Former PepsiCo CEO Indra Nooyi: Lessons from the Top

On her first day as CEO of PepsiCo, Indra Nooyi fired her general counsel. Then rehired him before dinner. It wasn’t a stunt. It was a signal. She ran a $200 billion empire the same way she ran her life: with surgical precision, uncompromising standards, and an allergy to corporate theater. But here's what separates this conversation from every other CEO interview: she tells you what her massive ambition cost her and her family. What it means to carry the hopes of millions who look like you. What happens when a strategy you bet your career on starts to crumble. She reveals her private system for tracking 400 rising stars inside of a corporate giant and the advice Steve Jobs gave her that changed everything. If you’ve ever felt the pull between ambition and identity, this one’s for you. Indra doesn’t just talk about power. She shows what it costs. Approximate timestamps: Subject to variation due to dynamically inserted ads: Thanks to our sponsors for supporting this episode: NORDVPN: To get the best discount off your NordVPN plan go to ⁠⁠⁠nordvpn.com/KNOWLEDGEPROJECT⁠⁠. Our link will also give you 4 extra months on the 2-year plan. There's no risk with Nord’s 30 day money-back guarantee! MINT MOBILE: Get this new customer offer and your 3-month Unlimited wireless plan for just 15 bucks a month at MINTMOBILE. COM/KNOWLEDGEPROJECT. MOMENTOUS: Head to ⁠www.livemomentous.com⁠ and use code KNOWLEDGEPROJECT for 35% off your first subscription. Newsletter - The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠ Upgrade — If you want to hear my thoughts and reflections at the end of the episode, join our membership: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/membership⁠⁠⁠⁠⁠⁠ and get your own private feed. Watch on YouTube: ⁠⁠⁠⁠@tkppodcast Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Growing up in an environment where India had just come out of 350 years of British rule, you sit there going, I have to pull myself up.

• 0:07Shane Parrish?

  You had a conversation once with Steve Jobs where he told you not to be too nice. How did that candid conversation influence how you ran PepsiCo?

• 0:16Speaker 00

  I think the biggest lesson I took away was, he said, what I was focused on is micro-understanding. Because if you don't understand the business down to where the rubber meets the road, you can make decisions at the top which are not implementable. The business was a multi-multi-billion dollar business. And remember, if you don't earn your place, the people below you are waiting to push you out. So people don't realize that as you get more senior in an organization, it's up or out.

• 0:49Shane Parrish?

  Welcome to the Knowledge Project Podcast. I'm your host, Shane Parrish. In a world where knowledge is power, this podcast is your toolkit for mastering the best of what others have already figured out. My guest this week is Indra Newy, the former chairman and CEO of PepsiCo, who led a global transformation at the company as one of the most remarkable leaders of a generation. What makes Indra fascinating isn't just her accomplishments, it's how she navigated her colliding worlds. An immigrant who became more American than most Americans, a dutiful daughter who became a corporate revolutionary, a mother who reached the pinnacle of power but kept her daughter's "please come home" note tucked in her drawer as a reminder of what she was missing. This is a conversation

• 1:32Shane Parrish?

  rich with clarity, resilience, and ambition. Indra shares the surprising story of how she almost quit PepsiCo, the unforgettable advice she received from Steve Jobs, and the moment her mother told her to "leave the crown in the garage" after being named president of the company. We talk about how to give feedback that gets heard, why great leaders zoom in before they zoom out, and how real strategy always has to be implementable. If you're trying to lead better at work or at home, this episode is packed with timeless lessons. It's time to listen and learn.

• 2:06Shane Parrish?

  I want to start with this wonderful story about you and your husband. When you first met, you went to a movie and you watched Silver Streak at the Sandberg Theater. And then you went out to dinner after and you decided to get married. But you're still not sure who asked who, who proposed to who? I want the real story here.

• 2:28Speaker 00

  That that is the story. Sometimes I tell him, why did you rush this proposal? I wanted to be dated and wooed and dined and wine. And he said, I didn't propose to you, you proposed to me. So I said, why did you accept if I proposed to you? He says, I don't know. It was just destined to be that way. And I think over summer, even though we didn't spend much time together one on one, there must have been some spark. And he's just a very good guy, to be honest. And I guess he thought I was a pretty good person, too. And so it was just a meeting of the minds, value system, families, every which way. And I said yes without being wined and dined. And he said yes without, you know, dating me and getting to know me. And the rest is history.

• 3:10Speaker 00

  And 45 years later, we can look back and say, huh, who proposed to whom again?

• 3:16Shane Parrish?

  That's such an incredible story. I love these stories of couples that just, it clicks right away. You might not know each other as well as some other people who get married. And it just works out. My aunt and uncle have never actually dated another person. They started dating at 13 and they are still happily married today. It's incredible.

• 3:35Speaker 00

  Maybe that's the reason we're happily married, because we started to date each other after we got married. And we started to discover each other after we got married. So we had that long process of discovery. And in spite of that, we kind of liked each other, loved each other.

• 3:51Shane Parrish?

  That's incredible. I want to go back to your childhood in India. Are there memories or lessons that stand out from your mom that you still carry with you today?

• 4:01Speaker 00

  It's mom, dad, grandfather, the whole extended family. It's not just the mother. And I think that it was a focus on excellence and doing well. It was, it was sort of beaten to us. If you're going to do something, do it well. If you can't get good grades, then, you know, what's your value to society? What are you going to do for society? So it was always this thing about push yourself. Don't sit idle. Satan has worked for idle hands. If you can read in every spare minute, do it. And that's the environment we grew up in. And we couldn't go complain to somebody else because our entire community was that way. And so you sit there going, who am I going to complain to? If I complain to an aunt or an uncle, they'll say, oh, I'm doing the same with my kids.

• 4:46Speaker 00

  So we grew up in an environment where everybody was being pushed. And we were being pushed because we were growing up in an environment where India had just come out of three hundred fifty years of British rule. And it was trying to find its place in society. And we were looking at other countries and saying, wow, you know, there could be growth, there can be innovation. The economy could get a whole lot better. And so everybody needs to pull themselves up to contribute to the country in order to make the country better. So that was the goal to push young people. And so you sit there going, I have to pull myself up. The family pushed you, but you have to pull yourself up. Everything in my childhood was about that.

• 5:29Speaker 00

  It was about working hard, being a team member at home, doing chores. Not having much money at all, but lots of discipline, freedom within a frame. That's what I remember. But work hard, study hard, and be viewed as a reliable person. If you promise something, deliver it. Okay, unless you're dead, you will deliver it.

• 5:54Shane Parrish?

  When you came over, like, growing up in that environment, when you came over and you went to Yale, were you like, this is, these people don't work as hard as I do? Like, they don't, they don't come from this environment where, you know, you're struggling to break out and you're, you're sort of driven by your parents and everything around you is sort of pushing you forward. And there's no option for failure. You have to succeed and you have to keep going.

• 6:16Speaker 00

  I actually came here, I was in awe of everybody I met. And I'll tell you why, because there we worked hard because the simple things in life we didn't have. You know, if you wanted to iron your uniform, half the time, there was no power. So you had irons with hot coal inside them. You know, you have spray starch here, you know, we had to, when I was in a Catholic school, your uniform had to be starched. And you had to show up looking very crisp. Here, you just buy spray starch and you spray it and you iron it on. There, you had to make your own starch at home. And sometimes it would be clumps that would, you know, land on the uniform because you didn't really, you know, cook out the clumps and the starch that you made.

• 6:58Speaker 00

  And so we spent a lot of time doing things that people here didn't have to think about. You just went to the store and bought it, or you had electricity, you had water. So you took all that for granted. We had to spend a lot of time on those un- so-called unnecessary survival tasks, growing up. So you come here and you watch everybody here going, wow, they're so brilliant. They think differently. They break boundaries. They're irreverent, but they're reverent also in their own ways. How does one become like that? You know, I was more in awe of them rather than they don't work so hard. It's just that the working hard part was on stuff that was made easy in the United States.

• 7:41Shane Parrish?

  Right.

• 7:42Speaker 00

  The price of development.

• 7:43Shane Parrish?

  I never thought of it that way. Thank you for sharing that. There was a moment before you came over, you had just got a big promotion, and I think it was Norman.

• 7:52Speaker 00

  Yeah.

• 7:53Shane Parrish?

  And you went to talk to him and you said, should I take this? Because you were about to take over 60% of the factory. Or go to Yale. And walk me through that moment and what went into that decision to, because that's a huge promotion, that's incredible success.

• 8:08Speaker 00

  No question about it. I would have been incredibly young to run such a big part of the company. Would have been successful, would have been in an environment that I was quite familiar with. My expenses would have been nil because I would have had to live at home. No issues with anything. But I had always dreamed about the United States because all my friends had come here and loved American music, culture, innovation, entrepreneurship, everything I read about just fascinated me. And at that time, I mean, we're not talking about the seventies.

• 8:39Shane Parrish?

  Yeah.

• 8:40Speaker 00

  America was the seat of culture and just brilliance. And as a young person growing up, your dream is to be part of this environment. So I went to Norman and I said, hey Norman, look, this job you've offered me is fantastic. One side of me says, take it and, you know, grow in this culture and environment. The other side of me says, be a rebel. Go and be part of this incredibly amazing country and culture and environment called the United States. And I knew one was risky and one was safe. And something in me wanted to take that risky bet also. But Norman was clear, he said, look, if I were you, I would take the risky bet. Even though it would be a loss for me and the company.

• 9:24Speaker 00

  If I were you, I'd take the risky bet because you may not get this chance again. And even though I knew I was going to take on loan liabilities, I could fail. I was an alien country that I didn't have too much family in because I'd grown up with family. I decided to take the plunge.

• 9:40Shane Parrish?

  Has that changed how you, when you were like the CEO of Pepsi? Did that change how you develop people? Where the best thing for Pepsi might have been for them to stay, but the best thing for them might have been for them to leave?

