America's Best Leaders: Indra Nooyi, PepsiCo CEO

The karaoke-singing chief executive is taking Pepsi in an unlikely direction—toward healthful foods.

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Indra Nooyi

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She played lead guitar in an all-women rock band in her hometown of Madras, India. She was a cricket player in college. She sang karaoke at corporate gatherings. Today, Indra Nooyi presides over 185,000 employees in nearly 200 countries as the chief executive of PepsiCo. And she still performs on stage at company functions.

Nooyi came to the United States in 1978 at age 23 to earn her M.B.A. at Yale, where she worked as a dorm receptionist—opting for the graveyard shift because it paid an extra 50 cents per hour. Her parents had told her she was out of her mind and should have stayed in India and gotten married. "I always had this urge, this desire, this passion," she once explained, to "settle in the United States," where she is now the married mother of two daughters.

When Nooyi joined PepsiCo in 1994, it was as the company's chief strategist. From the start, she helped executives make some tough decisions. Seeing less future in fast food, she moved the company to shed KFC, Pizza Hut, and Taco Bell in 1997. Betting instead on beverages and packaged food, she helped engineer a$3 billion acquisition of Tropicana in 1998 and a $14 billion takeover in 2001 of Quaker Oats, maker of Gatorade. The moves proved prescient choices. Company earnings soared, and so, too, did her stature.

By 2006, Nooyi was one of just two finalists to succeed CEO Steven Reinemund as leader of one of the world's best-known brands. After getting the nod, Nooyi flew to visit the other contender. "Tell me whatever I need to do to keep you," she implored. They had worked together for years, both loved music, and Nooyi was persuasive, offering to boost her competitor's compensation to nearly match her own. He agreed to serve as her right-hand man, creating her version of a team of rivals.

A caring CEO. Though raised on cricket, she has become an expert on New York Yankees statistics and Chicago Bulls teamwork. Nooyi is a master of substance, knowing PepsiCo's product lines and financial metrics in depth. But former CEO Reinemund, now the dean of business schools at Wake Forest University, has also noted that she is "a deeply caring person" who "can relate to people from the boardroom to the front line."

As CEO, she has continued to pursue her unusual, and tremendously ambitious, vision for reinventing PepsiCo. She is trying to take the company from snack food to health food, from caffeine colas to fruit juices, and from shareholder value to sustainable enterprise. In doing so, Nooyi is attempting to move beyond the historic trade-off between profits and people. Captured in her artful mantra—"Performance with purpose"—she wants to give Wall Street what it wants but also, the planet what it needs. "It doesn't mean subtracting from the bottom line," she explained in a 2007 speech, but rather "that we bring together what is good for business with what is good for the world."

By 2010, Nooyi has pledged, half of the firm's U.S. revenue will come from healthful products such as low-cal Gatorade and high-fiber oatmeal. The company will eschew fossil fuels in favor of wind and solar. It will campaign against obesity.

This is, clearly, not business as usual. "People these days are bringing their principles to their purchasing," she said in the same speech. "We, in return, are bringing a purpose to our performance." If Nooyi can produce both wholesome foods and dependable profits, PepsiCo's future may be safe.

Yet fresh challenges to Nooyi's leadership abound, including the spiraling costs of commodities like cooking oil that go into the company's products; rising public aversion to bottled water, such as PepsiCo's Aquafina brand; and slowing consumer spending in all categories. The long-simmering cola wars could always flare up again.

But assuming Nooyi continues to combine performance and purpose at PepsiCo—and to offer melodies at company retreats—an even larger personal calling may lie ahead. With annual revenue of $39 billion, the enterprise Nooyi leads is as large as many federal agencies, and moving to run one of those agencies could be her next venture. "After PepsiCo, I do want to go to Washington," she has said. "I want to give back."