Driving Data Strategy with PepsiCo's CIO | Technovation 549

Peter, thanks for having me. I'm looking forward to our discussion.

I really couldn't have asked for a greater opportunity. Coming back to PepsiCo — I was with the company for a bit of time and left and returned. The role for the CIO is, as you would imagine, multifaceted. There's no two days that look alike, but I would say on a macro level, first and foremost, it's critically important that our IT systems are able to support our... A couple of other areas are top of mind in the position in terms of ensuring we're advancing the agenda for the company. The first is around digital, really ensuring that we have a robust capability — whether it be data or platforms or digital products that sit on the platforms. The IT organization has a pretty significant role to play to ensure that all of that can come alive, and that's a key area for us to be focusing on in terms of our growth opportunity. And then I would always be remiss if I didn't say that cybersecurity is clearly going to be a focal point for I would expect any of my peers in positions like ours. The company is a key component of my time and my priorities.

That's a really good question, and it's a discussion that we've been having internally since I returned, but I would suspect even a little bit before. In my opinion, an analog company thinks of their products in a single dimension: it's their finished goods. So for Pepsi, that could be a can of Pepsi, Lay's potato chips, Gatorade, anything like that. Digital companies, I believe, tend to think about their product in a more broadened sense. So clearly our finished goods is part of the equation, but all of the digital solutioning that can help us be better at selling the product, or better at manufacturing the product, or better at identifying new products that we might want to go after — to me, are all part of the equation in terms of to be able to be better, faster, and stronger in terms of how our project is going after the marketplace.

It's a really good question. I think if you were to go back even five to ten years ago, most organizations — especially consumer — had data, but what's evolved over the past decade or so has been the ability to take information out of the transactional systems and lift it up at a higher level and enrich the data with either other transactional systems internally or external data sets. That allows us to then take all that information and basically leverage optimizers, AI, machine learning, all the different tools that are out there now, to gain new and interesting insights for us to be able to react to. In a perfect world, there's a bit of a closed loop that can occur: you take the data out of your information and bring it to life. So when we talk about the PepsiCo data journey, it's really to bring to life what I've just described. I would say where we are in that journey — no one's ever going to say 'We're done, the journey's checked and accomplished' — but I would say we're actually making some very good advancements. We've recently signed a strategic partnership with Microsoft with the Azure stack, and we have been focusing over the past several years on this idea of taking data out of the transactional systems, basically not encumbering it any longer with having to be within the four walls of a specific transaction system. And we have had some really good successes. To me, the question is: do we have the data, and do we have that data now available for this information to be looked at? And the answer there, fortunately for us, is yes. That's the capability that we have now, and we feel that we've started to really mature that within our organization.

It's a really insightful question. Recently, about a year and a half ago, we hired a chief data officer as well as a strategy and transformation executive who are really focusing on data and digital products. When I mentioned the fact that we've gotten okay at being able to take data out of the transactional systems, Peter, as you very rightfully call out, just dumping data into a... around the organization today — that's not our end state ambition, but that is where we are today. So the data group, the chief data officer, is really focusing quite a bit of their time on the data modeling and the data repository and the data cataloging, for lack of a better term. As we start to think about the partnerships that we create, the IT organization is very much responsible for the data engineering — how do we move data in and out of the various transactional systems, because at the end of the day, we do have to make, move, and sell our product. The CDO organization then works on the modeling of that information so that it's not just that we're solving one-off problems, but rather we're... Not every country or every market in the world, but surely there's other markets that can be grouped together that could take advantage of the capability we might have built for one that we could then quickly be able to apply to others.

A lot of people assumed that it was an absolute no-brainer that when Pepsi... The CEO who I supported for Europe and Sub-Saharan Africa ultimately got promoted to the CEO of global PepsiCo. He and I had a pretty decent working relationship, and what intrigued me to come back was specifically his ambition around the digitization of the company. Ramon Laguarta is one of the few CEOs, in my opinion, that actually not only understands the names of these terms but actually understands what's beneath them. So when we started to talk about his ambitions for where he wants to take PepsiCo, the challenge was one that I just couldn't pass up. It's a really exciting proposition for our company to really — I hate to use this term — go from an only-product company to one where there's a digital component as well. Ramon has enlisted all of his direct reports to be part of this journey, and that's the piece also that I feel is a key to success. Often you see these digitization journeys fit within almost disparate groups within the company, and I feel that that's usually not going to be a recipe for success. Ultimately, this idea of digitization, if it's not embraced by the functions who are actually performing the work, I don't think it's something that you can really truly gain momentum on. So with Ramon's strong support of the initiative, as well as his drive with all of his direct reports, it's...