• 9:52Speaker 00

  Well, at some point, when people come to you and say, I've got this great opportunity. You sit there going, would they be better off leaving? And in case I want them back, I can always go back and get them. Or are they better off staying at PepsiCo? Sometimes selfishly, I look at this and say, I'm actually better off if this person goes and gets this completely different experience because I can bring them back. So you always look at this in a nice selfish way. I don't mean in a negative selfish way, in a nice selfish way. Somebody went to a tech company, go there. I'm sure the allure of PepsiCo would make you want to come back if I wanted you back. And now I have somebody who's got the PepsiCo pedigree, has got a tech background,

• 10:33Speaker 00

  and now can come back and contribute to the company in profound ways or partner with me. So I'd look at it that way. But if I felt that a person did not have much runway in PepsiCo, I would also tell them very honestly that they might be viewed as a critical professional in PepsiCo. You know, they could have a career, but not a fantastic career. And if they got a better opportunity somewhere, I would provide the reference and I would help them find something. I think if you really care about people development, you've got to think that way.

• 11:04Shane Parrish?

  I love that. After Yale, you went into the consulting business. What did you love about that?

• 11:10Speaker 00

  It was a sink or swim place. I went to the Boston Consulting Group in Chicago. We had just opened up and I'd never been in consulting before. And so this was a new experience. First of all, the caliber of people is just fantastic. Each one is pushing the other. You're operating at the highest level of a corporation. And in BCG, you worked on two different assignments at the same time. So you had to understand two industries, the value drivers, two non-competitive industries. What are the value drivers? How do you think about adding value to the client in the assignment you're working on? And so it challenged me in profound ways. First, to learn industries, learn the economics of the industry, the value drivers.

• 11:53Speaker 00

  Think beyond the industry to see what insights you can bring to the industry. And learn about dealing with leaders at very high positions, which I'd never done before in the United States. I mean, I'd looked at these leaders as, my God, so and so is the CEO. And now I'm sitting in the same room with the CEO. How do I behave? How do I, you know, articulate my point of view without sounding like I'm a know it all? There's so much I had to learn. In my six and a half years at BCG, I think I grew 10 or 15 years. It was tough. It was a tough learning curve, but man, I would never trade that experience for anything in the world.

• 12:32Shane Parrish?

  And a very competitive environment.

• 12:34Speaker 00

  Incredibly competitive.

• 12:37Speaker 02

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior light beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 13:06Speaker 03

  This episode is brought to you by Subaru. You know that place your mind always wanders to? The lake, the mountains, the homes of the people you love most? The completely redesigned 2026 Subaru Outback is built to help you get there. With legendary capabilities, standard symmetrical all wheel drive, and the confidence to go further. The 2026 Subaru Outback. Love never looked so good. Visit Subaru.com/Outback to learn more.

• 13:31Shane Parrish?

  How did you go about learning about industries you knew nothing about?

• 13:35Speaker 00

  It's surprising, you know, for example, let's say that I was working in the tissue business. All right, paper tissue. I would actually go to factories. I'd go to manufacturing lines. I'd go to R and D laboratories, talk to everybody that was willing to give me time. Because consultants can't just sit there and articulate a point of view or provide direction without really understanding the details. So my philosophy was zoom in before you zoom out. So in everything I've done, I always went deep into whatever the business was, the company was, tried to understand things from the ground level. Then I'd zoom out and say, what's missing here?

• 14:17Speaker 00

  Why is the strategic direction in need of a re tweak or a reset? And I'd go back and say, if we did reset it, how would it sit in the front line? What changes would we have to make? Then go back out. So this constant telephoto lens that I had in my head is what stood me in good stead through my entire life. Zoom in, zoom out, zoom in, zoom out.

• 14:40Shane Parrish?

  How did that help you at PepsiCo when you were CEO in terms of understanding, you know, the right side of the decimal place at the low level? And then also, you know, 30,000 foot view, setting strategy for a huge company?

• 14:52Speaker 00

  You know, some people say, CEO should be careful not to micromanage. I agree with you. What I was focused on was micro understanding. Because if you don't understand the business down to where the rubber meets the road, you can make decisions at the top which are not implementable. Or in the implementation, The intent of the strategy gets lost. To me, strategy and implementation have to go hand in hand. And very often, the reason operating executives rise to become CEOs is because the belief is they know how a strategy has to land in the frontline. In my case, I didn't grow up in the operating businesses.

• 15:33Speaker 00

  I grew up in strategy, finance, you know, corporate operations, not, you know, P and L. So my replacement for having not run a P and L was go and learn each business from the ground up. So, you know, whether it was Steve Reinemann, who gave me an opportunity to learn the right side of the decimal, or whether it was the work I did with the Frito-Lay distribution system, it was always zoom in, learn the business bottom up. And have the humility to tell people to teach you the business. People like it when you tell them, hey, can you teach me this business? You know, I'd go to the R and D laboratories. I'd tell them, teach me how the concentrate is made. Teach me how the Frito-Lay, you know, chip is produced, a Lay's chip or a Doritos chip.

• 16:17Speaker 00

  I'd walk the manufacturing lines, walk the research labs, talk to people. I spent an enormous amount of time doing that.

• 16:24Shane Parrish?

  What was the right side of the decimal lesson? Well, I forget what that was.

• 16:28Speaker 00

  So, you know, when you're sitting in corporate as a CFO, the head of strategy, you're thinking in millions, tens of millions, hundreds of millions of dollars. That's the left side of the decimal. But money is not made always in the hundreds of millions of dollars. It's can you take a penny out of a delivery for Frito-Lay? And when you have so many routes times a penny, it adds up. So on a daily basis, you've got to think about a tenth of a penny, half a penny on a package or on a route. So it's that little micro pennies that add up to the whole business. So if you don't understand the business at the most granular level, you come at it in

• 17:10Speaker 00

  a very different perspective and people don't understand you because you're talking in tens of millions and hundreds of billions and they're like, I'm selling a 25 cent bag of Doritos, a 45 cent bag of Tostitos. What are you talking about? Don't talk to us about millions. We've got to cut a penny out of this route or cut a penny out of the packaging cost to get the profitability up. So you've got to be able to talk that language. So the left of the decimal is that language where you sit down with the team and say, can we take our two cents from this entire product package?

• 17:43Shane Parrish?

  That reminds me of J D Rockefeller when he was first starting out with Standard Oil and they were welding the oil cans that they were shipping it in. They were putting, I think it was thirteen welds on these. Can we do it with eleven?

• 17:54Speaker 00

  Yeah.

• 17:54Shane Parrish?

  And those two welds would make a huge difference for the volume that they were doing.

• 17:58Speaker 00

  I mean, the example is when we decided that it's an imperative that we reduce the water usage in our beverage plants, right? We were using two and a half liters of water to make a liter of Pepsi. Now, I want to get it down to one point two or one point three. And it's not enough to provide a dictate and say, get it down to one point three. It's a question of what does it take to get it down? Let's talk through it. Where do we use the water? How can we recycle some of the water? How do we need to clean it to Fishpond standards? You've got to ask all those questions so that the R and D people realize that you're not just providing a mandate. You're basically saying, I'm going to help you get to the right answer. So then you set goals saying, by year two, let's get to two liters.

• 18:43Speaker 00

  Then let's get to one point eight, one point seven. Here's a meaningful step down over a reasonable period of time so that we can get to the one point four or one point two within five years. So it's having respect for the frontline. So you talk to them in a language that they're familiar with as opposed to waving your hands and saying, I want to save a hundred liters of water within two years. And people go, does she know what she's talking about?

• 19:10Shane Parrish?

  I want to come back just for a second to the consulting. And one of my favorite anecdotes from this yearbook was when you were sitting in a bar in Green Bay, Wisconsin, and you were listening to the line workers talk about the problems in the business and you were getting insights from that. And I thought that was like so unique and I'd never, I've never seen anybody document that before and I'm sure people do it. Are there any other ways that you went about learning that were sort of off the beaten path that provided valuable insight like that?

• 19:40Speaker 00

  Well, one of the most interesting ones was I was working for a particular industry and a competitor was building a big plant. And we wanted to know how big the plant was, how many bays they're gonna have, and what kind of bays, what kind of transportation. And we couldn't get enough information from the local filings or whatever. And the plant was being built in a very wooded area. So it was a highly wooded area, but the middle was cleared for the plant. And a big lesson I learned is that in the United States, don't ever say that data is not available, say you didn't look hard enough, because data is available somewhere. So I kept digging and digging and digging to see where I could get this data.

• 20:24Speaker 00

  And the US government has got fantastic data available. Somebody from one of the departments said, oh, I know where you can get the data. If you did an FOI, a Freedom of Information request to the Intelligence Department, and asked them to give you satellite photographs of the plant from different altitudes, they can give you a pretty good picture. And I did that. And in a few days, I got the pictures at like 5,000 feet and 3,000 feet. And I now know from the top what the plant looked like, the size of the plant, you know, what kind of bays, you know, what kinds of products they might be considering manufacturing there. And so the valuable lesson is, don't tell me you can't get the data. Find a way to get the data.

• 21:08Speaker 00

  Because in the US, directly, indirectly, tangentially, you can get enough information and data to, you know, really develop hypotheses about issues you're working on. And so I've always kept that in mind. When people come to me and say, I don't know how to get this data, I say, come on, go look hard, it's there.

• 21:27Shane Parrish?

  What an incredible story. Is there another example, like top of mind, that comes to you when you think of that?

• 21:33Speaker 00

  Well, when we were doing COVID, the question is, we didn't use it as much, but one realized this was available to us. You know, when you had to do tracking to see Who's got COVID but had not declared it? And how big could the transmission be? You know, the syndromic surveillance, which is a well-known tool, where you look at their driving patterns. If they keep going towards a pharmacy and buying tests, you know that they might have COVID. Okay, so you've got to immediately track that person to say, should that person be socially distancing or quarantining? So they're looking at the wastewater that comes out of their home. You can tell whether there's COVID.

• 22:15Speaker 00

  So I think it's how do you triangulate on data using multiple sources? Now with social media, you've got lots more opportunities to track people, know what's going on without invading their privacy. You can get all this information. Those days, it was all paper and pen and, you know, poring through wards of data.

• 22:34Shane Parrish?

  As a leader, you've called yourself blunt and direct when delivering a message to people. I'm curious what you've learned about delivering a message that gets heard.

