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Pepsi CEO: Break With the Past, and Don’t Play Too Nice

Source | StanFord Business : by Bill Snyder

Soft drinks and snack foods don’t get the best press these days, but that hasn’t slowed Indra Nooyi’s campaign to restructure PepsiCo, one of the world’s largest food and beverage companies. Since she became CEO in 2006, the company’s global revenue has increased from $40 billion in 2007 to more than $63 billion last year. Hallmarks of her management style include a tough-minded willingness to uproot a legacy culture and a laser-like focus on the customer experience. In Nooyi’s case, this included following trends in eating habits by offering more water and low-calorie drinks. “In many ways, you’ve got to make a break with the past. If you don’t, you’re spending more time appeasing the heritage employees” than making the necessary changes, Nooyi said during a recent discussion with Stanford Graduate School of Business students.

Nooyi disagrees with management theorists who advocate ignoring short-term results in favor of the long haul, and approvingly quotes advice given to her by Apple’s late CEO Steve Jobs: “Don’t be too nice.” Nooyi, named by Fortune in 2014 as one of the most powerful women in business, spoke at a View From The Top session this month, where she was interviewed by Walmart CEO Doug McMillon. Here are six key insights into management she shared during that conversation:

Break With the Past

Conventional business thinking suggests that leaders of a turnaround need to preserve the history and culture of the company. But Nooyi said it’s a maxim that’s often overused and she sometimes wonders if old culture “is a ballast.”

Looking back on PepsiCo’s turnaround, Nooyi said she may have been a little too respectful of her company’s past. Rather than appeasing conservative, long-tenured employees, the CEO may need to say, “Guys, we don’t have the time. We have to make the change. And guess what? It’s going to be painful,” she said.

“I think if I had to do it all over again, I might have hastened the pace of change even more,” she added.

Don’t Be Too Nice

Steve Jobs, a famously short-tempered executive, told Nooyi that losing one’s temper isn’t always wrong. “Don’t be too nice,” she recalled his advice to her. “When you really don’t get what you want and you really believe that’s the right thing for the company, it’s OK to throw a temper tantrum. Throw things around. People will talk about it, and they’ll know it’s important for you.” Nooyi called that guidance “a valuable lesson.”

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