Forward-looking leadership 1

Nooyi and forward-looking leadership

Jonathan Noury-Elliard

SNHU MBA-550
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Contents

Nooyi and forward-looking leadership................................................................................2

Indra Nooyi..........................................................................................................................2

Structure and teamwork...................................................................................................3

Nooyi’s Influence........................................................................................................4

Changes............................................................................................................................4

References............................................................................................................................6
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Nooyi and forward-looking leadership

When Indra Nooyi came on as the CEO of PepsiCo, she made rapid changes in the

company’s structure and product development. Her ability to identify the changing desires of the

marketplace and swiftly make appropriate adjustments allowed PepsiCo to become a

powerhouse. Her warm yet firm leadership style is a large contributor to her success.

Indra Nooyi

Indra Nooyi is a forward-thinking, knowledgeable, and emotionally intelligent leader.

Coming to PepsiCo in "2006, Nooyi foresaw the coming shift among consumers, especially

the millennial generation, to healthier foods and beverages. She immediately introduced

PepsiCo’s strategy “Performance with Purpose,” that focuses on complementing the

company’s core soft drink and snack business with healthy foods and beverages," (Harvard

Business Review, 2017) which was "an initiative to drive long-term growth while leaving a

positive imprint on society and the environment... results under her tenure as CEO of PepsiCo

speak for themselves. PepsiCo's revenue grew from $35 billion in 2006 to $63.5 billion in

2017 and by the end of last year, total shareholder return was 162 percent" (CNBC, 2018).

While Nooyi possesses the technical knowledge, the strength of convictions, and the

drive to accomplish them, her most transformative trait is her emotional intelligence. "It's

been shown that the most successful companies have a culture where every single person feels

valued. No matter what the position, they all know they have a chance to contribute and make

a difference" (CNBC, 2018). To accomplish this, Nooyi goes out of her way to ensure her

employees feel valued. In the CNBC article that has been sourced a few times now, Nooyi

says the following about recognizing her talent, "I tell the parents what a great job their son or

daughter is doing. That recognition is worth more than money, stock runs, hugs, tickets –
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anything – because at the end of the day, when your parents say to you, 'I'm so proud of you;

your boss just wrote to me saying you're awesome,' the look on their face is worth more than

one million dollars." 

Structure and teamwork

Due to the natural structure of the corporate world, the Leader-Member Exchange (LMX)

Model is prolific amongst companies in promoting teamwork, and PepsiCo is no different.

Competition and drive of individuals within the company structure almost forces the creation of

competent “inner circles” for executives, generating the “in-group” and “out-group” described in

the LMX Model. The creation of these groups is exacerbated by the hierarchical design inherent

to corporate structure, so the LMX model is sustained and becomes beneficial for business. "A

complex way in which LMX enhances teamwork is that teams tend to attain better results

when multiple members of the team emerge as leaders. Leadership emergence often depends

on which expertise is required for the task at hand, such as an expert in graphic design acting

in a leadership role when the group task requires graphic design" (Durbin, 2016).

Leveraging this structure, Nooyi established a secondary efficiency and teamwork

practice she referred to as “‘connected autonomy.’ The idea of disciplined collaboration is to

let organizations units work independently when that approach produces the best results. This

practice maintains the benefits of decentralization – giving people the freedom to ‘own’ a

chunk of work, to be responsible, to be entrepreneurs building something great, to be close to

customers, and to be rewarded for the results. This approach, however, needs to be

complemented – not replaced – with a ‘behavioral overlay’ of collaborative behaviors, which

occur when people throughout the organization appropriately select collaboration projects.

They don’t need orders from the top on where and how to collaborate. Rather, they
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themselves see opportunities, know when to (and when not to) collaborate, and are willing

and able to execute the selected projects. They act as disciplined collaborators” (Hansen,

2009, pg. 18).