• 22:44Speaker 00

  You know, it's an evolving process, if you want to call it that. Sometimes people deliver messages that are not heard because you haven't really delivered the message clearly. People actually come out of performance appraisals and say, I think I'm doing a good job. And you're going, oh, my God, I hope that's not what you heard. You're saying to yourself, because this person was supposed to have told you the three or four things, areas that you're supposed to improve upon and the three or four things that you did wrong. You're supposed to have gotten very direct feedback. People don't like conflict. People don't like to deal with issues directly. They like to beat around the bush and then leave saying, I think I gave the person the message.

• 23:27Speaker 00

  I had the opposite perspective, which is give the message, do it in a supportive way and make sure that whatever you tell them they have to work on, you help them get to that. So I chose to write performance appraisals, which said, this is what you've done well. This is where I think you didn't do well. This is what you need to work on. And if you were to work on these issues and show progress, this is where you could go. So you see, what this letter did was celebrate them for what they did well, told them what they didn't do well. Told them the three or four things they had to demonstrate, progress on in the next year and how I was going to help them. And then also told them, if you showed progress, this is your trajectory.

• 24:12Speaker 00

  Because if we don't do it, I think we're not getting the best out of people.

• 24:16Shane Parrish?

  There's a kindness and clarity.

• 24:18Speaker 00

  Toughness, kindness and clarity, all three. But don't forget the toughness, because you're confronting them and saying, you know, I asked you to really get to know the international markets. You made two trips internationally last year. And each trip in three days, you came right back. How could you have learned international markets without getting out of the office in the US? Okay, and then you write saying, I'd like you to visit the following countries next year. And when you visit those countries, make sure you go down to this level of detail. You know, some people would say, a CEO shouldn't be getting to that level of detail. Yeah, they're right. But if I truly care about this executive and I think they have great potential, I will get to that level of detail. And I will monitor it middle of the year and say, hey,

• 25:04Speaker 00

  did you make any international trips? Did you follow anything I said? And if they say, no, I really don't want to go, then you go there. You know, you don't have the potential to be a CEO.

• 25:13Shane Parrish?

  From the outside, we hear these stories about how CEOs pay attention to the top 50 of the top 100. How many people inside were you really monitoring and trying to develop? And having a personal, a real one-to-one personal relationship? Where you're doing this and you're in the weeds and you're in the performance report and you're trying to build them?

• 25:31Speaker 00

  I think there's about three or 400 that were corporate assets. And one watched them all the time, because these are people who in 15 years could be CEO. There's something about them that, you know, you sort of caught your fancy when you were in a meeting or in some project that they were on, they had brilliant ideas. Not brilliant ideas that reinforced your thinking, brilliant ideas that challenged your thinking and took us to a better place. Because you don't want yes people around you. You want people who say, why don't we push the boundaries of our thinking? What if we approach this creatively? And people who put the company before themselves. I look for that all the time. And so there were three or 400 people that we actually call them corporate assets and we track them.

• 26:18Speaker 00

  To make sure that we game plan them, give them the right assignments. And even if they couldn't move, could we give them interesting assignments so that they could get the experiences without constantly moving? So that's the number of people that we tracked.

• 26:32Shane Parrish?

  What were the signs that somebody was putting the company ahead of themselves?

• 26:36Speaker 00

  They would put their hand up for difficult assignments. And if something went wrong, they didn't look for somebody else to blame. They would take the blame and say, hey, you know, I could have done a different job, or I could have led differently, or I could have staffed my team differently.

• 26:52Speaker 00

  These are people who would come to me and say, you know, whatever's going on in this other part of the company, I think maybe putting something in jeopardy. And I'm not throwing them under the bus. Would it be okay with you if I went and worked with them to perhaps write things? And I said, be careful how you do it, but go for it. And I will tell them that I didn't send you there, that you were doing it out of your own good nature. Otherwise, people say, oh, the CEO's got some pets that she's sending our way. So you've got to be very careful how you deal with organizational dynamics. But these are people who look around themselves and are constantly looking for ways to improve the company as opposed to how do I get the next promotion, the next raise?

• 27:36Shane Parrish?

  Are there things you've learned about reducing bureaucracy, increasing meritocracy, and decreasing sort of company politics? Obviously, in a company the size of PepsiCo with hundreds of thousands of employees, there's a little bit of politicking going on. But how do you minimize that? And how do you find and promote the best people?

• 27:56Speaker 00

  That's a very important question, Shane, because I think you have to understand the politics of an organization. Where there are people, there's politics, okay? You've got to understand the politics, but don't play in the politics. Don't meddle in the politics. Just understand who doesn't like whom and, you know, how meetings work. Just understand it. And then figure out how best to contribute within that. Once you start to meddle in the politics and gossip about it, you become a negative force. That's been my mantra through the entire time that I was in corporate America. Because meddling in the politics, playing the politics, becoming political yourself and gossiping is only a formula for disaster. Focus on the job, focus on moving everything forward.

• 28:40Speaker 00

  I think things would be great. Now, I was helped because of fact that I had a family and kids. So work in the office, I had to go home to the family and kids. I had no time for bar talk or going out to dinner and talking about the politics. And I really didn't care about it.

• 28:57Shane Parrish?

  What about bureaucracy? Was there ways to? I mean, there's a natural entropy to these large organizations to hire somebody to do this job. And then they they make that job important. And Parkinson's Law takes up all this time. And, you know, you're distancing yourself from it. And if you let it go, it just becomes, you know, at the extreme, it becomes government. Uh, and you go bankrupt. And how do you? How do you fight that?

• 29:21Speaker 00

  Companies like PepsiCo, at least in my time, I can only talk about the time when I was there. Um, you know, we had very good scorecards to measure productivity, spans and layers. Uh, and we monitored that constantly. You know, is our output per employee going up? How many spans? How many layers do we have? Are we adding layers for no reason? Uh, you know, we monitored all of that carefully. And that's why the company was successful because, you know, it's like an accordion. Sometimes you end up adding a couple of layers and then you say, hey, wait a sec. How did this happen? Why did we drift there? Let's get the number of layers down. Uh, you know, we see certain levels of people have to have at least eight reports or 10 reports.

• 30:02Speaker 00

  So we have different ways we triangulate on organization, hierarchy, levels, bureaucracy, overhead. We look at all of that. And because our target setting process for the businesses and for the company as a whole is always reasonably stretched. It's never, uh, easy targets. It's always a reasonable stretch. Then we always promise the street. A number that's lower than what we set ourselves to do.

• 30:35Shane Parrish?

  Right.

• 30:35Speaker 00

  Okay, so we never do the opposite where we tell the street.

• 30:38Shane Parrish?

  Higher.

• 30:38Speaker 00

  Higher number and promise ourselves lower and pay ourselves big bonuses. We always had internally stretched goals and we promised the street something more reasonable. That way, we never got paid if we didn't make the stretch goal. The bonus, we never paid out bonuses without the stretch goals. So that was the performance culture in PepsiCo for every leader that was there in the company.

• 31:00Shane Parrish?

  You mentioned kids and one of my favorite stories from your book, and I'm gonna read this because I want to make sure I get it right, is when you got promoted to the president of PepsiCo and you drove home after work and you were so happy and you were feeling so confident about yourself. And when you got home, your mother was there and you told her you had the most incredible news and she told you, the news can wait. I need you to go out and get milk. And you went back in the car and you drove to the store for milk and you came hopping mad, telling your mother, I've just become president of PepsiCo and you couldn't just stop and listen to my news. You wanted me to go get the milk. And your mom said to you, listen to me, you may be the president of whatever, of PepsiCo

• 31:44Shane Parrish?

  or whatever, but you come home, you're a wife, a mother and a daughter. Nobody can take your place, so leave that crown in the garage.

• 31:54Speaker 00

  Uh huh.

• 31:54Shane Parrish?

  What does that teach you about power and humility?

• 31:59Speaker 00

  Well, you know, we grow up with all these dualities, especially as you ascend to the top, the dualities just grow. Okay. Power and humility was a set of dualities that I had to struggle with always because I chose to be a mother. I chose to get married. I chose to work hard and ascend in my career. I was helped along by other people, but I decided I'd like to keep working and I'd like to do well and move forward. So when I make those choices, I can't delegate all of that to somebody else.

• 32:33Speaker 00

  I chose to marry an Indian man, which means that there were some duties and responsibilities that went with being a person of Indian origin. I didn't shirk them. And so having made those choices, she was right. Somebody else can take my place in the company. But at home, who else is going to be the wife and the mother and the daughter? Nobody else but me. And so I knew that I had to play those roles and play them well. So the real question was, since I made all those choices, how do I get the support structure? And have the resilience to play all those roles? It's not easy to play all those roles, okay? You can't just come home and start bossing your kids around because they say, "I don't work for you, Mom." And my kids have told me that.

• 33:17Speaker 00

  "Stop treating us like we work for you. Don't give us instructions." And so it's not that I talked to the people who work for me that way, but somehow they interpreted it as I just sit there in a chair and I boss people around. Little did they know, but they would say, "We don't work for you." I said, "Yeah, I understand." And so I think that all that she was telling me was just constantly remind yourself as to all the roles you play. And don't just think that you can walk away from any of those roles because you made those choices yourself.

• 33:50Shane Parrish?

  Do you see that as balance? Or do you see it as harmony between these things?

• 33:55Speaker 00

  There's nothing called balance. What balance? You know, anytime you use the word balance, I think of this beam sitting on a fulcrum that's perfectly still. It doesn't exist. It's juggling all those roles. It's not even harmony. Sometimes it's not very harmonious. You just juggle those roles and hope the most important balls every day don't fall and crash and burn. So that's all you do. They're all full-time roles, each one of them.

• 34:23Shane Parrish?

  I think this often with, you know, being ambitious and driven and working hard and then also holding myself to an incredibly high standard as a parent. And it motivates me. And it simultaneously, like, having those standards can also be...

• 34:41Shane Parrish?

  Counterproductive because you're so hard on yourself. Is there any advice?

• 34:46Speaker 00

  You've got to start off by saying, look, the job is a selfish thing. Okay, we love the job, we love, you know, working on challenges.

