makes you struggle to balance the strategy

“and the financials?

“Or you could’ve said,

“‘Look as a company you have to deliver these financials.

“‘What aspects of the strategy can we back off from

“‘and can we still accomplish the goal of gaining share?’”

So he said you’ve got to frame this in a more palatable way

as opposed to a dead cat between the eyes way.

Took me a long time to learn that skill,

I’ll be honest with you.

Culturally, I was not used to it but you know,

little nuggets like this here and there shaped me

to be a much better person.

• Thank you so much for that.

• You’re welcome. - Great.

So we’re almost out of time.

Let’s go ahead and hear the last two questions

and we’ll give Indra a chance to respond

to one or both of them.

Just tell us your names and your last two,

and your question please.

• Hi my name is Joseph

and I’m a cofounder of a company called Tame

which is a B2B marketplace for convenience store owners

to buy inventory and I actually have two questions.

One is how. - Can you ask one of them?

Right now, thanks. - Oh, okay.

Yeah, yeah, that’s all good.

How do we get large brands and companies to partner with us

when we’re not that big

and don’t have as much leverage on the customer side

which is the convenience store aspect of it?

And how do we get these companies

to kind of change their old ways

and work with a newer company essentially?

• [Samir] Great thank you.

And let’s hear the final, final question.

• Hi, so my name is Rajir Sharma.

I’m actually in

the Berkeley Masters of Financial Engineering Program.

The question that I. - Wow.

• That I wanted to ask was

that with a lot of young professionals

going into the industry,

a common trend that we’ve seen is that after pandemic,

a lot of people were actually like,

even after being offered a one-time bonus,

surplus salaries, they were not able to take it

just because there was no work life balance,

there was a lot of mental stress.

So I’d like to ask you,

what’s your code for a near perfect work life balance

or is it a myth?

• Oh so let me take the first question and then come to you.

You know, big brands,

by virtue of the fact that they’re big brands

believe they can do it all themselves

and we don’t really need to partner with anybody else

because partnering with other people is time consuming

and it takes away from our core job

of growing the big brand

and unless there is a clearly articulated need

to partner with somebody,

big brands don’t like to partner with anyone.

And big brands have extraordinary talent

behind the big brand

so that they can grow the business themselves.

So the small company has to articulate a reason

why the big brand has to partner with them

and it’s gotta be a compelling reason

and it’s a hard one to do.

So I hate to throw some cold water on you

but that’s the reality.

Now let me come to your second question.

I’d say that when I was you know,

coming up the corporate ladder, there was no technology.

The smartphone had not even been invented.

Internet was in its early stages.

There was no Zoom or Teams or any of these technologies.

So everything had to be done in person.

I had to travel around the world.

If my kids’ school called, I had to rush over.

So there was no work life balance.

It was always work life juggling.

You started the day with one set of priorities,

by midday it was a different set of priorities,

by the end of the day it was a completely different

set of priorities.

We were always hoping that the balls

that you were tossing in the air, they didn’t fall.

So it was a juggling act all the time

and you built a support structure around you

to pick up whatever you dropped.

Today with all these technologies,

there is hope that you can have work life balance.

You don’t have to travel as much.

You can come into the office

three or four times of the week,

three or four days of the week

and perhaps spend a day at home working from home

and still somehow manage to have a life.

So I actually believe because of technology,

we can go from work life juggling

to kind of sort of work life balancing.

And everybody’s getting more sensitized to this right now.

My only plea is,

as we have discussions about the future of work,

rather than just focusing on robotics and automation

and artificial intelligence, let’s put family

in the center of future of work discussions.

Why does the school start at eight and end at three

while offices start at nine and go to five?

Makes no sense.

You know let’s start to rethink every aspect

of life as we know it and think about

how to make family center to the future of work

as opposed to leaving it on the fringe

and I think if we did that sort of thinking,

it’ll make everybody’s life easier

and this discussion of overwhelming stress and you know,

all kinds of mental illnesses can actually be addressed

because we are creating a more holistic society

and in many ways,

putting the human back in humanity.

• Jenny, are you there?

• I am. - Did you want to conclude

the session?

• Oh okay, great, yes.

So thank you.

That was brilliant and full of insights.

Indra you’re just a treasure

and we’re so incredibly grateful

that you took the time to talk with us

and with our wonderful, amazing students.

So thank you on behalf of the School

and our student body for joining us today.

Can we have a round of applause?

(audience applauds)

Okay. - Thank you.

And to you, to Samir, to the Dean.

Thank you very much for having me

and keep the Haas flag flying high.

• We will. - it’s a good school.

• Thank you so much Indra. - And just a final note,

we have a number of partners

from our Berkeley Culture Initiative

joining us today virtually and I wanted to say to them

and to our students, the Berkeley Culture Initiative

will have its annual conference in January this year.

Hopefully live.

We hope some of you will be able to attend.

It’s a wonderful two-day event

with incredible companies in the mix

and sort of the cutting edge academic research

all blended together.

We’re also undertaking our first,

what we’re calling mega study

which is a study of organizational culture

and looking at the impact of culture

on bottom line financial performance.

We hope to be the foundational study in this domain.

So stay tuned for more on that.

Thank you everyone, thank you Indra.

Have a great day. - Thanks everyone.

• And we’ll see you soon. - Thanks.

Thank you very much. (audience applauds)