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How Pepsi's Indra Nooyi Learned To Be A CEO

In this excerpt from his new book No Fear of Failure, author Gary Burnison recounts his conversation with Nooyi on what her prior career as a consultant taught her and what she had to figure out on the job.

How Pepsi's Indra Nooyi Learned To Be A CEO

No Fear of FailureAt the time of our conversation Indra Nooyi had been chairman and CEO of PepsiCo for nearly four years, but she took none of it for granted: not the beautiful setting, not the large corporate campus filled with art, and certainly not the position she occupies. "I have an immigrant mentality, which is that the job can be taken away at any time, so make sure you earn it every day," Nooyi, who was born in India, explained.

Nooyi credited experiences early in her career as a strategy consultant with Boston Consulting Group (BCG) for teaching her inductive thinking that helped shape her leadership style. "I don't think I could have gotten here without a strategy consultant background because it taught me inductive thinking. It taught me how to think of the problem in micro terms but also to zoom out and put the problem in the context of its broader environment and then zoom back in to solve the problem."

As much as Nooyi credited her experience with BCG as "absolutely the best job to go into," it was clear that she viewed strategic consulting as the foundation—not the structure—of her career. "That was more than thirty years ago," she said with a smile that softened only slightly the firmness of the point she was making. "I've been around the bend in corporations."

AfterBCG, Nooyi worked for Motorola and Asea Brown Boveri and then PepsiCo, which she joined in 1994 as chief strategist— reportedly after turning down an opportunity to work for Jack Welch at General Electric. She quickly made her mark on the company, urging then-CEO Roger Enrico to spin off PepsiCo's fast-food businesses including Taco Bell, Pizza Hut, and KFC in 1997. Other moves she helped orchestrate include the 1998 purchase of Tropicana and a $13 billion merger with Quaker Oats in late 2000.

In 2001, she became president and chief financial officer, which deepened her leadership skills and experiences as well as her knowledge of the company. When she became CEO five years later, however, nothing could quite prepare her for the demands of the job. "The one thing I have learned as a CEO is that leadership at various levels is vastly different. When I was leading a function or a business, there were certain demands and requirements to be a leader. As you move up the organization, the requirements for leading that organization don't grow vertically; they grow exponentially," Nooyi explained. "When I was president of the company, I said, 'Okay, I can do this—piece of cake.' Then when you are the CEO, the responsibilities multiply enormously because you worry about everything."

Her observation applies not only to herself but also to every CEO who discovers this position requires a vastly different array of responsibilities. No matter how close a leader has been to the CEO—serving as CFO, president, or COO—nothing quite compares with being in the top job. In order to succeed, CEOs must not only draw on previous experiences and abilities they have developed, but also commit to lifelong learning as a process of continual selfimprovement. The more the leader is willing to expand and grow, the more vibrant the organization will be.

Nooyi related this lesson by quoting what she considers one of the best pieces of advice she ever received: "The distance between number one and number two is always a constant. If you want to improve the organization, you have to improve yourself and the organization gets pulled up with you. That is a big lesson. I cannot just expect the organization to improve if I don't improve myself and lift the organization, because that distance is a constant." Her comment echoed what Korn/Ferry has found in its work: that learning agility is a key predictor of executive success.

A tireless worker who sleeps no more than four or five hours a night, Nooyi shoulders the responsibility that goes along with being CEO to stretch herself while she takes the company forward. "Just because you are CEO, don't think you have landed," she said. "You must continually increase your learning, the way you think, and the way you approach the organization. I've never forgotten that."

Learning and growing as a leader means Nooyi focuses not only on the big picture, but also on the details. She related her experience of doing store checks to see how the company's Pepsi-Cola, Frito- Lay, Quaker, Tropicana, and Gatorade products were displayed in a neighborhood store. "I notice everything. The printing quality—if the printing is bad or if the color is off. If it's a Hispanic store and we don't have enough Hispanic offerings there. Why isn't this merchandised so that the shopper mom can pick things up easily?" With a slightly mischievous smile she added, "I pick up the details that drive the organization insane. But sweating the details is more important than anything else."

Reprinted by permission of the publisher, John Wiley & Sons, Inc. , from No Fear of Failure: Real Stories of How Leaders Deal With Risk and Change, by Gary Burnison. Copyright (c) 2011 by John Wiley & Sons, Inc. All rights reserved.