• 34:55Speaker 00

  But when you have kids, you've got to understand it's a tether. It's a beautiful tether, but it's a tether. It's a loving tether, but it's a lifelong tether. And so I think you should have kids only if you love having kids. I mean, I adore my kids. They may not think that always, but I just adore my kids. I love them more than anything in this world. And so, does it cause angst at times? Yeah, it does. Do sometimes I sit down and say, God, I wish I could just work on this problem uninterrupted? Yes. But that tether comes with some responsibilities. And so I have to have the resilience to balance all of those things. So each of us as parents, working parents,

• 35:41Speaker 00

  have to find a way to manage all of these priorities and not lose ourselves. So what you end up doing is giving up some of the things that you wanted to do for yourself. Just forget them because you've got to see it through the eyes of your kids, through the eyes of your spouse, through the eyes of the job. You have to morph into a new being. That's the reality.

• 36:03Shane Parrish?

  And when you were CEO of Pepsi, your kids were pretty young. How did you manage the information flow? Just the volume of information that goes to the CEO. How did you do your full day at work? I imagine you had like a homework bag almost where you're coming home with, you know, two or three or four hours of homework as well. But you've got to put dinner on the table, you've got to be there for the kids. How do you, what did that information flow look like?

• 36:28Speaker 00

  I had two or three skills, talents, I don't know what you want to call it, or curses. I didn't sleep much.

• 36:35Shane Parrish?

  Okay.

• 36:36Speaker 00

  So, you know, you can either say that was, wow, you're lucky, or man, I wish I could sleep.

• 36:42Speaker 00

  I had a pretty good memory. I could read anything and it'll stick in my brain. And I was a speed reader. All three helped. I had a support structure between family and then later on I could afford to hire help. I had a support structure. So to put food on the table, the food was prepared. And then the most important thing is I had a supportive spouse. The role that my husband played in this hall was just fantastic. And if I wasn't there, he made sure the kids were taken care of because he was working full time too. And I did the same when he was traveling. And so I think the two of us worked as a team.

• 37:22Speaker 00

  We had support from family a little bit, but mostly the help around us were like family. And the weekends, we had no help. It was just us. But then we said, look, the weekends, we were just devoted completely to family. I never went into the office on the weekends, most of the time, but I worked from home. Cause there's just lots to read. When the kids did homework, I did homework. And so was I always there for the kids? I'd say no. But you don't get to be CEO by being the perfect mom, the perfect wife, the perfect everything. You don't. You do the best you can, and that's all I did.

• 37:59Shane Parrish?

  Do you think a lot of people are unwilling to make those sacrifices?

• 38:02Speaker 00

  It's hard to make those sacrifices. I mean, I'd like to say it's easy. It's not. You look back and go, God, I missed all of these things I could have done for myself. I missed all of these fun events. I missed twenty date nights. Yes, you missed all of that. But, you know, on balance, if you put it all together, the whole package worked okay.

• 38:23Shane Parrish?

  I see this often. We hold up CEOs and entrepreneurs and people starting a business as as sort of, we want that, but we don't want all the things that come with it.

• 38:33Speaker 00

  It's a climb. It's a tough climb. Anybody who thinks it's easy to get there and then keep the job is tough. I mean, I, every organization is a pyramid. Okay, it's not a cylinder. It's a pyramid. So as you go from the bottom layer of managerial positions to the top, think of it in PepsiCo, in the bottom layer, probably fourteen, fifteen thousand people. By the time you get to CEO minus two, you're at about sixty or seventy. CEO minus one, you're down to fifteen. So you've gone from fifteen thousand to sixty to fifteen to one. Just think of the climb. And then this is all happening at a time when the world around you is changing so much. So you've got to keep up with all the changes in the world.

• 39:16Speaker 00

  And you've got to make sure that you earn your place in the next row. And remember, if you don't earn your place, the people below you are waiting to push you out. So people don't realize that as you get more senior in an organization, it's up or out. So to just keep those jobs is very difficult.

• 39:35Speaker 02

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends. Like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra. Because it's not just a superior like beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 40:04Speaker 03

  This episode is brought to you by Subaru. You know that place your mind always wanders to? The lake, the mountains, the homes of the people you love most? The completely redesigned 2026 Subaru Outback is built to help you get there. With legendary capabilities, standard symmetrical all wheel drive and the confidence to go further. The 2026 Subaru Outback. Love never looked so good. Visit subaru.com/outback to learn more.

• 40:29Shane Parrish?

  Is that why there's a lot of turnover after a CEO change? Like when you were promoted to CEO, the people you were competing with for CEO probably left.

• 40:38Speaker 00

  I kept many of them because I told them, look, I may become CEO, but I can't. I don't see why we can't work together. Most of them stayed. After two or three years, they got CEO jobs and they left, but many of them stayed. But you're right. You know, when you're, when, if there are five people competing to be CEO and only one is made CEO. Typically what happens is other companies grab them. Especially for a company like PepsiCo, which has a great leadership development. People came and grabbed them. And so they go off to be CEOs, which is good because you've got PepsiCo alumni now running so many companies. But you know, you've got to think about this math, which is pretty tough.

• 41:17Shane Parrish?

  When you became CEO, I'm going to rewind after this and go to pre-CEO. But when you became CEO, you walked into your general counsel's office, Larry, and you fired him. And you hadn't thought about this beforehand. And then he looked stunned. And about 10 seconds later, you hired him back. What was the importance of that?

• 41:34Speaker 00

  I had to make sure that all the people working for me knew that they were working for me, the new CEO, not just carryovers from the old CEO. Typically, what happens when you have carryovers is that people wonder if you can trust them. And not that there's any bad feelings between you and the old CEO, but you want your own team. The general counsel is one of the most important jobs. And even though I worked very closely with Larry and I adored him, I didn't ever want him to think that he was always going to be viewed as a carryover from Steve, even though Steve and I were best friends, great colleagues. I respected Steve enormously. So I had to make sure Larry realized that I'm going to respect him even more if he was now my hire. So I walked in and said, Larry, you're fired.

• 42:19Speaker 00

  But I did it with a smile. And he just looked at me and said, what do you mean, boss? I said, OK, you're now hired as my general counsel. He burst out laughing. And I mean, my first years at PepsiCo, my early years as CEO, were successful because of Larry. What a general counsel.

• 42:34Shane Parrish?

  Well, even he said that that was an important moment because it reset him as well to not being a holdover and to being there. Is it, when you mentioned you sort of like the old CEO around, if a CEO goes to the board, how does that impact the new CEO?

• 42:50Speaker 00

  The outgoing CEO is never in the deliberations. You provide your perspective, then you leave the room. The board picks the next CEO. Because remember, the outgoing CEO doesn't have to deal with the new CEO, right? And so that's what happened when Steve was stepping down. And that's what happened when I was stepping down. I told the board what I thought the company needed going forward. I gave them the dossiers of four or five people and said, these are all the pros and cons of each candidate, based on what the company needs. And this is how these people have evolved over time, the trajectory of their development over the last five or seven years. But it's your decision. You need to deliberate. You need to interview each of these people. You need to do your assessments. Because at the end of the day, I'm gone.

• 43:34Speaker 00

  You have to make sure the company stays successful. Based on the choices you make. And so the board deliberated diligently, met each candidate one on one and got to know them and spent almost two years deciding who should be CEO. So that's the, that's the way to do succession. And so I think outgoing CEOs can develop people, but they don't select the person.

• 44:00Shane Parrish?

  When a CEO steps down, is there a risk if they join the board of the company, they're stepping down from a CEO in a way that limits the incoming CEO in a way?

• 44:10Speaker 00

  That's my belief. I think an outgoing CEO should just leave, should not sit on the board because then you're sort of curbing what the new CEO can do. Because they're now always looking over their shoulder to see if they can take a direction that's different than the CEO sitting on the board. It's a terrible situation. When I stepped down as CEO, I told the board I wouldn't be chairman for more than two months max, and then I'm out. Because I wanted the new CEO to have total flexibility to do whatever he wanted.

• 44:43Shane Parrish?

  While we're on boards, you're on many boards, including Amazon's. What's the difference between being the CEO and being a board member?

• 44:51Speaker 00

  When you're CEO, you're it. When you're on a board, you're one among peers. So it's a group of you collectively that are serving the company. Nobody is more important than you. We're all doing it together. So it's got to be, you've got to understand you're dealing with peers and together we are the board first. Point number two, there's a deep urge as a CEO to want to manage the company. You cannot manage the company. You can only provide direction, ideas, suggestions to the company and worry about the governance of the company. So you've got to make sure you don't dig into the weeds and create confusion as to whose direction should we be taking.

• 45:33Speaker 00

  So it's very important that CEOs forget their CEOship and put on a board hat and always ask yourself the question, when I was CEO, if a board member behaved the way I'm behaving now? Would I have liked it?

• 45:47Shane Parrish?

  Oh, that's a good question.

• 45:48Speaker 00

  Yeah, always ask yourself that question. And if you say, oh, God, I would have hated it, then change your behavior. Okay, so understand the roles of the CEO and understand the role of the board member. And the third thing is, you know, when you're a board member of the company, remember that the shareholders are expecting you to play the role of, you know, setting the right strategy, picking the right leaders. All of that are the roles that this company is expecting you to. The shareholders are expecting you to perform. Focus on those things. Focus on the strategy. Focus on leadership development. Understand the business so you can marry it with the strategy. Focus on those things. Don't try to get into the weeds and try to micromanage quarterly results or annual results. It's just not your role.

• 46:33Shane Parrish?

  You've spent your life in strategy. What is strategy?

• 46:38Speaker 00

  You know, it's a nebulous concept, but it's a very clear concept on the other hand. The strategy in my books is crafting a path forward for an entity that allows it to execute on that path forward with superior results. You can never craft a strategy so that your results are diminished. You always craft a strategy to improve your results. But if you craft a strategy which is not implementable, it's not a strategy. So strategy requires implementation with it and a place is better than where you are today. Both are difficult to, because you have to almost anticipate what the outcome of the strategy could be. It can be implemented and you're going to get to a better place.

• 47:24Speaker 00

  And that's the challenge with strategy. You've almost got to have a 360 degree view of the environment, of competition, of the markets, of customer evolution, everything else. And then you're crafting a path to say, this is how we should proceed. And this is why it's going to be better for us than it is today. And incidentally, if the world around us changes, we're going to zag a little bit, but we're still going to focus on getting to a better place. That's why I think strategy requires unique skills. Zooming in, zooming out, being able to have peripheral vision constantly, learning from other industries. That's where consulting was a huge benefit, because that's what consulting taught you. Strategy consulting.

