INTRODUCTION

THE JOURNEY AWAITS:

THE OPPORTUNITY OF EXPERIENCE

In the summer of 2016 a funny thing happened on the way to the vending machine. Bottled water bypassed carbonated soft drinks as the top-selling beverage for the first time since . . . well, carbonated soft drinks. For a multinational company like PepsiCo, whose flagship cola brand is second only to the iconic Coke, this surely spelled disaster.

Didn't it?

On the plus side, PepsiCo owned about two dozen billion-dollar brands, from Diet Mountain Dew to Doritos. On the minus side—and a big minus it was—soda sales had dipped lower every year for a decade and showed no sign of turning around. How was it then that, in 2016, PepsiCo remained the largest food company in North America and one of the most admired and profitable brands in the world?

The answer, in large part, was leadership and vision from the top that was driven by an ability to learn from experience, apply those lessons, and clearly communicate them to influence others. PepsiCo CEO Indra Nooyi charted a long-term course for the company to navigate a change even greater than the impacts of globalization or economic downturns. That change was consumer trends, driven by a kaleidoscope of conflicting desires.

The picture was endlessly complicated. Drinks and snacks needed to taste good but without the calories. Then again, consumers distrusted diet substitutes. They wanted treats that were appealing and convenient but also nutritious. Variety and novelty had instant allure. But there was a contradictory pull toward the nostalgic, classic, and handmade, hearkening back to the first batch of Pepsi produced in the late 1800s behind the soda fountain counter in a small-town American drugstore. In other words, consumers wanted it all.

As if that weren't a sufficiently tall order, the modern-day PepsiCo sought to present itself as ethical, environmentally responsible, culturally diverse, and health-conscious. This was more than public relations or brand marketing. It was survival. What was good for the customers, as Nooyi saw it, was good for the business. If consumer tastes went through such dramatic change every two to three years, PepsiCo needed the ability to change with them.

Thus, a company that had been as conventionally American as hot dogs—and offered comparable nutritional benefits—had now expanded its menu to include packaged kale smoothies, whole-grain pita crisps, purified water, and individual servings of garlic hummus. Nooyi, a business strategist who joined PepsiCo in 1994 and was named CEO 12 years later, meanwhile articulated a set of goals she termed promoting a progressive corporate agenda on everything from sustainable water use to professional development.

How Nooyi gained the social capital to help PepsiCo reinvent itself is a textbook case of experience-driven leadership. The move to diversify PepsiCo beyond its traditional products that were “fun for you,” as Nooyi termed them, to foods that were “good for you” was the most ambitious transformation she had been part of, but it was not the first. That fact underlines an important premise of the Center for Creative Leadership's approach:

At such a critical juncture, changemakers like Nooyi need to harness the mindset, behaviors, and tools that successful leaders draw upon every day, capabilities that subsequent chapters of this book will explore in depth. Four fundamental skills drive the thoughts and actions of the most effective leaders:

But let's step back a moment to consider a fundamental question:

The answer, as we'll learn, is that experience-driven leaders like Nooyi have often been fashioning them all along.

Leadership-building experiences didn't happen to Nooyi by accident. She sought them out. Born in India and educated in Calcutta, she worked for multinational companies in her native country and then applied to management school at Yale as one of its first MBAs. Her motivation was to encounter a new world, and she brought a mentality of open-mindedness, curiosity, continual learning, and on-the-ground street smarts.

This meant doing more than studying in the United States; she immersed herself in its culture. For example, Nooyi, who loved the game of cricket, turned her attention to baseball. She immersed herself in the New York Yankees and their team statistics. If a person wanted to communicate, she told her biographer years later, this required learning both the language and what people talked about. At the same time, Nooyi learned not to hide her identity and what made her.

After an awkward and self-conscious first job interview, to which she wore an ill-fitting western suit, she went to her second interview wearing a sari, and landed a job as a strategy consultant. Aware that she was an outsider in a predominantly white, male, Anglo-Saxon, American-born corporate setting, Nooyi set out to leverage what she brought to the table as an Indian-born Hindu woman with a global perspective.

The 1980s in some ways foreshadowed today's tumultuous business climate. Companies that had been successful for years doing things the way they had always done them could no longer operate that way. This was true for Motorola, where Nooyi worked next, at a time when the venerable TV and radio manufacturer found itself on the cusp of a communications revolution.

