Indra Nooyi’s Leadership at PepsiCo

Subject: Leadership Styles
Pages: 7
Words: 1978
Reading time:
8 min
Study level: PhD

Introduction

All organizations aim at enhancing their financial performance with time. Their goal is to undergo a transition from being average organizations to great companies. Collins (2001) describes the mechanisms through which organizations transform from normal into great businesses in his book Good to Great. The author defines greatness as “financial performance that is better than the market average over a sustained period” (Collins, 2001, p.12). He holds that businesses achieve a change through a keen concentration of their possessions on their strong areas. This process requires effective leadership. According to Collins (2001), level 5 leaders provide such leadership. This paper discusses level 5 headship in the context of Indra Nooyi who is the CEO of PepsiCo. The discussion will borrow from various educational theories. Level 5 leaders transform the organizations they lead into great institutions by exercising personal humility and professional will.

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Born in India, Indra Nooyi appeared in the register of 100 most influential personalities as listed by Time Magazine in 2008. In Forbes’ listing of most influential women across the globe, she took position 5 while Fortune listed her number one in a record of 50 most powerful women in 2006. In 2007, Fortune featured her in the 22nd position in a group of 25 most influential people in the business sector across the world. The question that emerges is, ‘what makes her achieve all these recognitions?’ Although her influence was clear since she started serving in the executive position at PepsiCo, this paper claims that her leadership style is pivotal in leading PepsiCo successfully through its transition from a good business to one of the greatest companies around the globe. Therefore, for educators to enhance their success and effectiveness in their work, they can emulate her leadership styles.

Indra Nooyi’s Education and Rise to Power

Nooyi was born in 1955 in India, Madras. In a time when Indian women could not exert themselves, Nooyi joined a cricket team whose members were girls. While studying at a Christian college in Madras, she also played the guitar in a women-rock band. She acquired an undergraduate degree in various disciplines such as mathematics, physics, and chemistry from the college before enrolling at the Calcutta Indian Institute of Management where she graduated with a Master’s Degree in Business Administration.

Nooyi’s first job was at Total Textile Company. The company had extensive business operations in India. Nooyi then later moved to Johnson & Johnson Company where she worked as a brand manager in its Bombay offices. She then began to feel not abundantly prepared for the business world. Consequently, she applied to study in the US. Yale University Graduate School that is based in Connecticut accepted her application. Indeed, she was surprised when her parents permitted her to move to the United States to further her education. In an interview with Financial Times, Nooyi confirmed that in the conservative Indian culture, it was unheard of a girl relocating to live in a foreign nation without the company of her parents.

According to Moreno (2013), she studied for a Master’s Degree in public and private management at Yale University. After graduating in 1980, she worked for Boston Consulting Company for about seven years before moving to the Motorola Company in 1986 where she served at an administrative faculty for four years. Ten years later, she went to Asea Brown Boveri Inc. (ABB) in the faculty of the company’s chief of production plans. After getting two job offers in the early 1990s, PepsiCo was a notch higher in rewarding her talent. She became part of the corporation as its captain planner before being named its CEO in 2006 (Moreno, 2013).

Indra Nooyi as a Level 5 Leader

Collins (2001) developed the idea of level 5 leadership. He classified leaders into levels 1 through 5. Level 1 leaders are highly capable. They execute their leadership role through their talents, skills, accumulated knowledge, and by practicing good job habits. Level 2 leaders contribute to work for teams. They are excellent in dealing with different groups to attain organizational aims and plans. Level 3 leaders are competent managers. They are highly competent in the running of organizational resources to achieve the set objectives. Level 4 leaders are effective leaders. They set high-performance targets and work towards achieving them through strategies such as workforce motivation and leading single-mindedly by focusing on organizational vision (Collins, 2001). Level 5 leaders focus on transforming organizations into great companies through extensive professional will and the exercise of personal humility. Collins (2001) reveals that this group of leaders leads great organizations. Is Nooyi a level 5 leader who is leading a great company, PepsiCo)?

A response to the above question requires the determination of whether PepsiCo is a great organization and/or whether Nooyi has leadership qualities that are necessary for a level 5 leader. Collins (2001) observes that great organizations are the ones, which have “achieved an average cumulative stock return of at least three times the market over 15 years” (p.15). Since Nooyi took over an influential leadership position as the chief strategist in 1994, the company has grown to meet this criterion of disguising great companies from good companies. Indeed, an investigation of Nooyi’s leadership approaches reveals that she is a level 5 leader.

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Collins (2001) specifies five attributes that define level 5 leaders. They are self-effacing and meek. They demonstrate self-confidence while setting their path to success. Thirdly, they possess a steadfast resolution in their work. They also portray ‘workmanlike conscientiousness.’ Lastly, they attribute their success to other people while taking full accountability for poor results. Besides, they relate their success to good luck as opposed to personal greatness. Nooyi’s unwavering resolution for work is evidenced by her clarity in setting the vision and participation in the realization of PepsiCo’s vision, which is based on high performance to achieve its set purpose of ensuring that PepsiCo’s products do not contribute to the increasing obesity epidemic. It has vowed to ensure that they (products) enhance environmental sustainability. This purpose also evidences her willingness and preparedness to take accountability for the products of her company.

Nooyi is a moderate and humble leader. She is an inspirational communicator who rallies people to her line of thought and strategic focus. She ensures that what she says is exactly what she does. For instance, she led the process of acquiring Quaker Oats and Tropican Products Inc. These two companies specialized in the production of healthy products. This move evidences her diligence and strict focus on her established vision of enhancing environmental sustainability (Geer-Frazier, 2014). Indeed, she remains committed to ensuring that PepsiCo transforms from relying on sugar and high-calorie products into utilizing low-calorie and low-sugar products. She ensured that PepsiCo removed all fat from its product lines well ahead of her competitors. Top on her list is also the replacement of plastic packaging with biodegradable packaging materials. Although these strategies are expensive for the company in the short term, she believes that they are not only timely but also worth the risk. She listens to all people, even though they may disagree with her line of thought. Besides, she attributes the success to the collective effort of those who are below her rather than her effort.