• 48:05Speaker 00

  And I think that's what I sort of took to heart and everywhere I went, that's what stood me in good stead.

• 48:12Shane Parrish?

  There's two times that you've mentioned in this that it has to be implementable. What's the importance of that? Is that something that comes up often? Or is that the difference between academic strategy and sort of real world strategy?

• 48:24Speaker 00

  Yes, definitely the latter because very often strategy is as it is taught, is taught by people who've never run a company, never implemented strategy. So I'll give you an example.

• 48:37Speaker 00

  In business schools, they teach the fact that organizations are siloed and siloed organizations are terrible. You should have information exchange within divisions in the company, et cetera, et cetera. But then universities are the most siloed places. There's hardly any sharing of information across departments. It's the most siloed organization. You see what it is is they're teaching something which is not implementable in that entity. So from our perspective, if I go into into the company and say, I want power of one, I want PepsiCo to practice power of one as opposed to Frito-Lay beverages. I'm now going to say, what is power of one? What do I mean when I say power of one?

• 49:22Speaker 00

  What all do I have to change to make power of one happen? Where can the friction be in the company to implement power of one? How do I provide the right incentives to remove that friction? Because at the end of the day, everything has to happen through people. So you've got to understand people and you've got to understand all the changes you've got to make to people, processes, incentive structures, everything to enable a change to happen. And that's what I mean by implementable. Don't just sit there saying we should have power of one. Talk about what is it going to take to implement it? And understand where it could be derailed, anticipated, keep addressing it. Watch for signs when it's not working well. See what changes you've got to make. So you've got to be very alert when you're making a change.

• 50:07Shane Parrish?

  You're one of the few people I've interviewed that that started with removing friction, which I think is beautiful. Most people start with force. How do I make this happen? How do I will this? How do I push through the friction?

• 50:19Speaker 00

  Most of it is friction in organizations, friction points, which you've got to look for and remove it.

• 50:25Shane Parrish?

  Coming back to the board just for a second here, what's the difference between a good board member and a great board member?

• 50:31Speaker 00

  A good board member probably does governance well and knows all the board rules and can show up at a meeting reading the material. A great board member reads a lot more than the material that's provided to you. You know, go read everything that's available outside of the company, its businesses, its competition, technologies, whatever. So when you come to the meeting, you don't just do what the basic stuff required to get through the two days of board meetings, but you're adding value over and above the basic requirements of the board. And so when you provide insights that are, that really cause the company to pause and say, God, she's got a great point there. Let's call her back and say, Hey, Indra, can you tell us more about what you meant by that?

• 51:15Speaker 00

  Now you're really a value-added board member. As opposed to, yeah, so and so's a good board member, read the board material, made sure that governance was ticked off. I think that's the table stakes to be on the board, but a great board member does a lot of work themselves to read way beyond what the company gave you to read.

• 51:36Shane Parrish?

  I love that. Amazon is known for doing things completely differently internally, including their memos to start meetings and stuff like that. What are the lessons that you've learned from being on the board there that may have been counterintuitive or new to you?

• 51:51Speaker 00

  You know, the entire company is focused on the customer. The obsession with the customer is something else. And it's always like, how do we make customers' life better? How do we lower costs for customers? How do we improve delivery times? How do we latency? All these things are what they focus on all the time. So I've never been part of such a customer-obsessed company. Okay? PepsiCo is consumer-focused, but these are customer-obsessed companies first. Second, Amazon has paranoia about, you know, sort of devolving into hierarchy and, you know, what they call losing the day-one culture. Day-one culture being when they were young entrepreneurial, how hungry they were and how, how they hustled.

• 52:34Speaker 00

  They want to have that hustle culture all the time. The fact that they're paranoid about it, even today, given Their size is what blows me away. They always cared that they will lose that day one culture. And so you've got everybody hustling to make sure that hierarchy is not built. Too much bureaucracy, it doesn't kill ideas. And so anybody can come up with an idea as long as they can write a six page document and present it to people. And you know, seek funding if your document is good. So I would look at Amazon as this gigantic day one company that's customer obsessed. It's an unusual culture, a culture that's prevailed, a culture that's constantly reexamined.

• 53:17Speaker 00

  So that it never ever changes from this day one hustle. And I feel privileged to be part of this company.

• 53:26Shane Parrish?

  You've led directly as CEO through many crises, including, I think you had a food safety scare while you were CEO PepsiCo. What are the differences between, I mean, academic and real world leading to a crisis? I guess would be a good way to frame this.

• 53:43Speaker 00

  No, academics teach crises, which is good because how else will students learn about what people, leaders did in crises? So I, I respect academics who teach all that. And they do a good job of doing the teaching. The thing is, when you're in a crisis, it's happening in real time. Public is writing about it. You're being taken down the eyes of everybody in the media and investors, analysts. Your home, everybody's scared because your face is on TV saying what the hell is going on? And it was even tougher for a female CEO because, you know, women CEOs got a lot more attention than men. And so when you're going through a crisis, first of all,

• 54:28Speaker 00

  you've got to understand the crisis down to the details as opposed to, we have a recall. Sit down and get your R and D and manufacturing guys and say, tell me about this in a lot more detail. Ask all the questions you need to ask to understand exactly the root cause of the crisis. Then let them give you a plan as to how they're going to address it. Then step back and decide what the messaging is going to be. Very often, people don't take the time to really understand the root cause of what causes crisis. And don't listen to the plan. And then they try to pass the blame on to somebody else. As a CEO, the buck stops with you.

• 55:05Shane Parrish?

  How does that go with positioning? I love this because how do you take what's happening? You've agreed that this is the plan. This is the path forward. You have credibility with this. I think we can do a lot with this. And then how do I position that in a way where the company is moving forward in the best way possible? But you're positioning it for an audience too, to be receptive to it and not pass the buck.

• 55:26Speaker 00

  Honesty is critically important. When you have a crisis, be honest with your employees, with the outside world, saying, this is the crisis we are facing. This is how we're going to address it. And we're going to give you an update on this timeframe. Honesty means, I mean, it changes the whole game. Because when you try to use big words to hide the crisis or you're just trying to deflect responsibility, people just don't have time for this, including your own employees. Okay? And so I'll give you a little crisis. When we had our second activist investor in the stock, it was a crisis for the company because nobody likes to have an activist in the stock.

• 56:06Speaker 00

  I did a town hall and I told everybody, I said, look, I'll give you regular updates on the activist. You'll see it on TV, ignore it. There's a general counsel, the CFO and I, who'll handle the activist. Your job is to just keep focusing on delivering performance. That's your only job. Don't worry about the other distractions. And you can be sure that three of us have the company's best interests at heart. And they all knew that. I always put the company before me. I said, we have the best interests of the company at heart, but we will keep you informed. But your job is to keep driving the performance. Now, Deep down inside, you know, I was in turmoil because I had to deal with all of this stuff instead of just focusing on the company.

• 56:50Speaker 00

  However, to the employees, I had to show that I was calm, I was in control, and that I was going to take them to a better place. So I think boards pick leaders for resilience, ability to manage through crises, and can you stay calm through it?

• 57:07Shane Parrish?

  Hmm. The second activist investor you had, was that Nelson?

• 57:11Speaker 00

  Nelson Peltz, yeah.

• 57:12Shane Parrish?

  Walk me through that. What was that like? What was the engagement with them like? I mean, it's so far in the past now that it's all sort of come out, but from your point of view.

• 57:20Speaker 00

  It was a typical activist book. He wrote a white paper and he gave it to me. I mean, I knew Nelson Peltz for years. I liked him, actually. So there was no, strangers walked off the street with a white paper. It wasn't that way. He'd done his work. Most activists pick data selectively to make their case. And so when he gave me the white paper, I didn't sit here going, I'm not going to listen to you. I said, look, let me study his white paper because he may be the external activist, I'm an internal activist. I want this company to do well. So why don't we look at his white paper as a free consulting report? And let's pour through it. If he has any ideas that we haven't implemented in the company, let's take those ideas.

• 58:02Speaker 00

  But we're not going to make big changes to the company just because Nelson said I had to make it. We'll make it if it makes sense for this company and if we can keep performing at the level we're performing. So I was clear on the company's strategy, the board was clear on the company's strategy. We listened to everything Nelson said because we have great respect for him. Okay? So this is not about blowing off activists as terrible. Some companies do that. I didn't do that. I said, I'm going to treat him with respect. Every time he wanted to meet, I met. Anytime he wanted to meet a board member, they met with him. But every time he proposed something, we said, look, we're doing this because of the strategy, of this direction because of these trends.

• 58:45Speaker 00

  If he wants to change his strategy, it's because you think the trend has changed. Has the trend changed? No, it hasn't. Then if the trend is that way, that's our strategy and we're not changing it. Okay, so he came around. I mean, he's a smart guy. He came around and we've remained friends since. There's no question about bad feelings or anything of that sort.

• 59:06Shane Parrish?

  Often activists want a board seat or demand a board seat. What are the pros and cons from your point of view as a CEO of letting an activist investor onto the board? And at what stake do you think it makes more sense, even if you disagree with it? What ownership level?

• 59:20Speaker 00

  Well, it depends on the board member they propose. You know, Bill Johnson from who we used to run Heinz came on our board. And Nelson actually suggested Bill Johnson. But what Nelson didn't realize is that Bill Johnson and I knew each other and we were friends already. So when Nelson recommended Bill Johnson, it was a welcome thing for us because he came from the consumer world, knew us well. Now, had he recommended somebody who was disruptive? We may have paused and said, don't want that board member because you don't want to spend our time answering activist questions when we should be running the company. Bill Johnson was hugely accretive to the board. And, you know, he had known Nelson forever, but he knew the consumer world, he knew PepsiCo.

• 1:00:03Speaker 00

  And so, you know, he actually added a lot to the board.

• 1:00:07Shane Parrish?

  It was a win-win.

• 1:00:08Speaker 00

  A total win-win.

• 1:00:09Shane Parrish?

  Is there a percentage in your head where if a shareholder has a certain percentage, then it's sort of probably right for them to have a board seat, even if they might be disruptive?

