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Indra Nooyi

How Indra Nooyi turned design thinking into strategy: an interview with PepsiCo’s CEO

Just a few years ago, it wasn’t clear whether Indra Nooyi would survive as PepsiCo’s CEO. Many investors saw Pepsi as a bloated giant whose top brands were losing market share.And they were critical of Nooyi’s shift toward a more health-oriented overall product line. Prominent activist investor Nelson Peltz fought hard to split the company in two.

These days Nooyi, 59, exudes confidence. The company has enjoyed steady revenue growth during her nine years in the top job, and Pepsi’s stock price is rising again after several flat years. Peltz even agreed to a truce in return for a board seat for one of his allies.

All of this frees Nooyi to focus on what she says is now driving innovation in the company: design thinking. In 2012 she brought in Mauro Porcini as Pepsi’s first-ever chief design officer. Now, Nooyi says, “design” has a voice in nearly every important decision that the company makes. (See the interview with Porcini in this issue.)

To understand Pepsi’s transformation, Harvard Business Review spoke with Nooyi at the company’s temporary headquarters in White Plains, New York (the real one, in Purchase, is being renovated). She talked about what design means to her, the challenges in changing a culture, and her proudest achievement.

HBR: What problem were you trying to solve by making PepsiCo more design-driven?

Nooyi: As CEO, I visit a market every week to see what we look like on the shelves. I always ask myself—not as a CEO but as a mom—“What products really speak to me?” The shelves just seem more and more cluttered, so I thought we had to rethink our innovation process and design experiences for our consumers—from conception to what’s on the shelf.

How did you begin to drive that change?

First, I gave each of my direct reports an empty photo album and a camera. I asked them to take pictures of anything they thought represented good design.

What did you get back from them?

After six weeks, only a few people returned the albums. Some had their wives take pictures. Many did nothing at all. They didn’t know what design was. Every time I tried to talk about design within the company, people would refer to packaging: “Should we go to a different blue?”

It was like putting lipstick on a pig, as opposed to redesigning the pig itself. I realised we needed to bring a designer into the company.

How easy was it to find Mauro Porcini?

We did a search, and we saw that he’d achieved this kind of success at 3M. So we brought him in to talk about our vision. He said he wanted resources, a design studio, and a seat at the table. We gave him all of that.

Now our teams are pushing design through the entire system, from product creation, to packaging and labelling, to how a product looks on the shelf, to how consumers interact with it.

What’s your definition of good design?

For me, a well-designed product is one you fall in love with. Or you hate. It may be polarising, but it has to provoke a real reaction. Ideally, it’s a product you want to engage with in the future, rather than just “Yeah, I bought it, and I ate it.”

You say it’s not just about packaging, but a lot of what you’re talking about seems to be that.

It’s much more than packaging. We had to rethink the entire experience, from conception to what’s on the shelf to the postproduct experience.

Let’s take Pepsi Spire, our new touchscreen fountain machine. Other companies with dispensing machines have focused on adding a few more buttons and combinations of flavours. Our design guys essentially said that we’re talking about a fundamentally different interaction between consumer and machine.

We basically have a gigantic iPad on a futuristic machine that talks to you and invites you to interact with it. It tracks what you buy so that in the future, when you swipe your ID, it reminds you of the flavour combinations you tried last time and suggests new ones. It displays beautiful shots of the product, so when you add lime or cranberry, it actually shows those flavours being added—you experience the infusion of the flavour, as opposed to merely hitting a button and out comes the finished product.

Have you developed other notable design-led innovations?…..

Harvard Business Review: Read the full article

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