Over the last several weeks, weve considered a number of corporate responses to societal issues impacting a variety of stakeholders employees, investors, business partners, customers, the general public, government and communities among them. In some cases, the majority of the class opposed what it deemed questionable, unethical (and occasionally illegal) decisions and/or actions taken by case protagonists.
In contrast, our text (in most chapters) referenced examples of admirable citizenship behavior by other companies. This week we look at two such firms and their leaders — both recognized as having defined a new era in business during the past decade. They are Indra Nooyi, recently retired CEO of PepsiCo and Paul Polman, recently retired CEO of Unilever. Both were “pioneeres of purpose” at a time that shareholder theory still held sway.
A Harvard Business School article said this about the two of them:
“When they became CEOs, the Great Recession of 2008 was consuming the worlds attention. Many speculated about the possibility of a new depression, a collapsing stock market, and extreme unemployment. Some observers even began to question the foundations of capitalism, arguing it needed to change in order to endure.
” They (Nooyi, and Polman) recognized that business had to contribute to society in meaningful ways, not just profit from it. They believed that organizations had to benefit all stakeholders: their customers, employees, shareholders, and communities and that this approach would result in sustained increases in revenues, earnings, employment, and shareholder value. Through their leadership they encouraged other corporate leaders to embrace this multi-stakeholder approach.”
This week we examine, in the articles and videos provided, Nooyi and Polman’s ideas, leadership styles, interpretations of corporate purpose, and operational approaches to exercise it.
Before reviewing these materials, read the instructions for this week’s discussion 1 (see yellow link at bottom of the page.)
Suggestion: When reviewing the articles and videos, be sure to take notes as you go along to capture insights and quotes as well as references to key concepts covered in our course that you can incorporate in your discussion posts
Read the quotes below to get a sense of each leader, then click on the two blue titles above them to access content about Indra Nooyi and Paul Polman:
1. Case: Indra Nooyi, PepsiCo and “Performance with Purpose”
In 2006, Indra Nooyi who grew up in India where she was exposed to poverty, environmental degradation, water scarcity and social and economic inequality — become CEO of PepsiCo.
Here’s how it all came about:
Link
(Links to an external site.)
About a year and a half ago Nooyi retired as CEO, but remained as Chairman at Pepsi. Just before she retired, still in the CEO job, Nooyi gave an interview at the World Economic Forum. Looking back at the start of her tenure as PepsiCo CEO and how she endeavored to change the company, she said:
Ten years ago, as my colleagues and I were thinking about the future of our company, we saw some major changes on the horizon.
People were increasingly looking for healthier foods. Environmental issues like water scarcity and climate change were threatening ecosystems, livelihoods, and economies around the world. And the competition for the next generation of talent was becoming more intense than ever.
We had a choice to make. Continue with business as usual. Or fundamentally transform our business, turning obstacles into opportunities. We chose the latter approach, and it has propelled our company forward ever since.
Listen to the full interview with Indra Nooyi here:
(Links to an external site.)
You will notice, in the interview, Nooyi references employees, shareholders, customers and other key stakeholders all topics of recent chapter readings in reference to her efforts to fundamentally remake Pepsi. That change required rethinking the companys relationship with all key stakeholders and redefining its purpose for existing.
2. Read this brief statement by Nooyi about her Performance with Purpose” initiative at Pep
3. For more detail about Performance with Purpose and its three planks — People, Planet an
( I WILL ATTACH 2 ARTICLES)
Performance with Purpose. launched a decade ago, was a bold initiative for Nooyi as part of her strategy to transform Pepsi. She maintains it is NOT about corporate social responsibility. Rather she says its about how PepsiCo makes money in her words: its about integrating what a company can do with what the needs of a society are. Nooyi thinks all CEOs today need to rethink the relationship between business and society.
Before leaving PepsiCo, Nooyi participated at the Future of Health Summit in a conversation with Mike Milken, Chairman of the Milken Institute about how culture trumps strategy, how Nooyi disrupted and recalibrated PepsiCos culture, and, looking forward, what a CEO should be in the 21st Century. The video below captures the essence of that talk:
Link
(Links to an external site.)
(Since retiring from PepsiCo., Nooyi serves on two corporate boards, Schlumberger and Amazon, as well as the nonpartisan, nonprofit Partnership for Public Service (the goal of which is to make government more effective). Announced this week she is nominated to serve on the board of Philips. She also teaches leadership at West Point and is writing a book.)
2. Case: Paul Polman, Unilever and “Find Your Purpose”
Paul Polman describes himself as a Trojan horse who in 2008 was hired from the outside to be CEO of Unilever, Europe’s largest (but at the time struggling) food, hygiene and consumer care company. Polman described the challenge as I did not expect to be accepted. The burden was on me to be accepted. His ideas about how to turn the troubled company around — including remaking its culture — were not, however, immediately or unanimously accepted.
Shareholders, disgruntled by one of Polman’s first decisions — to stop quarterly profit reporting — got his bold advice to divest their shares. He then took his senior team to a small northern Norwegian village where the company had been founded a century before to find their roots in the long-forgotten philosophy of Sir Lever, the firm’s founder and an entrepreneur with an ahead of his time understanding of organizational purpose. The result was a movement to build purpose into every Unilever brand and into the DNA of the organization itself.
In the short video below, taped at a business conference in Europe in 2015, Polman discusses how he operationalized “purpose” at Unilever and its early results:
Link
(Links to an external site.)
Polman says a “culture of purpose” at Unilever explains it becoming one of the worlds top 500 companies — consistently recognized by Fortune as one of the most admired firms in the world, named by Boston Consulting Group as one of the 50 most innovative, admired as a global leader in human rights and workplace equality and as among the most sustainable corporations in the world. Throughout Polman’s tenure, Unilever has been impressively profitable.