• 1:00:18Speaker 00

  Oh, 15% or so, 10, 15% maybe, maybe. But 1% to 2% and you try to agitate for a board seat, I think that's really wrong.

• 1:00:27Shane Parrish?

  You mentioned women CEOs. Correct me if I get this wrong. When you became CEO of PepsiCo, you were the first woman CEO in the S and P 500?

• 1:00:36Speaker 00

  No, no, no, no. Couple others, Carly Fiorina, Worsa. So when I became CEO in 2006, I think there were 11 companies that had women CEOs. Okay, when I became president of PepsiCo, I think I was one of two or three. But I was the first woman of color to run a Fortune 50 company. Now that I think there's about 54 women CEOs of the Fortune, of the S and P 500.

• 1:01:03Shane Parrish?

  Does it feel like we've made progress to you?

• 1:01:05Speaker 00

  You know, when you're at 10%, it's not really progress because 50% of the MBA graduates are women. Okay, so somewhere the pipeline is leaky. But, you know, it's a journey because you've got to make so many trade offs. Why did you get to the top? But it was novel at the time I became CEO. The first immigrant person of color from an emerging market to lead a Fortune 50 iconic American company. It might have made a lot of news, but deep down inside, I'm like, God, I better prove myself. Okay, I lived off of that fear of making sure that I did my job right and didn't let any of these constituencies down. To the outside world, it was big news.

• 1:01:47Shane Parrish?

  How do we go about creating more of an equal opportunity while maintaining a meritocracy in companies that allow for more women? Like, where do we get in the way of this happening?

• 1:02:00Speaker 00

  I think if you decide that you want to have a meritocracy in the company, you should draw from the entire talent pool. When you have more than 50% of the graduates are women, women are getting all the top grades, they're hungry, they want to move ahead. And then you don't hire from that pool because you start off saying, oh, she's a woman, must not be very good. You have these biases, that's a problem. So you've constantly got to check your biases at the door and say, if I had to put on a blindfold and hire people, how do I make sure that I draw from the best and the brightest? That's what consulting does, okay? So you draw from the best and the brightest. And then while they're in the company moving ahead, make sure that barriers that exist to their success are removed.

• 1:02:45Speaker 00

  Because once you attack somebody's confidence, it attacks their competence.

• 1:02:52Shane Parrish?

  Go deeper on that.

• 1:02:53Speaker 00

  So if a woman is presenting and you roll your eyes at her, or when she's presenting, you cut her off, or she says something and you cut her off, or, you know, I've seen this often, somebody will say, oh yeah, this is so theoretical when a woman presents. When a man says the same thing, I'll say, oh God, that's so brilliant. So these things happen as a matter of practice in companies. Women, people of color, when they present, they do go through some bad behavior. I'm talking of then, things have changed a lot now, but in those days, it did happen. And so when those things happen, you've got to figure out a way to call those people out right there and say, hey, can you let her finish?

• 1:03:34Speaker 00

  Can you let this person articulate their point of view before you cut them off? Will you stop rolling your eyes when she's presenting? Because you can feel the person rolling their eyes. So if you really value every talent for what it is, meritocracy, bring them all in, allow them all to thrive, then everybody has a confidence to continue to contribute. But if you have all these unconscious biases that impact people who are different, then they lose their confidence. And once you lose your confidence, you no longer feel comfortable. So your competence is impacted because you're questioning yourself. Am I good enough? Can I do this?

• 1:04:14Speaker 00

  So I think the whole idea of meritocracy is thinking about all talent is equal, as opposed to one talent is more important than the others.

• 1:04:26Shane Parrish?

  And then creating equality of opportunity, I would imagine.

• 1:04:29Speaker 00

  Opportunity, environment, constantly monitoring it, making sure we don't slip back to old bad habits. And making sure we have the numbers. Usually when you have one or two diverse people in the organization, you can't really practice how to be inclusive. And then you have to constantly check yourself and say, if 60% of the summa cum laude's from that college were women, where are my summa cum laude's? Why aren't they in this company? Okay? So you've got to ask yourself those simple questions based on the statistics coming out of all the graduating classes. Because if 55% of the graduating class are women,

• 1:05:12Speaker 00

  55% of the summa cum laude's and magna cum laude's are women. And even in STEM disciplines, if it's more than 50%. And if you only have 20% of the hires are women, why aren't they coming to you? So you've got to look at all these numbers and say, let me ask the question about what is it about my company? Especially if you're a consumer company, you go, boy, they should really want to come here. What are we doing wrong? You've got to get introspective yourself.

• 1:05:39Shane Parrish?

  One of the anecdotes that you pointed out in your book, and correct me if I'm getting this wrong because I'm just going from memory here, is when you started listening in on the performance reviews with the men, it was they did all these things and this. But with the women, it seemed like they did all these things but this. Was that like a bias within the organization or what was going on there?

• 1:06:00Speaker 00

  So performance appraisal for men is like, you know, he didn't deliver on all his goals. Yeah, I agree. But the guy's got really, he's got great potential. With the women, it was she delivered on all her goals. But I think, you know, her future trajectory is not that great. You go, why not? Well, I don't know. Something about her tells me that she won't be successful. Sometimes it was just ineffable. Not with all people, but some of the people, that's how the dialogue would go. You have to stop it at that time and say, let's, let's not just leave this discussion. Let's really have a conversation about this because maybe it's true, maybe it's not. And sometimes it used to be issues related to her style

• 1:06:44Speaker 00

  or the way she dressed or how she showed emotion or how she gesticulated too much. Only because, again, I'm not criticizing. The original idea of the executive was a certain kind of male.

• 1:06:59Speaker 00

  And now these women show up in these C suites and it's a different gender behavior, everything. People have to get used to it. So you need more examples of people in C suite. And then you say, okay, look, each person behaves differently, but they all bring a richness to the dialogue.

• 1:07:15Shane Parrish?

  Was that what happened when you quit PepsiCo? Because you quit, you went to Roger and you said, I'm leaving, I'm going to do this board meeting and then I'm gone.

• 1:07:25Speaker 00

  I didn't quit, remember, I just threatened to quit. I said, I'm, oh yeah, I just said, after this meeting, I'm leaving tomorrow.

• 1:07:30Shane Parrish?

  If nothing changes.

• 1:07:32Speaker 00

  I didn't even say that. I said, you know, look, you've been watching this bad behavior and you've said nothing. So I'm going to make this presentation tomorrow to the board. After that, I quit. And he didn't say anything. And then that day, the meeting with all the presidents that was supposed to happen, where I would always get beaten up, didn't happen. He called off that meeting and instead he brought in the people who. Were tough on me and I think he had a chat with them. And then the next day morning, he walked into my office and said, hey, you know, next week, we're going on this trip to look at these operations and these operations. Just make sure. He didn't even tell me, I hope you've changed your mind. He just assumed.

• 1:08:13Shane Parrish?

  He just acted like.

• 1:08:14Speaker 00

  Yeah, nothing. And then, believe me, I don't know what conversation he had with those people. Everything was night and day after that. We never talked about it.

• 1:08:24Shane Parrish?

  Did you ever have to have a conversation like that with people?

• 1:08:27Speaker 00

  I would call out bad behavior immediately when I saw it. But in a gentle way, I'd say, hey, can you let her finish? Stop interrupting her. Or him, it could be a him too. What I would say, don't roll your eyes when they're talking unless something's wrong with your eyes. Okay, so but I do it in a way that didn't make them feel bad. But it was direct and pointed.

• 1:08:51Shane Parrish?

  You only have to do that a couple of times.

• 1:08:52Speaker 00

  Yeah, that's right. The message goes quickly down the company.

• 1:08:55Shane Parrish?

  You had a conversation once with Steve Jobs where he told you not to be too nice. How did that candid conversation influence how you ran PepsiCo?

• 1:09:04Speaker 00

  I think he taught me a value, but first of all, he gave me time, which was just so generous of him. I think the biggest lesson I took away was he said, if you care about something, and you should care about a few things, show your passion. Okay, for example, the guy who ran TVWA Child Day, the ad agency, which was doing work for Apple, would always say, when you go to see Steve Jobs, the campaign, if you didn't like it, he'd throw the stuff all over the room and say, I want to see a new campaign by the morning. And you scream utter profanities, do whatever. But he wasn't doing it to destroy the place. He was doing it because he cared so much about Apple

• 1:09:45Speaker 00

  that he wanted the absolute brilliant right campaign for Apple. And his way of showing his frustration at himself and at the group was to act the way he did, okay? Now, as a woman, I'm not the kind that utters full letter words and throws things around. But all the Steve Jobs was telling me was, people have got to know what you're really passionate about. When you're really passionate about something, don't sit there going, God, I don't want to send them back three times. It's okay to send them back three times. Get it to a point where you're really comfortable, this is going to be good for the company. Show your passion, push people back. So I got to a point when design as a discipline was set up in PepsiCo. When they'd bring me something I didn't like, I'd say, hate it.

• 1:10:30Speaker 00

  Absolutely hate it. And then I would tell a joke about it and say, this is what the customer is going to say when they see it. Or I'd say something like, this new product is delayed. I don't care in six months we have to launch it, even though normally it takes three years to do it. And guess what? I'm the program manager, so we're going to meet every Friday morning to talk about this program. People go, you're the program manager? I said, yeah, I'm the program manager. And people go, this is a disaster because to have a CEO review every week means we have to have two other reviews. Before we come to see you, I said, no, I'm the program manager, I'm not the CEO, I'm the program manager. And I was. And I told them, no need for pre-discussions before you come to me. I'm the program manager.

• 1:11:11Speaker 00

  And so people sort of realized that I was passionate about launching this product. And so they went along with the program and they were grateful. I removed every barrier, told them that, okay, this is what's holding you back. Let me make a few phone calls and see if I can't get this out of this company faster. So I'd jump through hoops for them.

• 1:11:32Shane Parrish?

  There's a lot of value in being passionate about something and just that energy sort of like transferring over to everybody else. There's also a huge benefit to just having clarity. It's not like, it's okay, you know, maybe try changing colors. It's like, no, I don't like it. It's garbage, like come back with something new.