Motorola introduced to the public what now seems an antiquated device:

THE PAGER.

Popular with emergency-room physicians and others whose jobs kept them mobile, the small devices presaged the cellular technology boom and the sweeping changes to come with mobile technology. By definition, successful innovation was fleeting. To remain on top in the volatile telecommunications industry, Motorola had to keep moving. A case in point:

WHEN WAS THE LAST TIME YOU SAW A PAGER?

By the time Nooyi had worked her way up to CEO at PepsiCo in 2006, standing still was even less an option. Sales at the soda and snack colossus were falling in key markets—in some areas, drastically. Adding to the uncertainty were new regulations on snacks and drinks. The company had a choice: The first, what Nooyi called the “pedal to the metal” option, was to slash costs and opt for short-term profits. The wiser choice, she convinced PepsiCo's board, was to pursue a long-term strategy by broadening the company portfolio and developing new capabilities.

For a business essentially built on instant gratification, this was a radical switch. It required awareness and understanding of the past, and the continued appeal of core products, while maintaining a constant eye to the future and how that core was evolving.

In a sense, Nooyi was drawing on earlier experience in introducing sweeping change to PepsiCo. As CFO, she had helped persuade the company to spin off subsidiaries Taco Bell, KFC, and Pizza Hut—restaurant brands that were struggling and did not mesh with PepsiCo's packaged food identity—and then had helped PepsiCo begin to rebuild the company's net worth by acquiring Tropicana. Rather than see the restaurants as a loss, Nooyi helped the company to see them as an opportunity to regroup in a new direction.

For a woman who had grown up in Madras, India, and risen each day with the rest of her family at 4:00 a.m., both the taco, fried chicken, and pizza division and the snack and drink division at PepsiCo held an obvious gap: breakfast. None of the products was relevant until late morning, and Nooyi understood that the company's sales were dormant for too many hours out of the day, missing an opportunity.

In arguing for the restaurant spinoff, Nooyi and then-CEO Roger Enrico laid out facts so compelling that board members felt they had arrived at the decision on their own. How Nooyi approached that change later informed the arduous task of taking PepsiCo in a future direction. With employees, she held a series of open-forum meetings to communicate the strategy and hear feedback. With managers, she made the urgency and the high stakes clear. They would have two to three years to make the change, but they had to change in order for the company to survive. Otherwise, she noted wryly, they would all be having retirement parties.

No change so sweeping happens in a straight line or without setbacks and frustrations, and Nooyi's approach took that into account. The company mantra was to learn to tolerate failure as a way to unleash innovation, just as the struggle with the restaurants had opened up the expansion with Tropicana. In some ways, this new journey meant that the huge multinational had to act like a small startup, discovering ways to launch experimental products in test markets such as China and Japan (think cucumber-flavored Pepsi) and give them three months to succeed or to pull the plug and move on to the next idea.

In an atmosphere of innovation, Nooyi gave employees the tools to think in new ways, for example starting a design department that looked well beyond logos and packaging to how consumers reacted to products and interacted with them.

Even if customers pined for the “real sugar” in throwback Pepsi bottles such as the nostalgic 1893, the truth was that the traditional soda dispenser at fast-food restaurants had to appeal to an iPhone generation. The company developed a new dispenser that resembles an oversized iPad that talks to consumers, displays pictures of the drinks as they are being mixed, and saves favorites to a swipe card. The mammoth company learned to sweat the small stuff. Was an individual Sunchip small enough to pop in your mouth? Was a 24-pack of Aquafina light enough for the average shopper to heft into a grocery cart?

It was a mindset that constantly processed and applied experience. “Every morning,” Nooyi told the Harvard Business Review in 2015, “you've got to wake up with a healthy fear that the world is changing, and a conviction that, to win, you have to change faster and be more agile than anyone else.”

What we can learn from leaders like Nooyi and other leaders featured in this book is how to look at challenges in a different way, how to see them as opportunities and as points where we can apply the lessons from our unique set of past experiences in novel, innovative ways.

The goal of the following pages is to assist you in thinking about your own story and the leadership lessons it holds and in understanding experience as a source of great opportunity for becoming a more effective leader. You will explore:

We have a rich itinerary and a rewarding destination ahead.

LET'S GET STARTED.