This Humanizing Growth conversation from the Institute for Real Growth is with the chairman and chief executive of PepsiCo. He starts from growth itself. Growth is essential to what organizations do, and the only route to a company that is sustainable and creates jobs.
He does not treat multi-stakeholder growth as a replacement for financial performance. Financial performance stays a critical metric, and the broader mission is what sits on top of it. His formulation is that the company only earns the right to pursue that mission by delivering strong returns.
Key findings
- The stakeholder he names first is his own workforce. PepsiCo has almost 300,000 employees, and the wider ecosystem including bottlers reaches six to seven hundred thousand people. Their development and their chance to realize their potential is what he calls his personal number one priority.
- Consumers are deliberately left off the stakeholder list. In a consumer goods company they are not a stakeholder at all. They are the reason the company exists, and they vote with their wallets on whether it continues to.
- The top 20 markets have been given end-to-end accountability under general managers rather than functional leaders. The reasoning is that the next step change in growth and cost will come from an end-to-end view, and that the company had functionalized too far.
- Empowerment is bounded rather than total. Certain things are explicitly untouchable for a general manager, including how data systems, investments, culture, and compensation are handled.
The job as aggregation
Laguarta describes the leadership task as taking needs that are sometimes conflicting and converging them into one business strategy. Every stakeholder pulls in a different direction, and none will ever be fully satisfied. What holds the course is a clear north star and a compass built from the company’s values.
He offers an unusually concrete test of balance. If everyone feels the leadership is getting it about 85% right, that is a good outcome. One group at zero and another at a hundred means the balance is wrong and the destination will not be reached.
What the crisis pulled the company toward
The company turned inward and became, in his words, more human. The community response was built on infrastructure that already existed for natural disasters. One discovery drove it: in the United States, many children in less favored communities had been getting their main meal at school, and school closures removed it. The company used its distribution to provide those meals.
Consumer understanding was already a named priority in a set of behaviors the company defined for itself, and the period sharpened it. Consumption occasions and brand loyalties shifted quickly, and the closeness gained is treated as a capability to carry forward.
Running a global company you cannot feel
Laguarta is direct about the limits of headquarters. The reporting is good enough to run the company, and you still cannot feel the company from there. His answer is presence: factories, sales teams, customers, and the feedback they give about service, quality, and motivation.
Remote working produced forums he says the company should have created years earlier. The top 200 managers used to meet physically about twice a year and now meet monthly for a couple of hours. He meets general managers one to one roughly quarterly. Town halls now run to 30,000 people. His verdict is that the technology was always there and the company was not using it.
The local empowerment argument rests on the category. Food is cultural, and understanding the kitchen logic of a country is what produces products that compete there.
Soil, and what a brand can do about it
The sustainability priority he speaks about most is regenerative agriculture. The pursuit of volume and output has cost diversity of species and degraded soil quality worldwide, and he frames restoring it as urgent.
The brand is the lever. Around 500 million people a day eat the company’s largest snack brand, which gives it the reach to raise awareness of sustainable and regenerative farming. He is careful about the distinction that follows. Awareness is one thing, and commitment is a very different one.
The mechanism he is relying on is consumer choice. The biggest power consumers have is to vote with their wallets for the companies making a difference, which is why he treats the explanation of a sustainable food system as part of the marketing job.
Scope and limitations
This is a chief executive describing his own company’s direction in a live conversation. The reorganization is presented as in progress rather than complete, and no results are given for it.
The sustainability claims are stated as commitments and ambitions rather than as audited outcomes. The speaker himself separates raising awareness from securing commitment.
Source
This page summarises HGS #32: Ramon Laguarta (CEO, Pepsico) about his definition of growth and decentralization, by Marc de Swaan Arons.