That's a really deep question, and I wish we would have like five hours to talk about it, but I'll try to be succinct. How to take advantage of cultural dexterity to be an advantage for you versus a headwind for you. If I'm doing work in, say, Asia versus if I'm doing work in, say, the Netherlands, as an example, it's a very different dynamic that I need to come and show up with. In some parts of the world, confrontation or directness is just part of the vernacular. In other parts of the world, that is the absolute worst way to approach a problem because you're basically going to scare the people to the point where they're not going to say anything, so you might be headed toward a brick wall and no one's going to say anything because they're afraid of you. Being conscious of these different cultural differences from one part to the next is super clear. There's a misconception, usually from America — not most, but many people in America — who feel that if someone's native language is not English, it must mean they're not as intelligent. I've seen some of that. Americans will come in, they talk very fast, they talk very loud, and if you didn't understand me, I'll talk even louder because that must be the problem. That's not really the reality. What I found was that the talent that existed around the world was top-notch. When you overcome that cultural bias, all of a sudden there's this huge unlock where we found there is just tremendous capability and tremendous value that we can leverage as an organization, especially global companies. Obviously PepsiCo is a very global company, Reckitt Benckiser is also a very global company, and we're able to learn some great things. The second thing I would call out is the assumption that all innovation has to go from west to east. There's a great book called Reverse Innovation. They fairly cost-effective way maybe for other parts of the world. With PepsiCo, as with most companies, we have different margin businesses around the world. As you start to go to the east, you might see some margin challenges that you might not have when you're in the west. What I also discovered in my experiences with global is there's a lot of great capabilities that have been established in parts of the world that are leverageable going the other direction. One example I can give that I couldn't be more pleased by: we had a very cost-effective e-commerce solution very quickly to stand up a direct-to-consumer website in the US. What we were able to do is take this very inexpensive but robust solution that we were using in Asia for customer integration or e-commerce and apply that to the US. Within 30 days, we stood up a full direct-to-consumer e-commerce website — snacks.com, if anyone's listening, would like to order some great Lay's potato chips, I would highly encourage it. But we were able to do that in about 30 days at a very attractive price point. This is a great example of what I would call this east to west innovation path. There's not a day that goes by that there's not a great learning out there. I'm pleasantly surprised at the capabilities that really do exist that you can unlock for the organization that you're part of.

That's a great question. I'm going to lead with: there's really three different stakeholder groups that we can talk about, and I'll go deeper on the third. I would be absolutely remiss if I didn't mention our own customers and consumers of our product. What we saw with the pandemic was a shift in channels in terms of where people were wanting to buy product. I'm not making a comment this was good or bad, because clearly if you're part of a channel that people were not able to come to, that's not a good situation for you. But to be able to react to that very quickly — I mentioned that snacks.com example it's... The group that has had to show up to work every single day even through the pandemic, which we call our frontline workers, both the sales and supply chain organizations, what we've been focusing on with them is their safety and protection. If I put the IT lens on that, what we were really focusing on has been the ability to do some level of contact tracing and storage of that kind of information so that we have the ability to do it. Now we're starting to think about potentially looking at, if the laws allow for it, some type of vaccine tracking to determine if someone does or does not have a vaccine. But that's a bit early days now. I think the real crux of the lesson for all of us — about a couple of weeks in, we were talking at the executive committee, I was asked the question: 'Hey, how hard would it be if we went to 100% remote working?' My response was: 'Well, if you could give me like two to three weeks' notice and if we could do like a trial run, it would be great.' Well, unfortunately, as I'm sure most companies and most CIOs were faced with, that two or three weeks turned into two or three days. We immediately over the course of about 72 hours went to remote working. I would say a couple of learnings we had in those early days: first, thank goodness we had the relationship with Microsoft on the cloud side and we have some really smart... It allowed us to basically stand up VPN capabilities overnight — I should say scale up; we had VPN but not to the scale that we would have needed. And because we already had the wiring between the data centers already established, we were able to pass people through the Azure stack, which was incredibly helpful from a scale point of view. We had already some pretty decent technologies on the devices, so the ability to split tunnel and really ensure that not all traffic had to go through our data centers that maybe didn't need to — if someone's doing just an internet search, they don't really need to go through our data center — ended up being a huge, very significant unlock. The other thing is that the major video conferencing providers, whether it be Zoom or Microsoft Teams, they all work. We found that that was working quite well, in fact maybe too well. When I look at the statistics, we saw our Zoom usage go up about five-fold from pre-pandemic to post-pandemic. I'll spend a little bit later on talking about the good and the bad with that one, but that did allow us to have connectivity almost instantaneously. Because of the cloud capabilities that these video conferencing providers have, all of a sudden we had easy access to our team members as well as the leadership across the entire company. So there really was not even a day... As my CSO would tell us, the attack surface looks very different now than it did before, but I would say with the endpoint protection that we have, we've been able to hold our own in that arena. The piece that I would say was not as readily accessible in terms of people jumping on it was the more robust collaboration tools. This is where I think there's a bit of a challenge that we're working through right now. There's this concept that I'm sure you've heard around Zoom fatigue or video conferencing fatigue. If you boil that down to what does that really mean: you no longer have impromptu meetings... What has happened is that most people have simply tried to replicate their meeting structure via Zoom. Going back to the earlier conversation around an analog company versus a digital company: a digital company also works very differently. A digital company works very iteratively and is able to use agile in everything that it does; it doesn't necessarily mean meetings for everything. But I think what we've most often done is we've just simply tried to replicate our on-premise environment remotely, and that's creating a bit of a fatigue. The organization — we saw our video conferencing go up about 5x, but our collaboration tools only went up a little bit less than 2x. There's clearly a gap there in terms of how much we think we could actually use these tools. So that's going to be an area of focus that we're going to continue to try to push on, because it's my belief — and I'm a pretty good adopter of a lot of these tools personally — I do feel it is a tremendous time saver. You don't necessarily need to be in meetings to work on things. In fact, one of the things I had done with my own direct reports: I was finding that I was getting upwards of 1,000 to 2,000 emails a day when COVID first hit, and I couldn't keep up. It was ridiculous. So I eventually just told my team: 'Listen, if you want to interact with me on COVID, we're only going to do it on Microsoft Teams.' I believe this is something where it's... I don't pat myself on the back; that's not a big idea. This is an area that I think we can actually leverage for just about every area that we work in, that we can probably really try to mature ourselves as we move forward.

