Talk
Indra Nooyi, Ex-C.E.O. of Pepsi, Thinks Big Business Can Do Better
Former Pepsi C.E.O. Indra Nooyi on the Truth of Corporate Responsibility
It’s probably fair to say that highly compensated C.E.O.s of Fortune 500 companies aren’t figures for whom a great many people are inclined to feel much sympathy. But whatever our feelings, we can safely admit that their jobs have only become more complicated in recent years as issues of economic and gender inequality, ecological impact and the corporate response to divisive politics have become increasingly central and hot-button. The former PepsiCo C.E.O. Indra Nooyi, who is 65 and who held her position for 12 years before stepping down in 2018, just published a memoir, “My Life in Full,” largely about her efforts to try to address those changes. “C.E.O.s have it difficult these days,” said Nooyi, who is on the board at Amazon and who during her time at Pepsi pushed to reorient the food-and-beverage giant toward a version of sustainability. “There are many issues that come up,” she said. Then she grinned. “You know, I’m glad I’m not a C.E.O. today. I had my set of challenges in my time.”
In the book you talk about a meeting you had with Steve Jobs, at which he suggested that Pepsi cut half the sugar out of its products. That was unfeasible for a variety of reasons, but his idea did make me wonder if you believe there is a right or wrong when it comes to how companies function in the world, or is it all a matter of degree? I think it’s having an idea of where you want to go to and then showing real dedication to getting there. Sometimes you say, “Too much plastic is bad for the oceans, it’s bad for landfills, we have to get more recycling.” Some people talk about all that but then don’t do anything. There are others that say, “This is what needs to be done, this is what we’re going to do, this is the investment, this is the timeline.” Those people have good intent. So it’s not a question of right or wrong. It’s: Are you doing the right things to get to the right goal? That’s where people fall down.
There are reasons a company like Pepsi has been a positive force in the world — chiefly economic ones but also ones having to do with personal pleasure. But inarguably some of those beneficial aspects have come at a cost to both human and environmental health. How did you think about those ethical trade-offs? The PepsiCo that I inherited — it’s a great company that was purpose-built for one time. Society was different, tastes were different, lifestyles were different. Everything changed. We had to worry a lot more about plastic and water use and carbon footprint because of climate change. We had to worry about what kind of products to put in the marketplace. There are companies that ignore all that and say this is only about consumer choice. I’m also for consumer choice, but I wanted to make the better choice an easier choice. So rather than put regular Pepsi at eye level in the retail store, how about putting Diet Pepsi, Pepsi Max, Pepsi Zero Sugar at eye level? This is not about taking choice away. This is about nudging consumers to the healthier choice because societies are changing. The biggest issue is when you use the words “socially responsible.” It sounds like you’re giving away money that shareholders should be getting. It’s not about giving away money we’ve made. It’s about how we make money a different way.
How would you characterize that disposition of a socially responsible C.E.O.? What are the attributes? I’ve thought about that quite a bit. You can start off by saying, “I have to maximize my profits in the short term at all costs; what’s the highest earnings per share I can deliver every quarter going forward?” There are shareholders that love that approach. There’s another approach that says, “I want to deliver great returns but I want to make sure that I’m not creating problems downstream for the company because of the business model that I’ve developed to deliver those returns or the cost I’m passing onto society.” That requires a unique ability to think carefully about what’s changing in society. How do you want to be viewed as a good company commercially and ethically? The ultimate goal is to be a positive force in society.
When you meet with business leaders today, is there anything you’re hearing that makes you think, gosh, these people are living in the past? The one thing that I wish was more front and center is how we support young-family workers and enable young women to create families and engage in their work.
So let’s say you were running a company in Texas, and that company believed in the importance of supporting young families. What would the company’s thinking be around the state’s abortion laws? I’m focused on one simple thing: How do you make sure families are successful, they’re nurtured, they’re developed and you have the resources to take care of the families? It’s a very narrow agenda that I’m focused on. I’m more worried about, once you decide to have a family, how do we make sure that having a family doesn’t cause stress but actually gives you more strength? How do we make sure there’s no fragility in the family? You know, my father had an accident. We could have been out in the street. Thank God, my father recovered and everything was fine, but lots of families are fragile. So I worry more about support systems to enable families to be successful and to allow these kids to grow and become productive citizens of the country. I have not engaged on any of the other issues around that.
