The Lancaster MBA

Student ID number(s): 30031231 Student Name(s): Aditya Chhabra Module Name:

FMBA516 Leading Change

Module Tutor: Professor Bill Cooke

Essay/Project Title

Using theories, concepts and models from the leading change module critically assesses Indra Nooyi of PepsiCo from a Leading Change perspective

Word Count:
2520 words

Assignment Due Date: 21-February-2011 By submitting this coursework for assessment, I/We acknowledge the following:

Academic Integrity

I/We have read and understood the Lancaster University Postgraduate Regulations (http://www.lancs.ac.uk/celt/celtweb/marp on cheating and plagiarism and state that the ) work I submit will be my/our own and will not contain any unacknowledged work from other sources. As the author(s) of submitted work in my/our name I we am/are prepared / to undertake a fair and reasonable oral examination of its contents. Research Ethics and Governance I have read and understood the Lancaster University Research Ethics and Governance code of practice. Note: This form is to be used as the first page for all coursework submissions.

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All leaders are managers but not all managers are leaders. The extraordinary Leader Mrs. Indra K. Nooyi
Leading complex global organisations has been an important challenge for current managers and leaders. There are many theories on leadership, in fact more books are written on leadership than any other topic. In spite of availability of large material, leadership is hard to define. Effective leadership varies with the organisations, the tasks, the influences and the personality of the leader himself/herself. However, the question is-What is Leadership? Defining leadership is not straightforward because todays leaders identify complex situations and exhibit different leadership styles at the same time keeping in mind the core values, purpose and objectives of the organisation. The leader also understands the role of communication and part that managers, teams and business units play in the interdependent organisation structure. Leaders effectively play an execution role in the organisations. They adapt quickly to situations reflective of productivity and growth, and provide comparative solutions. The leaders not only have long term vision for the organisation but they also understand how to get there. Indra Nooyi, CEO and Chairman at PepsiCo, fought hard for successful $3.3 billion acquisition of Tropicana in 1998 (McKay, 2000). She had a vision and understood the importance of having sustainable future. Even for an established company like PepsiCo, she could foresee the problems and find solutions by bringing all the board memberstogether for an important decision. Indra Nooyi has held many leadership positions in her strong and successful career. This report mainly focuses on the leadership aspects of Indra Nooyi. The report will analyse the Indra Nooyis evolved leadership styles over the past 30 years of her career (PepsiCo, 2011). In addition, the report will also discuss the various theories and models devised by the astute and learned scholars to elucidate the understanding of her leadership style at various stages of her career. Before looking at the career history of Indra Nooyi, it is imperative to understand what are the leadership traits that make her an incisive leader. There are several traits that make Indra Nooyi a leader in her own rite. Many traits stated by trait theorists, Kirkpatrick and Locke (1991), and Dulewicz and Herbert (1996), fit Indra Nooyis personality ingeniously. These traits apparently have been infused and instilled in
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Indra since childhood. In her childhood years Indras mother, after meal used to ask Indra , and her sister - what would they like to become when they grow up. This forced Indra to think and dream for herself. (Inspire Minds, 2008)

DRIVE
Drive has to do with the sense of achievement and initiative. Since the beginning Nooyi was more of a rule breaker in the middle class world she was born in. In an age in India, where it was unusual for women to exercise themselves, Nooyi not only joined the all girls cricket team but also played guitar in female rock band. Nooyi was ambitious and wanted to go beyond the stereotype that women of that era belonged to. She not only had ambition but also energy and tenacity to drive her ambitions into reality. She enrolled in Indian Institute of Management when only two schools in the country o ffered masters of business administration program. This trait clearly articulates her drive to become a differentiator. This also has to with the way she was brought up and the values that were instilled in her during her childhood years. Beforehand, she knew what success meant for her. (Murray, 2004)

