How Indra Nooyi Turned Design Thinking Into Strategy: An Interview with PepsiCo’s CEO

How Indra Nooyi Turned Design Thinking Into Strategy: An Interview with PepsiCo’s CEO

MAGAZINE ARTICLE from 2015 by Adi Ignatius

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, I 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.
—Adi Ignatius

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 realized 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 labeling, 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 polarizing, 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.”

CEO Indra Nooyi believes that each PepsiCo product must engage customers so directly and personally that they fall in love with it. So in 2012 she hired renowned designer Mauro Porcini as PepsiCo’s first chief design officer. Nooyi says that design thinking now informs nearly everything the company does, from product creation, to the look on the shelf, to how consumers interact with a product after they buy it.
Design thinking is apparent, for instance, in Pepsi Spire, the company’s touchscreen fountain machine that gives consumers the visual experience of watching flavors get added to a beverage before the finished product is dispensed. And design thinking is an integral part of what Nooyi says makes women embrace Mountain Dew Kickstart—with its slim can, higher juice content, and lower calorie burden—as a product they can “walk around with.”
But design is not all about the way a product looks, according to Nooyi. She says that PepsiCo has delivered “great shareholder value” on her watch because the company also offers consumers true choices, as evident in its “good for you” and “fun for you” categories of products—and because she has led her workforce to adapt strategically to consumers’ constantly evolving aspirations.

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