But surely the issues you just described are connected to the ability to have a family when you want to have a family? You know, that’s a subject that I’ve stayed out of, David. We want children to be productive. We want children to be happy. We want families to be thriving. And we need a birthrate that’s consistent with the replacement rate so that our country can remain vibrant going forward. I’m singularly focused on that issue.
More generally, when it comes to corporate responses to political changes, what factors would you be looking at to help you determine the right response for your company? When I was C.E.O. and had to deal with these issues, I always went back to our company’s code of conduct and value statement — to say, Should I or the company weigh in on a political issue? As a consumer company I always knew that one-third of the people would agree with my weighing in, one-third would not and one-third would be silent. I could easily say two-thirds were supporting me or two-thirds were against me. It was kind of a no-win situation. So you always needed a true north before you waded in: our value statement.
Also in your book, you write about money when things were tight for you. You don’t write about money when, presumably, things were less tight. How did your attitude about money change the further along you went in your career, once you became very handsomely compensated? I never asked my board to give me more money. Some of my reports would say to me, “Your problem is you’re not asking for more money because our compensation is pegged to yours and you’re not asking for more.” I said: “I will never ask my board for more money. Whatever they give me is much more than I would have ever had.” In fact, one year the board gave me a raise and I said, “I don’t want it.” They said, “Why not?” It was right after a financial crisis, and I said, “I don’t want the raise.” “They’re going to wonder whether your performance was bad.” I said, “Say you gave me the raise and I turned it down.” And they did. We have lived in the same house for over 30 years. We didn’t move into a bigger house. All we did was buy the properties next door to ours and take down the house so that nobody would build a gigantic mansion. We landscaped it and we allow people to wander around it. But we grew up without much money, and that philosophy has never left us. One place that I did spend some money was in buying some decent clothes, because people said, “Come on, wear some clothes that fit as opposed to two sizes too big.” But we’ve given away a lot. All the educational institutions that touched us, our kids — we’ve endowed a chair in public health at Yale. We say, “We are blessed with money, so let’s give it away.”
Do you think there is anything gendered to your decision to turn down a raise? I think it’s me, just me. I’ve never, ever, ever asked for a raise.
Why? I don’t know. I find it cringeworthy. I cannot imagine working for somebody and saying my pay is not enough. My husband and I talk about it all the time. He goes, “This is more money than we ever thought we would make, so forget it.” He’s that way too.
Can you tell me a good story that didn’t fit into the framework of the book? I’ll tell you one: the Kendall Jenner ad. The Kendall Jenner ad was a story which came from a good place. We’re talking about unity; how do we bring people together? But that was not relevant to this book. I mean, I had a bunch of stories about Pepsi Refresh, which is a campaign that I loved, that I had to pull. I agonized over it, but how is that relevant to this book? There isn’t a story I tried to avoid, but we looked at each one carefully to see, Is it germane to this book?
Now I have questions about the Kendall Jenner ad! Ask away.
Was there no one internally who saw that and said, “This seems tone deaf’’? Most of the people that saw it said it’s a lovely ad.
Really? Yeah. We were trying to bring communities together. Pepsi does not have a bad bone in its body. We were the company that put the first African American in an ad. We were the company that promoted the first African American to a vice president in the history of corporate America. We were the first company to have an African American sales force that called on African American customers in the Deep South. We were a company that was culturally considered the most advanced when it came to Black causes. But you know what? The minute I heard that people thought we were tone deaf, I said pull the tape. We didn’t care what it cost us to make the ad, we are not going to hurt anybody, because that is not what Pepsi is about.
Did you feel as if you understood the blowback to the ad and agreed with it? Or was the blowback itself sufficient for you to feel you’d made a mistake? Both. You don’t wait to understand the whole thing before you pull it. I was going overseas. When I landed they said, There is blowback. I said, “Pull the ad, then we can figure it out.” Then we did a deep dive and said let’s pick all the pictures of iconic moments in history and make sure we understand those and never use them in an ad because there is a sensitivity and a sensibility associated with all of them. Look, we are a consumer brand. Consumer brands have to be very careful, because you don’t want to alienate any part of the consumer base. You want to be in the discussion in a positive-to-neutral way. Never in a negative way, because it takes a while to recover. People have long memories. We’re all learning.
This interview has been edited and condensed from two conversations.