• 1:11:50Speaker 00

  But there's one big lesson. When you're in such positions of leadership and you have passion about something, don't try to take the credit. If the team does a great job at the end of it, even though you were the program manager and you drove it, give the credit to the team. Because you couldn't have done it yourself, the team did it. It's just that you exercised the power of your office to help them get there. So the credit should go to them. Make sure you give them the credit. When if something goes wrong, take the blame.

• 1:12:19Speaker 00

  But blame flows upwards, credit should flow downward.

• 1:12:23Shane Parrish?

  Steve Jobs inspired the design thinking at Pepsi. How did that change how PepsiCo went about their business? I remember you gave binders to people and stuff, but how did it tangibly work its way into products? And what was the impact of that?

• 1:12:37Speaker 00

  Well, all of a sudden, people are saying, God, we can do so much with design. We can change our innovation process. We can change our package, our product design. We started to move from what's the color of the package on the shelf to how is this product going to be consumed? How is it going to be used? How is it going to be carried? How is it going to be stored on the shelf? How is it going to be stored in the pantry at home? We were thinking about the chain, the use chain, all the way to how does a consumer shop for it? Put it in the pantry at home and then take it out and eat it and carry it in the purse. We were thinking about every touch point of the product until it got into the mouth and was consumed. So it expanded the entire chain, which goes into the thinking.

• 1:13:21Shane Parrish?

  And previously, you were focused on what's going to make it stand out on the shelf? How are people going to buy it?

• 1:13:25Speaker 00

  Right.

• 1:13:26Shane Parrish?

  And then we're not worried about it once they put it in the cart.

• 1:13:28Speaker 00

  I think if there were 10 steps, we worried about three steps in the past, about 30%. Now we started to worry about 80, 90%. So it was a different experience. It was fulfilling. People loved it.

• 1:13:41Shane Parrish?

  Are there any other lessons that you've taken from other CEOs? I mean, you had a conversation with Jobs, you worked with Jeff Bezos on the board of Amazon, where you're like, oh, that's a really good idea, really clever. I wish I would have known that before. Or ones that you did implement while you were CEO of PepsiCo?

• 1:13:58Speaker 00

  You know, one of the things you should do as a CEO, talk to other CEOs. If you see something interesting they're doing, you're in such a rare club, the CEO club. Call them up and say, hey, you've done this, it's so interesting. Can you share some findings with me? Can you share some results with me? Or I'll give you one example. We used to do business with club stores like Costco and people like that. Very different businesses than a regular retail store. Item merchandisers, Costco only, merchandisers, so many SKUs, limited number of SKUs. They're all in a different packaging than most other retailers. You know, I said they're going, I don't understand Costco enough.

• 1:14:40Speaker 00

  My salesman told me about Costco, but I didn't understand Costco enough. So I called Jim Sinagal, who was at that time the founder and still running Costco. I said, Jim, I want to do better at Costco. I'm CEO. And he said to me, if you want to do better at Costco, walk the store with me. Come to store opening, spend the whole day, because he goes to every store opening. Walk the store with me. Amazing human being, Jim Sinagal, just, I mean, heart of gold. That he gave me a day, walked the store with me. Taught me how club stores operate. Taught me the basics of the business. This is CEO to CEO. He taught me the basics of the business.

• 1:15:21Speaker 00

  And in that store, everybody watches him, Jim Sinagal and me, being great friends. But I'm the student, he's the teacher. And he taught me the business.

• 1:15:32Shane Parrish?

  Oh, my gosh, walk me through this. Like, what did he point out? What did he notice? What did he draw your attention to?

• 1:15:37Speaker 00

  Package sizes, how they think about packaging sizes, how they think about treasure hunt. Because in Costco, there's always something new. How they think about the treasure hunt alley? How they think about pricing architecture? You know, it's like Costco would have a unique packaging configuration, which was not really comparable to anything out there in the marketplace, and why that was important for Costco. You know, what is there thinking about how to manage the budget of a family, especially a family with two or three kids? How do you think about that budget? So, for example, we stood at a refrigerated shelf. I remember in Portchester, the store, you know, walking in. And he said, okay, Indra, you get to pick a product that I should put into the store. Do you have an idea?

• 1:16:22Speaker 00

  I said, yeah, I gave him an idea. I'm not going to tell you what it was. I gave him an idea. And I thought, you know, in six months, it'll show up on the shelf. Two weeks later, I go to the Costco store, it's there. How he got it done in two weeks, I don't know. But it was a huge seller, so I felt relieved. But based on the draw of that consumer in that neighborhood, I thought this product would do very well. But he listened. You see that? You see how you feel about the fact that the CEO wasn't just teaching, he's also learning from you? And so I had experiences like that. I remember there was a Walmart senior executive. Greg Foran, who was running North America Walmart.

• 1:17:02Speaker 00

  And he was in Kiwi and he was turning around Walmart North America. People thought he was very difficult. And I went to meet him. And Doug McMillan, the CEO, told Greg Foran, hey, Indra is a good friend of mine. And Greg Foran said, well, if you really want to learn Walmart, follow me on a store tour. And you know, these guys go to a store every day, some region. So Greg would say, I'm going to be in Pittsburgh from 8 a.m. to 6 p.m. on the 23rd of March. So I'd fly to Pittsburgh, I'd meet him there. And my job was just to trail Greg Foran, to see how he looked at every aisle,

• 1:17:44Speaker 00

  how he looked at how clothing should be merchandised, what product was married with what, where did he stop and say redo this entire display for the consumer. So I was learning from Greg Foran, but he allowed me to tail him. Okay, and so I felt it was a gift he gave me. And at lunchtime, he would only take a half an hour break. He'd sit down and say, tell me what you learned. Let me tell you what I think you should have taken away. Greg now runs in New Zealand. I was in New Zealand a year ago with him. We were reflecting on our market experiences. He taught me more than I would have learned from anybody. But this is the advantage of being open to ideas, open to learning.

• 1:18:29Speaker 00

  And you can learn a lot from CEOs and become a better person yourself. Because at the end of the day, a company does not exist in a vacuum.

• 1:18:35Shane Parrish?

  That's one of the reasons we interview so many CEOs and share your lessons with our audience. Is there anything that stands out about what you learned that day walking through Walmart or the lunch after where you were sort of, oh, I never thought of it that way?

• 1:18:49Speaker 00

  You know, how they merchandise t-shirts is dark to light. You know, when you hang, let's say you're hanging a certain t-shirt, but you've got to make sure the colors go from dark to light. If you mix up all the colors, consumers have a difficulty shopping for a t-shirt. He'd go and stand there, then he'd look at his team and say, what have you done wrong? And you know, sometimes the guy will have the right answers, sometimes they won't. You gotta merchandise it, dark to light. Or he stands in front of a Frito Lay aisle and he'll say to the guys, what do you think about this aisle? All right. And they all say, it's perfect. He'll say, yeah, why isn't every aisle like the Frito Lay aisle? Because PepsiCo's merchandise is perfectly.

• 1:19:35Speaker 00

  Or the best example, I remember we stood in front of a Quaker Oats aisle. He'll pull out four packages of multi-packs, you know, all the different flavors of. He'll put all four packs and he'll look at me and say, Hendra, come here. I say, yes, Greg. I said, awesome lineup, because my products, right? I own Quaker Oats. He'll say, each of these boxes, they're three different sizes. But each of these boxes has got nine packs, twelve packs, six packs, whatever. But the pricing doesn't reflect the changes, you know. Why is that? And why do I need four different packs? Why don't I just have two? And I'm going, buh, buh, buh, buh, I don't have the reason.

• 1:20:15Speaker 00

  But, you know, he, he's thinking about, how can I get the maximum inventory on these shelves that makes sense for the consumer? But have price transparency so the consumer is served well. And basically, what he was pointing out to me is my pricing architecture was messed up.

• 1:20:34Shane Parrish?

  And it was causing confusion, I would imagine.

• 1:20:37Speaker 00

  And even if the consumer didn't express the confusion, they were probably confused because we were confused at that time, looking at the four packages.

• 1:20:44Shane Parrish?

  Right.

• 1:20:44Speaker 00

  But he would look at it at that granular level.

• 1:20:46Shane Parrish?

  That's incredible.

• 1:20:48Speaker 00

  And you know, you learn so much and say, guys, hang on. When you go back and you look at pricing architecture, you ask people these questions, how many SKUs did you put on of Quaker Oats? Why do we need ten SKUs? Why not four? It'll simplify the manufacturing operations.

• 1:21:02Shane Parrish?

  I think Frito does their own stocking of shelves. Do they know? Is there a reason behind that?

• 1:21:07Speaker 00

  Because velocity is so high and it's all, you know, air in the bags, right? So if you put it through the warehouse, it'll take up too much space in the warehouse. So we bring it in through the art trucks. And our salesmen know how to put the right SKUs in the right place on the shelf. If Frito Lay products and beverage products came through the warehouse, they would have to build separate buildings just to house those products.

• 1:21:28Shane Parrish?

  Right.

• 1:21:29Speaker 00

  Because I'll give you an example. A Frito Lay chip will turn forty, fifty times a year. Beverages might turn sixty to seventy times a year. Toothpaste turns twelve times a year. Cookies turn ten times a year. So, you know, those people, those can come through the warehouse. But chips, milk, beverages, very hard to bring it through the warehouse.

• 1:21:50Shane Parrish?

  When you look at an aisle of Frito-Lay or PepsiCo products, what, what draws your attention? What do you notice?

• 1:21:57Speaker 00

  Well, I look for new products. Do they, have they been slaughtered? Are the existing workhorses like a Lay's or Doritos got enough facings? So the consumer knows that they should grab it. Is each package neatly crisped and put on the shelf? Because that's the media you own, right?

• 1:22:12Shane Parrish?

  Mm hmm.

• 1:22:12Speaker 00

  When your consumer sees the product on the shelf, that's a media talking to you. So to me, the media you own is very important to the consumer. Because the media you rent is your TV and your advertising. Many people don't see it, but they see that billboard effect on the aisle. So how does your package show up on the shelves? Is the right assortment there? Can they shop it easily? For example, is there a corporate block called Frito-Lay? Or do you have potato chips, corn chips? How would you prefer having it? Are the dips next to the chips? If something is on deal, is it on an end aisle? There's so many things we look at. The Frito-Lay guys do a great job.

• 1:22:49Shane Parrish?