Nooyi’s Influence

Indra Nooyi worked at PepsiCo as the Chief Financial Officer (CFO) for seven years

prior to being promoted as the Chief Executive Officer (CEO). “‘Indra Nooyi is truly a star and

has been working side by side with Mr. Reinemund over the past several years,’ Citigroup

analyst Bonnie Herzog wrote. ‘She has been very involved with every major decision

PepsiCo has made over the past five-plus years and therefore we expect this transition to be

very smooth’” (Associated Press, 2006). Her history as a decision maker at PepsiCo allowed

her to walk into the CEO role with substantial positional power, alluding to the expected

ease of transition. Beyond her experience at PepsiCo, Nooyi already possessed influential

power through her personal journey and education, her ability to manage hectic situations,

and her emotional intelligence, which doubles as a motivational tactic but allowed her to

avoid dysfunctional politics and improve productivity. Indra Nooyi was the perfect person to

lead PepsiCo to the future and that’s exactly what she did.

Changes

In the face of Indra Nooyi’s success, it is difficult to identify something to alter. By her

hand, PepsiCo saw massive gains in revenue and outpaced the previous industry leader to

become one themselves. Her ability to see changes in the market, use her personal and political

power and to maintain a high level of productivity, and emotionally connect to motivate her

employees, is second to none. By relying on hindsight, I would suggest pushing the health food

alternatives and corporate responsibility harder. In the light of Global Warming, the market is
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continuing to demand healthy and eco friendly options. By pushing this paradigm harder, Indra

Nooyi would have been setting the pace for the Millennial generation through CSR.

We can already see the beginning of this in the growing importance of Corporate Social

Responsibility (CSR) and how businesses have already begun implementing these practices to

attract the younger workforce. Institutions like Ted, Harvard Business Review, and Boston

College have generated aggregates and bodies of work to better stay informed on this emerging

metric. Similarly, a study performed by the University of the Cumberlands in Kentucky

identified the increased importance of CSR in Millennials compared to non-Millennials as,

“Millennials have internalized the need to make the world a better place… hearing the speakers

passionately discuss their companies’ efforts at incorporating social responsibility significantly

affected the students’ opinions and willingness to work for the companies,” (McGlone & Spain,

2011, p.200). This finding is reinforced by the study by Ewha Womans University focusing on

internal legitimacy versus external legitimacy regarding CSR, finding that, “…internal

legitimacy enhances employees’ attachment to and identification with their firm’s CSR…” (Lee

& Yoon, 2018, p.628). The concept of CSR in manufacturing and its effects on the service

industry will also be discussed. The “Manufacturing industry contributes to environmental

pollution and social cost. Hence, corporate social responsibility (CSR) functions as a way to

reduce the effects of corporate activities, to increase long-term performance and stakeholder

trust” (Handayani, Wahyudi, & Suharnomo, 2017, p1). Should Indra Nooyi have dug her heels

in with health and social contributions, she would have performed even better.
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References

Associated Pres. (2006, August 14). PepsiCo names new chief executive. Retrieved from

http://www.nbcnews.com/id/14343254/ns/business-us_business/t/pepsico-names-new-

chief-executive/#.XLH1p-hKiPo

CNBC, D. (2018, July 25). Follow Indra Nooyi's example: Become a leader people are excited

to follow. Retrieved from https://www.cnbc.com/2018/09/12/pepsico-indra-nooyi-be-a-

leader-people-want-to-follow.html

DuBrin, A. (2016). Leadership: Research Findings, Practice, and Skills (8th ed.). Boston, MA:

CENGAGE LEARNING

Handayani, R., Wahyudi, S., & Suharnomo, S. (2017, August 8). The effects of corporate social

responsibility on manufacturing industry performance: the mediating role of social

collaboration and green innovation. Retrieved from

https://btp.press.vgtu.lt/article/14803/

Hansen, M. T. (2009). The Best of Two Worlds: Decentralized and Collaborative.

In Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big

Results(p. 18). Brighton, MA: Harvard Business Press.

Harvard Business Review. (2017, April 24). Op-Ed: Courage: The Defining Characteristic of

Great Leaders. Retrieved from https://hbswk.hbs.edu/item/courage-the-defining-

characteristic-of-great-leaders
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Lee, S., & Yoon, J. (2018). Does the authenticity of corporate social responsibility affect

employee commitment. Scientific Journal Publishers Limited, 46(4), 617-632. Retrieved

from https://doi.org/10.2224/sbp.6475

McGlone, T., & Spain, J. W. (2011). Corporate Social Responsibility and the

Millennials. Education for Business, 86, 195-200. doi:10.1080/08832323.2010.502912