LEADERSHIP / MOTIVATION / SELF-CONFIDENCE

Being a leader is not easy. They have to face many obstacles and setbacks. They have to play an important role in decision making. Hence, not only the leaders self confidence is important, but also is the others perception of it (Sheeley A. Kirkpatrick, 1991). After her MBA in 1978, Indra Nooyi was hired as a brand manager in Johnson & Johnson, the personal care products maker. She was given the Stayfree (Sanitary napkins) account. This presented a formidable challenge for Nooyi-firstly, Stayfree was not able to make its impact in the market, and secondly, advertisements for personal protection products were not allowed in India. Leaders

realise that sometimes they cannot fully understand the situation they are in, however hey t must focus and plan for the situation, but must be flexible and adaptable to re -plan, improvise and innovate according to the changes. Indra Nooyi has been known to have the iron will to succeed. She started promoting Stayfree products in schools and c olleges, making sure she gets the product directly to the target customer. In the end she excelled by making Stayfree a household brand. (Murray, 2004) Leaders have high level of motivation that drives

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everything they do. Indra Nooyi was always driven by self motivation. She demonstrated this trait by taking responsibility and by pursuing that responsibility through action and accomplishment.

COGNITIVE ABILITY/KOWLEDGE OF BUSINESS

Effective leaders have extensive knowledge abo the company and industry. The knowledge ut helps leaders to understand the concerns of their followers and thereby provide effective solutions for the same. Therefore, Indra Nooyi has always been inclined towards education. She graduated with a bachelors degree in Mathematics, Physics and Chemistry from Madras Christian College in 1976, an MBA from the Indian Institute of Management, Kolkata, in 1978 decided to pursue masters in public and private management from Yale Universitys Graduate School of Management in New Haven, Connecticut. (Inspire Minds, 2008) However, she always made sure that she never stops learning. Learning should not be restricted to academic knowledge but it is also about being aware of the real world problems and issues. Indra Nooyi has always maintained the natural curiosity to learn and have always kept an open mind.

HONESTY AND INTEGRITY

Honesty and integrity are virtues that are present in many leaders. Indra Nooyiis no different. This may be inflicted upon her by religious upbringing. Even today, she continues to be a staunch believer of Hindu religion. After graduating from Yale University, she went for her first interview in a trouser which did not fit her well and consequently she did not get the job. On her professors advice she wore a sari for her next interview. She not only got the job but she also carried this philosophy throughout her career. She still wears a sari to board meetings. Above all she is afraid of letting people know who she. She believes that Americas corporate world appreciates people who are genuine.(Inspire Minds, 2008) Trait theories are mainly based on the assumption that it is possible to identify a set of universal characteristics, or traits, which make people leaders. The traits explained above shows how great leaders can be identified through their activities and actions. Further the report will explain different roles Indra Nooyi held as a chang agent and how her e
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transformational leadership style helped not only herself but also the organisations achieve new heights.