  That's awesome. One of the big strategic pivots, I guess, that happened under you is when you were president, you sort of outsourced the bottlers. And then when you were CEO, you brought them back in. Do I have that right?

• 1:23:00Speaker 00

  Well, you know, when Roger was CEO, we spun out the bottlers in North America. I executed on his direction. And though, at that point, it was the right thing to do. But when I became CEO, I realized that the market was growing. The bottlers were thriving. When the market growth rate slowed down, okay? The pie wasn't growing, but there were two companies, the concentrate company and the bottling company, fighting for a larger share of that pie. And it was not constructive. We were not serving the customer, but now fighting amongst ourselves. I made that hard decision to buy back the bottlers. Now it gets back to strategy. Sometimes people say, oh, you flip flopped. No, the environment changed.

• 1:23:42Speaker 00

  Remember I talked to you about you change strategy, the environment changes. You cannot be dogmatic about your strategic direction. When the environment changes around you, you've got to zag a little bit, which is what I did. Bought back the bottlers. Had we not bought the bottlers back at that time in North America, we'd still be fighting with the bottlers and the pie would be shrinking. Because we're not serving the consumer, we're fighting each other. So it was tough, but we bought them back.

• 1:24:05Shane Parrish?

  But one of the ways that people deal with reality is to be humble. You know, that was the best path at the time, but that sounds so easy. But this is a multi-billion dollar decision.

• 1:24:17Speaker 00

  The business was a multi-multi-billion dollar business. So again, you know, people are going to criticize you for flip flopping. People are going to say you took on a more asset intensive business. But was it right for the company? Got to put the company before you. They might criticize you, but is it right for the company? The answer is yes.

• 1:24:37Shane Parrish?

  What have you learned about decision making that you wish more people knew?

• 1:24:41Speaker 00

  I think many people do it well. Decisions are rarely made in a vacuum. Decisions are made because you've looked at dreams of data. You're married with experience, with a little bit of intuition, a lot of counseling with other people, a lot of discussions, a lot of input from other people too. Don't underestimate, you know, how much knowledge is resident in your teams and how you can tap into it. And so I think if you're willing to incorporate all those points of view into decision making, you're going to end up with a great decision. But you've always got to keep one thing in mind. If something goes wrong with the decision you made, the blame is yours. If it goes well, give it to the team that worked on it.

• 1:25:24Speaker 00

  Okay, cover for them, provide the air cover, but don't try to take the credit yourself. Because the more you take the credit to yourself, people will go, she just wants to look good. Okay, just say, guys, I've got your back. We've done all the thinking, discussion. We've looked at this from every perspective. Go make it happen. If something goes wrong, I got your back. Your people feel empowered.

• 1:25:47Shane Parrish?

  You were involved in a lot of acquisitions of companies through strategy and through being the CEO of PepsiCo. Why does so many acquisitions not work out the way that they're intended?

• 1:26:00Speaker 00

  As default, the acquisition logic should be correct. Okay, don't do deals just because it's sexy to do a deal or you're trying to buy some short-term growth or profitability. If you do it for the wrong reason, they will not work out. Second, any acquisition, the deal process is just 10% of the whole process. The whole work is in the post-merger integration. How do you integrate the acquired company into your company? How do you extract the synergies? How do you build a new culture? How do you absorb them? People don't pay enough attention to that. And when post-merger integration efforts are not done right, acquisitions do fail. And you've got to keep that in mind.

• 1:26:41Speaker 00

  And sometimes acquisitions don't work because the people that you put in charge of running the new company are not competent. I think one of the lessons I learned is respect the culture of the company we acquired. I'll give you two examples. When we bought Tropicana, the days when there were oranges available in Florida, Roger said something very interesting to me. He said, it's a different company. It's a good-for-you product. Don't allow people from the rest of PepsiCo to go there and put their ideas on a good-for-you business because you'll mess up that business. So he made me go sit down with Ellen Marham, who was running that business, to say, what are the rules under which Tropicana should operate?

• 1:27:25Speaker 00

  Almost their value system. And he said, preserve that until this company is mature enough to be called part of PepsiCo. Very important lesson. The second was when we were buying Quaker Oats. It was, Bob Morrison was very important to Quaker Oats.

• 1:27:41Shane Parrish?

  Which included Gatorade, right?

• 1:27:42Speaker 00

  Yes. He said, when we're buying Quaker Oats, whatever happens, we're going to do everything possible to keep Bob Morrison, at least for the first two years. So the onboarding into PepsiCo is done with the way that, you know, we respect their culture and they respect us. Made a whole lot of difference. So I think acquisitions fail when you don't recognize these pitfalls and don't address them proactively.

• 1:28:07Shane Parrish?

  Are there any big mistakes that you made in an acquisition where you're like, ah, lesson learned for next time, but?

• 1:28:13Speaker 00

  I'm not going to tell you those mistakes, but yeah, of course. I mean, we correct them, but yeah, we made mistakes. And if the mistakes were made is because I wish we'd played out how that market could have evolved even more. Or I didn't bring the bottlers in soon enough to talk about how are they going to carry it on the bottling system? Or I put it into Frito-Lay even though it was a good for you product. And somehow it became a fun for you product when I wasn't looking. So yeah, we made mistakes. The key thing is where it makes a huge difference and big bucks are involved. Be careful, be ultra careful about post merger integration and people because the cost of failure is very high.

• 1:28:59Shane Parrish?

  I'm going to ask a question. I want to hear your sort of rapid fire response of other behaviors or traits. If somebody had an unfair advantage in PepsiCo and they were just constantly like knocking it out of the park all the time. What would be the behaviors and traits that that person would have or the skills?

• 1:29:15Speaker 00

  They've got this uncanny ability to zoom in and zoom out. They draw, they ask people for opinions and ideas and incorporate them.

• 1:29:27Speaker 00

  They put their hands up for difficult assignments and learn from difficult assignments. They've gone through failure in the past. People who hit it out of the park have been through a lot of failure and learned from that failure. They haven't allowed it to get them down. They've learned from those failures. They pick themselves up, talk about what they learned, fix it the next time and move forward. These are people typically humble. You know, people who hit it out of the park rarely beat their chest and say, I hit it out of the park. I hit it out of the park. Look at me. I got to move forward. These are people who say, hey, this is what the company needed. I did it.

• 1:30:03Speaker 00

  And PepsiCo had a lot of them.

• 1:30:04Shane Parrish?

  Was that almost a reverse signal when people were too braggy about what they've done? Or look at me, look what I've done. And then you just dismiss that because, you know, historically, that doesn't correlate really to people who do the work?

• 1:30:18Speaker 00

  You know, PepsiCo didn't have too many of these bragging people. So I was blessed to run a company where the culture was such that

• 1:30:27Speaker 00

  some people might have tried to be a bit more out there to take credit, but there were very few people who were braggars, really. Even Amazon has no braggars. Philips, the other company I sit on the board of, the med tech company from the Netherlands? Not at all. Nobody brags. Everybody's talking about what can we do together to move the company forward? So I think I'm just lucky to be in these sorts of companies.

• 1:30:51Shane Parrish?

  Do you think that there's an important component to being part of a company? And I mentioned this in the sense of maybe COVID or work from home, where it's really easy not to feel part of something larger than yourself. But there's this very human side of us that needs to feel part of something larger than ourselves, whether it's a family or work, that we're making a difference, that we're contributing to society. Does that get lost in work from home, do you think?

• 1:31:16Speaker 00

  I don't even know what it is to work from home only. To me, if you don't come to work, interact with other people, understand the culture of the company,

• 1:31:26Speaker 00

  you know, see people in the corridor, toss around ideas, pop your head into a meeting and say, hey, I see you guys are working on this, can I help? If you don't have that sort of human interaction, I don't even know what it is to work in a corporation as opposed to doing a job from home, doing an assignment from home, if you want to call it that. So I grew up at a time when everybody came to work and I loved it. So as we went through COVID and post-COVID, I'm struggling to see how I would have run the company without people coming to work. I'm struggling to see how I would have developed people without seeing them. Now, let me come to the other side. I also see the benefit of people who choose to work from home

• 1:32:09Speaker 00

  because they can now juggle more responsibilities working from home. So I understand that too. However, I'm also of the belief, Shane, that if you choose to work from home, male or female, I don't care, if you choose to work from home. You might also want to accept that your promotional challenges may be, your promotional opportunities may be limited.

• 1:32:31Shane Parrish?

  That was the most controversial tweet I've ever put out. I put this out, I think in 2021 or 2022, and I said, if you work from home, you're going to end up reporting to somebody who works at the office.

• 1:32:41Speaker 00

  Unless you're in a company where only individual contributors move forward because they're all super techie. But in companies where you really have to work in teams to move things forward, I don't see how you can do it all on Zoom.

• 1:32:52Shane Parrish?

  I want to thank you so much for your time today. This has been a fascinating interview. We always end with the same question, which is, what is success for you?

• 1:33:00Speaker 00

  Performance with purpose. You know, when I ran PepsiCo, I ran it on that motto. To me, delivering performance in whatever field is one thing, but you've got to make, leave the place better than you found it. And you've got to do it with a deep sense of, I want to make the world a better place. I want to make the company a better company. I want to make the employees feel better about themselves than when they, you know, came into PepsiCo or had a different leader. So at every point in time, how do you have a deep sense of purpose to leave the place better than you found it? Those are the three words I used as a CEO of PepsiCo. Those are the three words that continue to guide what I'm doing today. This

• 1:33:42Speaker 00

  deep sense of purpose without taking your eye off the core performance you have to deliver.

• 1:33:48Shane Parrish?

  Thank you very much. That's a beautiful way to wrap this up.

• 1:33:51Speaker 00

  Thank you, Shane. Thank you for having me on your show. It's a privilege talking with you.

• 1:33:56Shane Parrish?

  Thanks for listening and learning with us. Be sure to sign up for my free weekly newsletter at fs.blog/newsletter. The Farnham Street website is also where you can get more info on our membership program, which includes access to episode transcripts, my repository, ad-free episodes, and more. Follow myself and Farnham Street on X, Instagram, and LinkedIn to stay in the loop. Plus, you can watch full episodes on our YouTube channel. If you like what we're doing here, leaving a rating and review would mean the world. And if you really like us, sharing with a friend is the best way to grow this community. Until next time.