Nooyi, Indra K.

Indra K. Nooyi

In 2006 Indian-born executive Indra K. Nooyi (born 1955) was named chief executive officer of PepsiCo, parent company of the ubiquitous Pepsi-Cola, the giant multinational drink and snack-food maker. With her elevation to the post, PepsiCo became the second-largest company in the United States with a female CEO—the largest if a ranking of companies by total stock value was used.

Nooyi was also one of the few foreign-born executives of either gender in top U.S. corporate ranks. "Being a woman, an immigrant, and a person of color made it thrice difficult" for her to succeed, she said in an interview quoted in England's Guardian newspaper. PepsiCo, with its products sold all over the world, had taken strides to diversify its workforce by gender and ethnicity, aiming to staff itself with personnel who would understand the markets in which the company operated. Yet there was general agreement in business publications that Nooyi's fast-track ascent up the corporate ladder was due not to diversity initiatives but to her brilliant moves as a strategic planner. Thanks to initiatives she had spearheaded, some of them risky ones, PepsiCo eclipsed its longtime rival, Coke, in many measures of performance in the early 2000s.

Solved Political Problems as Game

Nooyi was born Indra Krishnamurthy in Madras (now called Chennai), in southern India, on October 28, 1955. Her family was part of India's middle class; her father was a bank official, and a grandfather, whom she later credited as an inspiration, was a district judge. Nooyi's mother also stretched her children's minds, making up improvised games for Nooyi and her sister, Chandrika, based on world problems. Nooyi had to place herself, for example, in the position of prime minister of India. She loved to read and to watch Tamil-language film comedies. She also had a younger brother, Narayanan, who followed her to Yale and to the American corporate world. Nooyi broke the mold in India's society, which was still defined by strong gender roles. She played cricket and was a member of an all-girl rock band. Even as a corporate executive she remained an enthusiastic singer and electric guitarist. "I was a wild one," she told Sarah Murray of the Financial Times.

Nooyi, a devout Hindu, attended Madras Christian College, majoring in chemistry and graduating with a bachelor's degree in 1976. She got her first experience in business managing advertising for a campus newspaper. Nooyi went on to earn a master's degree in business administration, majoring in finance and marketing, at the Indian Institute of Management in Calcutta (now Kolkata), one of just two business schools in India at the time, finishing in 1978. Her first job after getting her degree was as a product manager with a textile maker, Mettur Beardsell, but she soon moved on to a similar position with Johnson & Johnson, an American-based multinational maker of personal care products.

The job posed severe challenges for the young business graduate, for she was given the task of managing the introduction of Stayfree sanitary napkins to India, where advertising for the product was banned. Nooyi got around the restrictions by marketing Stayfree pads to young women directly, at schools and colleges. Then, while leafing through a magazine in her new home of Bombay (now Mumbai), she read an article about the Yale University School of Management, then only two years old. Friends in the United States convinced her that she should apply for admission, and Nooyi mailed her application off without really thinking it would be successful. She was not only admitted but was also offered financial aid. Despite societal pressures, Nooyi's parents got on board with her plans. "It was unheard of for a good, conservative, south Indian Brahmin girl to do this," she told Murray. "It would make her an absolutely unmarriageable commodity after that."

Even that prophecy turned out to be inaccurate, as she later married Raj Nooyi, a management consultant, and raised two daughters. Nooyi adjusted easily to life in the United States, but at first she lived on the edge financially, working an overnight shift at a reception desk and wearing saris to her summer jobs because she could not afford a Western suit. (She was still seen wearing them occasionally in the halls at PepsiCo, however.) The program at Yale, however, proved a perfect fit for Nooyi. She jumped enthusiastically into novel American management ideas like team-building exercises, going out with a group on an Arctic survival expedition at one point. A Yale course on communication was unlike any she had taken before. "That was invaluable for someone who came from a culture where communication wasn't perhaps the most important aspect of business, at least in my time," she told Murray. She learned to analyze problems in detail and to work with a team on typical American corporate planning projects.

Followed Strategic Planning Career Track

After receiving the degree of master of public and private management from Yale in 1980, Nooyi went to work as a director of international corporate strategy projects for the Boston Consulting Group. She moved from there to the automotive division development team at electronics maker Motorola in 1986, and in 1988 she was promoted to vice president and director of corporate strategy and planning there. In 1990 she accepted the post of senior vice president and director of corporate strategy and strategic marketing at Asea Brown Boveri (ABB), a diverse collection of American businesses, associated with power plant construction and industrial equipment fabrication, that had been acquired by a Swiss-Swedish conglomerate. She told Laurie Kretchmar of Fortune that it was like a "$6 billion startup," for it was left to Nooyi to forge a group of some 15 separate businesses into a cohesive operation. In her first year at ABB, she assembled a group of managers across corporate division lines to develop a program that assisted electric utilities in complying with Clean Air Act regulations.

By 1994 Nooyi, regarded as a rising star in management, was being aggressively courted by corporate headhunters. Nooyi studied video recordings of Chicago Bulls basketball games, not only to become familiar with the pro sports world but also to glean insights about teamwork. "She was on every packaged-goods company's list in terms of CEO jobs," consultant Kenneth A. Harris Jr. told Claudia Deutsch of the New York Times. PepsiCo thought enough of her to bring in former CEO Christopher Sinclair, who had grown up in India as the son of an Exxon Mobil executive, to her interview to try to help sell her on the organization. She joined PepsiCo in 1994 as senior vice president of corporate strategy and development.