INDRA NOOYI AS A STRATEGIST

After graduating from Yale University, Indra Nooyi joined Boston Consulting Group in 1980 as a corporate strategy director. After 6 years she joined Motorola and Asea Brown Boveri in 1986 (BCG, 2010). In both the companies Indra Nooyi was responsible for directing international corporate strategy. In both the companies she held senior positions. She climbed the corporate ladder throughout her career, making advancement in each step she ook. In t 1994, she joined PepsiCo, a food and beverage company. In transformational and leadership, Scheins primary mechanisms model fits her eloquent leadership style perfectly. Scheins primary mechanisms model mainly talks about to what leaders place their attention, how they react to crisis, how they become a role model for their followers, how the allocate rewards y and above all how do they recruit and select. Indra Nooyi is a absolute example for n elucidating Scheins model. Indra Nooyi always paid attention to the society we operate in. She came up with the concept of Performance with Purpose (BCG, 2010). She reiterates the vision by constantly stressing on the basic concept that large organisations cannot function in isolation. A CEO cannot just look at the revenues minus costs equal to profit, but it should be revenues minus costs minus cost to society. A company is responsible to the society in which it is runs and hence owes the duty of care to the society. Nooyi through this inspiring vision for PepsiCo explained the importance of food sustainability, environment sustainability and talent sustainability. Food sustainability is basically associated with reducing the sodium levels, fat levels and sugar levels in PepsiCo products thereby promoting healthy lifestyles by motivating people to exercise more. In addition, Nooyi also stresses on the fact that performance with purpose in not a corporate social responsibility act, on the contrary it is match between what companies need to do in order to fulfil the needs of the society. Indra Nooyi handles crisis in similar fashion. In 2003, major pesticide problem was instigated by social workers in India. (Brady, 2007) Consequently, the sales and market share of PepsiCo was significantly affected. Though Nooyi was not the CEO at that time, she was given responsibility to fire-fight the situation. Nooyi reacted to critical situations by stepping in the shoes of the critic and look at the situation from outside perspective. Nooyi ensured
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that all the ideas were communicated to the general public about the safety of PepsiCo products. She also admitted that she should have got involved in the process sooner. Indra Nooyi leads by example. She treats every single employee at PepsiCo the same way as she would expect herself to be treated. Nooyi explains that all employees at PepsiCo are mothers, fathers and children before they are employees of PepsiCo. During her surprising appointment as CEO, she flew to Cape Cod to talk to the chief competitor Mike White, for , the job. (Morris, 2009) She not only accepted the position of CEO but also convinced Mike to stay with PepsiCo. It may be unusual step for CEO but she approaches each person in the same way by treating that person as the most important person in the entire organisation.The way to articulate the direction of the company to all employees is not only through financial performance but also through the holistic impact on the society. Indra Nooyis recruitment, selection and promotion criterion is as unusual as it is her way of doing business. She drives the best and brightest to come and work at PepsiCo by building a culture of extended family. She writes letters to senior managements parents every quarter and builds a personal relationship with employee of the organisation. At PepsiCo she has s ensured that employees actually balance life and work. She stresses that everybody at the company is there to help each employee in every possible way. Indra Nooyis criterion for allocating rewards and status is very performance oriented. She sets goals and milestones, and on the basis of performance the employees are rewarded Indra Nooyis leadership style . evolved as her career progressed. Leadership style also has to do with the influence of power and politics. Nooyi throughout her career demonstrated unusual yet exceptional leadership style. Leaders like Indra Nooyi have an entirely different mindset in terms of practising power and authority. She practices power parity between her employees. Nooyi does not define tasks and direct employees to a particular task; instead her decisions are dependent on the employee initiative, creativity and competence for the success of the organisation as a whole.

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INDRA NOOYI AS A CHANGE AGENT

Articulating change in an established and successful organisation is harder than implementing change in an unprofitable organisation. Leaders with their vision are able to foresee the future and devise vision keeping in mind the core values of the organisation. Indra Nooyis way of transforming PepsiCos vision and organisation change fits the Kotters change model (1996) perfectly. Kotters model primarily consists of various stages for change such as establish a sense of urgency, enlist the core change team, envisage, motivate, communicate, act and consolidate gains. As explained earlier Indra Nooyi could sense the need for change at Pep siCo. Nooyi wanted to create a new vision and direction for the company. For long term sustainability of the company, she came up with Performance with Purpose (explained above). With this vision in mind, Nooyi wanted to diversify the PepsiCos product p ortfolio. For human sustainability as a shared vision, she wanted to acquire Tropicana, and Quaker Oats, and spin off PepsiCos loss making fast food chains. Nooyi faced major problems with both the acquisitions; however she fought hard for the acquisition and was eventually successful. Consequently, in 2004, she was made the CFO of PepsiCo. In her course as CFO PepsiCo showed growth in profits and exceeded markets expectations for straight four quarters. In 2006, Nooyi was promoted as CEO and chairman of PepsiCo (BCG, 2010). Indra Nooyi knows that company constantly need to adapt, therefore, it is important to bring the board of directors on board with idea of change, and thereby act as core change team. Nooyis foresight and leadership style was the driver for the vision that PepsiCo lives by and breathes today. The main issue was to articulate this vision to the every employee of the company and communicate the same sense of urgency so that everybody in the company not only believes in the vision and change but also act upon it. The core team acted as change agent by enacting a new R&D team. Nooyi had also set goals and milestones, which were connected to employees performance appraisal. The Performance with Purpose vision has been proven fruitful for the company. Firstly, it has virtually ended the cola wars between Pepsi and Coke. Secondly, it has given PepsiCo an entirely new direction, which without a great leader like Indra Nooyi would not have been possible. This new direction has identified and eliminated the conventional way of doing business for PepsiCo as an organisation. These problems have to
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be identified like an iceberg that only shows 1/10th of its surface above the water. Consequently, in future, organisation will be more amiable to change and will quickly adapt to situations that may be blurry today but may become prominent in future.