There's two ways to look at that. The perspective that I had when I had my last role at Pepsi before leaving was really the understanding of how the business operates. What can happen is, if you spend too much of your time in corporate positions, you run the risk — not to say it always happens, but you do run the risk of becoming less associated with the actual day-to-day business activities. One of the things that I found in my time in one of those roles that I try to be sensitive to with my team members is: the pressures of the day-to-day business are big. Those are ones where we have to be there in a big way to help enable all of those. Then you start to get into areas that are maybe not as frontline-ish, like your back-end financial close process. You could quickly start to say, 'Well, I'm not going to worry too much about that.' But guess what? Our shareholders care quite a bit about that. So you also have to make sure you're staying through to what's going on. I'd like to think — and maybe I should ask my direct reports this question to see how good I am at this or not — I'd like to think that I am quite sensitive to any issues that have any implications to our ability to make and sell our products. I'm available at any hour of any day. There is not a time of the week that we're not in prime time selling or manufacturing product at PepsiCo, which means there's always a chance if there's a problem anywhere around the world that you need to make sure you're at the ready to help.

Well, there are many. There couldn't be a more exciting time to be in this type of a position in... I'll tell you today, IT is very much at the front and center in a lot of what we do. Most of the trends that I would call out that I get excited by are trends that are back to this kind of digital space. Whether it be optimization engines that are learning through neural learning capabilities or through rule-based learning capabilities to select and help our team members do their jobs better. For example, if you're a salesperson walking into a store, all of a sudden being prompted: 'Hey, you really should push this product because this one SKU will both help your customer gain higher sales but also clearly help the company.' These optimizations are where we're really leaning in, and we believe this is a big unlock. Other areas, like robotic process automation, is also a big idea that we can take to various places. Like most companies, we're in it and we're using it in piecemeal areas. One of the things we are focusing on is a more robust global business service organization across our company, and automation is going to be key. It's not just about co-location of a bunch of smart people together; it's about how to really think through a more efficient way to do our various processes. Quantum computing has some interesting potentials for our industry. Quantum seems to work best in the optimization spaces. One of the things that we are playing around with a bit — I wouldn't say we're majoring in it yet because quantum is on the cutting edge — but I do believe quantum is going to help us figure out optimizations in ways that today are just not feasible. Like most companies, when we're running optimizations, we're typically constrained by the hardware, the processing power needed to do the calculations, and therefore we limit the data sets that go into it. Those are some of the bigger ones that I'm interested in.

Well, with Pepsi, we have such a wide variety of products that it's hard to pinpoint just one. But I'm a huge Gatorade fan; I drink it quite a bit, and we have some really nice innovations that have been happening in that space. The whole PepsiCo beverage area... I suspect that in your pantry, Peter, you probably have some of our products. I know I have a whole pantry full of our products. I don't necessarily pick just one because I like to vary it by day, but it's definitely a staple for my family.