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Stanford GSB News

 

If It's India They Must Be Lentil Chips

March 2007

STANFORD GRADUATE SCHOOL OF BUSINESS—PepsiCo International isn't in the business of sending bags of Frito-Lay chips to markets where they're not wanted.

Instead, the company tailors its products to suit the local palette, Mike White, PepsiCo International's chairman and chief executive officer, told a Stanford Graduate School of Business audience March 6. That's why you'll find curry-flavored lentil snacks on supermarket shelves in India, and Peking duck-flavored potato chips in China. The Greek market goes for feta cheese, and in Mexico they reach for chili/lime-flavored chips.

PepsiCo International, a subsidiary of PepsiCo Inc., similarly tweaks flavors of Pepsi-Cola, Quaker oatmeal, sports drinks, juices, and other products. It uses the company's large-scale and strong brand positioning to maximize profitability on these locally tailored products, but no amount of corporate muscle-flexing can endear a flavor of chip or beverage to a local market. When balancing global and local interests, White sides with the locals.

"If it's a tie between global and local, I'll vote for local every time, because then people will own it," he said.

The company's international image is also essential to PepsiCo's continued success in more than 200 countries. The PepsiCo Foundation sends aid to natural disasters across the globe, and funds educational programs in places like Mexico, where it teaches the importance of good nutrition and physical exercise.

Programs like these are "not optional, not in this world," said White, who was invited by the student-sponsored View from the Top speakers program and the Global Management Program. "Just making a profit isn't going to be good enough."

But refusing to do business in countries to affect political change is risky, he said. PepsiCo has never recovered its market position in South Africa after pulling out in 1985 to protest apartheid. The Coca-Cola Company stayed and grew a "monster" business there, White said. PepsiCo tried to re-enter when apartheid ended in 1994, with little success.

PepsiCo also left Burma in 1996 after customers in other parts of the globe threatened to boycott PepsiCo for doing business in a country known for its heavy military hand.

In most cases, business is best used to build relationships between societies, White said. That was what PepsiCo's CEO Don Kendall did in the 1950s, when he traveled to the Soviet Union to open it up to Pepsi products.

"I'm generally not in favor of pulling out of countries for some … noble cause," White said.

The audience asked White how he maintains a work-life balance while traveling most of the time. It helps that his youngest child is 26, he said, and that PepsiCo International pays for his wife to join him on about half of his trips, he said. Having his wife along helps build personal contacts in foreign countries, where relationships are essential to successful business deals. He also counts many PepsiCo employees as friends, he said. Last year, on a trip to South America, he and four colleagues traveled to Machu Picchu with their wives. It was a "double bonus," he said.

White, who holds degrees in Russian and English literature and international relations, didn't discover his knack for financial analysis until he was in his thirties. He encourages young people to seek out different experiences and to "go wide and deep." Develop a depth of expertise in something, a pocket skill that will open doors at companies and organizations. Once inside, let curiosity take you on a path of lifelong learning, he said.

White also shared what he considers the six critical characteristics of good leaders:

  • All good leaders have perspective. They simplify problems, ask the right questions, and balance long- and short-term interests. They listen more than they talk. Good leaders "need to be able to cut through the clutter and come up with a solution."
  • Successful leaders turn strategy into results. They face reality and adjust plans to achieve their goals. They motivate people and are decisive, adhering to the 70-30 rule: If you have 70 percent of the information it's time to make a decision because "if you hold out for the last 30 percent you're probably toast."
  • Great leaders have the courage to make changes, even when things are good. In 1996, when PepsiCo announced it was spinning off its restaurant business, Forbes magazine called the move a huge and irretrievable strategic blunder. It turned out to be a good move, but at the time it took a lot of courage, White said.
  • Effective leaders are self aware and savvy. They know how to read people and organizations, and they flex their style to achieve results.
  • True leaders have unshakeable integrity. They set the moral tone and ethical standard of an organization. They ask for help and seek the council of others.
  • Proven leaders know how to build strong teams. A leader's ability to recognize potential in others and foster it builds successful organizations.

—Sarah Ruby