Characteristics of Indra Nooyi’s Leadership Styles that Educational Leaders should Emulate

Educators can emulate various attributes of Nooyi’s leadership style. For instance, commitment to vision is essential in ensuring that educators achieve the set objectives and purpose of the institutions they lead (Liden, Wayne, Zhao, & Henderson, 2008). Transformational leaders are deployed in organizations that require a sudden turnaround, transition, or even a spark to rejuvenate them, as witnessed in the case of PepsiCo. Transformational leadership style has the merit of setting visions and inspirations that are necessary for the followers to pursue in the effort to drive organizational success (Polychroniou, 2009). This assertion is perhaps well evidenced by Nooyi’s undying effort to ensure that PepsiCo adopts the best standards such as environmental sustainability. Educators need to deploy Nooyi’s transformational leadership style to ensure that education remains significant. Transformational skills are also important in fostering an effective change of curriculum to meet the emerging demands of the modernized world.

Nooyi’s transformational skills find applicability within education institutions that are characterized by reduced worker morale. The modern operating conditions for learning institutions create the need for a transformational leader such as Nooyi. Sakiru, Lawrence, Othman, Silong, Busayo (2013) confirm how transformational leadership is important in assessing current situations in the effort to formulate growth and improvement strategies. In education settings, transformational leaders possess the ability to ensure adequate and effective communication of success strategies and visions to all education sector stakeholders. This advantage aids leaders to handle challenging external and internal situations within the institutions since they can see bigger pictures of the future position of the learning centers after adopting certain success strategies.

Educators also need to emulate Nooyi’s inspirational leadership traits. Inspiration comprises an important characteristic that enabled Nooyi to effectively transform and lead PepsiCo while operating under hard financial and environmental conditions. From the paradigms of inspiration, the advantage of transformational leadership is that such leaders depend on their passion to ensure that employees follow their established directions (Prati, Douglas, Ferris, Ammeter, & Buckley, 2003). This position was critical in ensuring that Nooyi remained focused on the desired direction. In educational settings, strategic directions are essential in ensuring that educators focus their efforts on one course of action, which leads to the achievement of the primary goals of education.

Many educational scholars contend that the assessment of pupils is a vital aspect that helps in fostering plausible teaching. This claim means that good teaching cannot exist without the assessment of pupils. In educational settings, assessment is defined as “the process of obtaining information that is used to make educational decisions about a pupil, to give feedback to the student about his or her progress, strength, and weakness, to judge instructional effectiveness and curricular adequacy, and to inform policy” (Dasu, 2001, p.15). Achieving these assessment concerns requires educators to deploy the assessment results to derive strategies for improving poorly performing students. Just as Nooyi does, this process should occur without taking ‘I do not know’ as an acceptable response when educators are taken to task to improve students’ educational achievements.

Conclusion

Leadership constitutes an essential aspect of every organization and even in institutions of learning. At PepsiCo, Nooyi’s leadership functions to inspire followers to work collectively to achieve specific goals and purposes. To this extent, leadership is an organizational practice that not only influences followers (PepsiCo employees) but also Nooyi in a manner that ensures that the company’s objectives are achieved through change as defined by Nooyi’s new strategic directions. In educational settings, it needs to integrate educators and students to influence learning institutions’ objectives and missions.

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At PepsiCo, Nooyi has set a benchmark that can be deployed by educators to enhance the performance of the learning institutions. As evidenced by the case of Nooyi, through her possession of level 5 leadership skills, educators need to consider their roles as influencers of the followers to ensure that the mission of their institutions is achieved. This step needs to be taken without fearing failures. However, educators also need to take full accountability for any failures. They should also learn to associate any success with their followers in the effort to build a common culture that is driven by the need to achieve certain levels of success. This devotion requires the possession of transformational leadership characteristics as demonstrated by level 5 leaders. It enables them to convert a good organization into a great organization. Based on Nooyi’s leadership approach, educators need to understand that the existence of a good relationship between leaders and followers within an organization initiates with the creation of a good understanding of the function and purpose of leadership among people whom one leads.

Reference

Collins, J. (2001). Good to Great. New York, NY: Harper/Collins publisher.

Dasu, M. (2001). Effective Teacher Education for Effective Classroom Teaching. Education and Development, 12(2), 14-24.

Geer-Frazier, B. (2014). Complexity leadership generates innovation, learning, and adaptation of the organization. Emergence: Complexity & Organization, 16(3), 105-116.

Moreno, A. (2013). The Women at the Top. Latin Trade, 25(5), 88-92.

Liden, R., Wayne, S., Zhao, H., & Henderson, D. (2008). Servant leadership: Development of a multidimensional measure and multi-level assessment. Leadership Quarterly, 19(3), 161–177.

Polychroniou, P. (2009). Relationship between Emotional Intelligence and Transformational Leadership of Supervisors: The Impact on Team Effectiveness. Team Performance Management, 15(8), 343-356.

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Prati, M., Douglas, C., Ferris, G., Ammeter, A., & Buckley, R. (2003). Emotional Intelligence, Leadership Effectiveness and Team outcomes. International Journal of Organizational Analysis, 11(1), 21-40.

Sakiru, K., Lawrence, J., Othman, J., Silong, A., & Busayo, A. (2013). Leadership Styles and Job Satisfaction among Employees in Small and Medium Enterprises. International Journal of Business and Management, 8(13), 34-41.