Working closely with PepsiCo CEO Roger Enrico, Nooyi remapped the company's future. "I wake up in the middle of the night and write different versions of PepsiCo on a sheet of paper," she told Melanie Wells of Fortune. At the time, the company owned the KFC, Pizza Hut, and Taco Bell restaurant chains, which were part of a single division. Nooyi, over the objections of her new boss Enrico, pushed the company to spin the restaurants off. "Indra is like a dog with a bone," Enrico told Wells after being brought around to Nooyi's position. The restaurants were divested in 1997.

At that point, the outlines of Nooyi's grand strategy were coming into view. She believed that PepsiCo's core products, its soft drinks and Frito-Lay salty fried snacks, faced flat or declining sales in the future owing to consumers' desires for healthier lifestyles, and that the company needed to diversify into new products within the field of packaged foods. Nooyi steered PepsiCo toward the acquisition of the Tropicana juice producer in 1998, a $3.3 billion outlay that was questioned by many PepsiCo executives. Nooyi, who personally liked Tropicana orange juice, was vindicated when PepsiCo posted four consecutive quarters of growth in revenues, profits, and return on investment in 2000. She was promoted to chief financial officer of the company that year.

Supervised Quaker Oats Merger

When Enrico retired due to ill health, Nooyi found herself with a new boss, CEO Steve Reinemund. The two implemented an even bigger deal, a joining of Pepsi with the venerable Quaker Oats Company that was variously described as a takeover and a merger. The details of the negotiations were mostly handled by Nooyi. The fusion of the two companies was a difficult process, but once again Nooyi's instincts were vindicated, as PepsiCo posted strong growth in the early 2000s, even as Coke sales were stagnant. The deal gave PepsiCo ownership of Gatorade, the top-selling American sports drink.

Reinemund and Nooyi were portrayed in business circles as something of a corporate odd couple. Reinemund, a former U.S. Marine, was the classic buttoned-down executive, but Nooyi was less conventional in her saris or long scarves. Sometimes she went barefoot at the office. Nooyi, whose aunt was a noted Indian vocalist, said that she had music running through her head constantly, and she sometimes hummed during tense business meetings. "She has a sort of guileless, unencumbered quality," Lincoln Center for the Performing Arts president Gordon J. Davis told Business Week. "She'll say something almost naïve, very personal and romantic in a sense, but totally truthful." Spontaneous and often humorous, Nooyi had a brush with controversy after a Columbia University commencement speech in which she likened the five continents and their economic functions to the thumb and four fingers of the hand, with North America as the middle finger (she denied any unpatriotic intent, contending that her remarks had been taken out of context and misconstrued).

Sometimes there were rumors of tension between Nooyi and Reinemund, but they maintained that constructive tension was essential to the functioning of a healthy organization, and PepsiCo's strong balance sheets seemed to support the contention. Between 2001 and 2006, PepsiCo's annual revenue increased from $24 billion to $33 billion, and in 2006 its total market capitalization (the value of a company's outstanding stock shares) passed that of longtime market leader Coca-Cola. Part of that growth came from international operations, which were placed under their own PepsiCo International umbrella in 2003. Some of the credit went to Nooyi. "Steve and I have worked closely for the past five years on everything related to PepsiCo," she told Deutsch, "from long-term strategy to day-to-day business. We complete each other's sentences." Despite their contrasting styles, the combination of Nooyi's planning expertise and Reinemund's operational focus was a powerful one.

So it was no surprise when Nooyi was named PepsiCo's new chief executive on August 14, 2006, after Reinemund announced his retirement. There had been speculation that she would be given the leadership of a PepsiCo division to add to her experience in the field of day-to-day operations management, the one gap in her resumé, but she was the clear choice as Reinemund's replacement, especially in view of a crisis facing PepsiCo in her native India, where both Pepsi and Coke soft drinks had been banned in several Indian states after an activist group charged that they showed high levels of pesticide contamination. More broadly, PepsiCo was a company in need of constant reinvention as consumer preferences shifted. At the end of 2006, having topped Fortune magazine's list of the 50 most powerful women in U.S. business, she was, it seemed, the right woman for the job.

Books

International Directory of Business Biographies, 4 vols., St. James, 2005.

Periodicals

Business Week, January 29, 2001.

Chicago Tribune, August 15, 2006.

Economic Times (India), September 23, 2006; September 28, 2006.

Economist, August 19, 2006.

Financial Times, January 26, 2004; August 15, 2006; August 17, 2006.

Forbes, January 20, 2003.

Fortune, May 6, 1991; October 16, 2006.

New York Times, August 15, 2006.

San Jose Mercury News, August 15, 2006.

Times (London, England), August 15, 2006.

Times of India, May 20, 2005.

World and I, May 2001.

Online

"Indra Nooyi: New CEO of Pepsico Inc.," Overseas Indian, http://www.overseasindian.in/2006/aug/news/18newsmaker.shtml (December 23, 2006).

"The Rise & Rise of Indra Nooyi," Economic Times (India), http://www.economictimes.indiatimes.com/articleshow/1896315.cms (December 23, 2006).

"A Woman with Fizz and Bottle," Guardian Unlimited (London, England), http://www.observer.guardian.co.uk/business/story/0,,1853951,00.html (December 23, 2006).