CONCLUSION
Indra Nooyi was not a child prodigy, she was not a scholar or author of any book yet she has been consistently ranked as most powerful woman CEO of the world by Forbes and Fortune. She is true role-model for men and women alike. Indra Nooyi understood the value of having money and more importantly success. I am a form of a change agent absolutely. I am not the sponsor for the change. There is a CEO who is really the sponsor for change. (Wright, 2008) It would be wrong to say that she knew from the beginning that she would one day become CEO of one of the worlds largest organisations. However, it was the drive and ambition that made her focus on relationships and tasks simultaneously and consequently reach to the pinnacle where she is today. This can be easily established when she accepted P epsiCos offer instead of GE. Throughout her career she assumed different roles and different leadership styles. She stresses that CEOs today need to perform using Heart, Head and Hand, not only to improve organisations performance but also be part of so ciety for creating a sustainable future. An immigrant and a woman of colour, Indra Nooyi had to break many barriers to reach to the place where she is today. She still remembers her core values and knows where she has come from. For women who want to go to the top and still be themselves, Indra K. Nooyi is probably the best role model.

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REFERENCES
BCG. (2010, February 20). Performance with Purpose. Brady, D. (2007, May 31). Pepsi: Repairing a Poisoned Reputation in India. Retrieved February 20, 2011, from BLoomberg Business Week: http://www.businessweek.com/globalbiz/content/may2007/gb20070531_868198.htm Inspire Minds. (2008, December 12). Retrieved February 20, 2011, from Change Minds: http://changeminds.wordpress.com/2008/08/25/lif e-stories-to-inspire-indra-nooyi-ceopepsico/ McKay, B. (2000, December 10). PepsiCo Chief Financial Officer Will Take on More Responsibilities. Contra Costra Times , p. 4. Morris, B. (2009, February 19). The Pepsi Challenge. Retrieved february 20, 2011, from Fortune-CnnMoney: http://money.cnn.com/2008/02/18/news/companies/morris_nooyi.fortune/index.htm Murray, S. (2004, January 26). From Poor Indian Student to Powerful US Business-woman. Financial Times , p. 3. PepsiCo. (2011, January 1). Borad of Directors and Committees. Retrieved Fabruary 20, 2011, from PepsiCo: http://www.pepsico.com/Company/Board -of-Directors-andCommittees.html#Nooyi_fb Sheeley A. Kirkpatrick, E. L. (1991). Leadership:Do Traits Matters. Academy of Management Executive , 54. Wright, C. (2008). Reinventing human resource management:business partners, internal consultants and the limits of professionalisation. Human Relations. Cook,B. (2011). From Leader to Change Agent [Lecture notes] Leading Change Module, Lancaster University Management School, Lecture Theatre 3, 17th February. Cook,B. (2011). Leadership and Transformation[Lecture notes] Leading Change Module, Lancaster University Management School, Lecture Theatre 3, 16th February.

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BIBLIOGRAPHY
Kotter, PJ, (1996), Leading Change, Harvard Business Press; 1st edition. Morgan, J. (1986). Images of Organizations. London: Sage. Weick, K. (1995) Sensemaking in Organizations: SAGE Publications Ltd, London. Grint, K. (2010) Leadership: A Very Short Introduction. Oxford University Press.

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