In the short profile below, Harvard Business School described Paul Polman, who headed Unilever from 2008 until last year, as “a world statesman who exemplifies all the qualities CEOs require in this era.” You will hear him, in the materials below, espousing many of the key ideas covered in this class. He accomplished something few CEOs have successfully attempted — fundamentally changing the culture of one of the world’s largest corporations. The articles and videos leave no question about how Polman answers the question, “What is the purpose of the firm.”
Paul Polman HBS profile.pdf
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Interview with Unilever CEO Polman_.pdf
download
In the first of two videos below, taped at a business conference in London shortly before his Unilever retirement, Polman argues that business cannot “be a bystander in a system that gives it permission to exist” — and warns our economic system can’t continue to function if it doesn’t change. Change is economically justified, he maintains, because the cost of not acting, is greater than the cost of acting. (You may want to listen to this lecture more than once.)
Link
(Links to an external site.)
As the video above exemplifies, while at Unilever CEO, Polman assumed a role as an advocate of purpose-driven business that stretched far beyond that single company.
In the following interview at Harvard Business School last year, Polman elaborates (quietly) to a more academic audience the importance of pursuing purpose:
Link
(Links to an external site.)
Finally, watch this impassioned 2-minute conclusion of a very recent presentation Polman made about the imperative of actually acting on one’s purpose:
Link
(Links to an external site.)
(When Polman retired from Unilever about eighteen months ago, he founded “Imagine,” a benefit corporation (B-Corp) aimed at accelerating business leadership in achieving solutions to the challenges of inequality and sustainability. He is also chair of the International Chamber of Commerce, a member of the International Business Council of the World Economic Forum, chair of the B Team, vice-chair of the UN Global Compact, and a board member of the Consumer Goods Forum. Until recently he was also chair of the World Business Council for Sustainable Development.)Indra Nooyi and Paul Polman are the same age. Both are of non-US origin. Both earned MBAs at US universities and worked most of their careers in a single industry. Both became CEOs of large, established, global corporations at about the same time and both retired at about the same time. In the interim, both transformed the firms they led with the same bold objectives to change stagnant cultures and outdated business models, instill organization purpose, vitalize stakeholder interaction, and rethink strategy operational practices and. product offerings.
Nooyi and Polman inherited organizations with similar characteristics. Both firms were short-term and shareholder focused. (Shareholder primacy was at that time the reigning corporate model). At both companies, product lines (although for different reasons) were out of step with rapidly changing consumer perceptions or preferences.
ANSWER THE DICUSSION BELOW AFTER READING CASE 1 AND 2 WITH THEIR VIDEOS AND ARTICLES.
Despite the many similarities in their situations, there were differences in the challenges Nooyi and Polman faced. Nooyi inherited a historically profitable company, but one whose fortunes derived from an unsustainable product line (dominated by sugary and salty snacks) and problematical production practices (including controversial water usage).
The board at Unilever, on the other hand, had hired Polman from the outside as CEO, recognizing it needed fresh talent to revitalize a stagnant corporate culture, long-standing, but neglected product lines and troubling financials.
To address their respective problems, both Nooyi and Polman recognized the need for comprehensive organizational change — starting with corporate culture and extending through corporate strategy (recall or revisit the Duke video about the link between them).
Access, from Discussion Materials page in the Week 6 module two cases — one on Nooyi and one on Polman. , In the articles and videos found there, Nooyi and Polman provide opinion, insight, and rich evidence of relevant ideas, concepts and practices relating to business and society covered in the Lawrence text and other required reading or viewing during this course. Here are some examples:
Ideas about a corporations relationship with society. (For example, the idea that organizations enjoy societys license to operate and the responsibility to earn it)
The importance of corporate culture and getting it right
Why purpose matters and its role at organizational, brand and personal levels
Differences between shareholder and stakeholder approaches to firm purpose
Ways purpose can be operationalized
Short versus long-term organizational focus and policies
Roles (and interactive roles) of the CEO, board, shareholders and other stakeholders
Relationships with stakeholders other than shareholders
Tri-sector (private, public and civil society) collaboration and partnerships to address societal (and organizational) challenges
For this weeks Discussion 1, you can explore any combination of these topics or others evidenced in the articles and videos — that have made a strong impression on you. The goal is not to reiterate what you read or hear, but to draw upon it to explain what you learned from them and from this class. Your post will be a thoughtful essay that involves reflecting on Nooyis and Polmans CEO (and, perhaps, pre and post) experience. (Students may have different responses to these leaders, their ideas and their CEO performance.)
Answer each of the 4 questions below, labeling them 1, 2, 3 and 4.
(Prepare your essay in a Word document, edit it for logic, flow and persuasiveness — as well as for grammar, spelling, etc. — and then paste it into the discussion thread. for your team colleagues to read.) Please respect your team (and me) by using the review function on your computer to correct spelling and grammar before submitting your post.
1. State at the outset which topics you have selected to talk about and why. (Dont try to cover all (or too many) topics as your essay will be superficial.)
2. Tell us why the topics are key course takeaway(s) for you and why.
3. Then draw from the videos and articles (citing the source each time) to exemplify, explain, demonstrate, amplify, etc. (Dont just report what one or the other leader said about your topics — but certainly, if applicable, compare their responses or behaviors, pointing out and commenting on similarities or differences between what the two CEO did, said, etc. or between them and other “protagonists” you’ve encountered in this class.
4. **To enliven subsequent discussion, discuss at the end of your essay which of the two CEOs had the strongest impression on you and why.
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