Give us an introduction to yourself.
I am actually an endocrinologist by training, which surprises many people who know me first as the vice-chairman of a food and beverage company. I completed my medical training and started my career in the UK before coming to the US as a Kellogg Scholar at the University of Minnesota where I served as faculty in the department of food sciences, the college of agriculture and the medical school. I also spent nine years leading programs in diabetes, endocrinology, metabolism and nutrition including as chief of endocrinology for the Hennepin County Medical Centre. From there I moved to the Mayo Clinic and Mayo Medical School in Rochester, Minnesota, where I served as the director of the diabetes, endocrine and nutritional trials unit in the division of endocrinology.
I left Mayo to become president of the Takeda Global Research & Development Centre, overseeing Takeda Pharmaceutical’s worldwide drug development.
In 2007, I joined PepsiCo, where I now serve as vice-chairman and chief scientific officer of PepsiCo. In this role I oversee the global “performance with purpose” sustainability agenda and lead research and development efforts, creating breakthrough innovations in food, beverages and nutrition – as well as delivery, packaging and production technology – to drive PepsiCo’s businesses forward.
Give us a brief introduction to PepsiCo and the strategic objectives of your innovation and areas of business change.
At PepsiCo, we believe the products we sell, the way we treat our planet and the opportunities we create for people around the world together are the true measure of a successful 21st-century company. By improving the way our food and drinks are grown and made, we continue to reduce our environmental footprint and create more sustainable, prosperous communities around the world. Our focus is on innovations that will help us to advance this agenda and transform our business to deliver future growth.
I will give you a few examples from our planet and people-focused work over the past 10 years.
• Reduced our environmental footprint by using fewer natural resources. Through innovations and efficiencies across our global manufacturing operations, we have reduced our operational water use by 23% and improved energy efficiency by 16% up to 2014. That is the right thing to do and it is good business. PepsiCo’s environmental sustainability programs have saved the company more than $375m from 2010 to 2014.
• Eliminated waste across our global enterprise. Over the past 10 years, we have reduced our overall packaging weight by approximately 550 million pounds. In addition, we have become the largest purchaser of plastic bottles in the world and are working to reduce food waste through innovative recovery solutions such as using peelings from left over potato chip production to make an environmentally-friendly fertiliser.
• Provided safe water access to millions of people worldwide. Working closely with partners, PepsiCo has helped provide safe water access to more than 7 million people in water-stressed communities all over the world.
• Supported farmers in developing communities. In 2011, PepsiCo launched the Sustainable Farming Initiative to help growers operate more efficiently and meet PepsiCo’s social, economic and environmental standards. Today, the initiative has expanded to growers across 11 countries, including Mongolia, Mexico, the UK and India. It provides farmers with resources, training and support to increase crop yields and support worker rights.
• Enriched lives all over the world. By harnessing our company’s global resources and reach, PepsiCo has helped accelerate growth and prosperity in many communities we serve, investing more than $850m in community programs since 2006.
What key technology and new business models do you see as an opportunity or threat to your business?
The biggest challenge facing our industry right now is how we are going to address some of the macro issues facing the world. We all know that the global population will expand from 7 billion to 9.5 billion people by 2050. An additional 2.5 billion mouths to feed in just 35 years. How will we feed an expanding global population?
At the same time there will be more mouths to feed, there will be less water and land. How do we make more food when there are fewer natural resources?
Investing in or partnering startups or incubators is seen as important for many corporates. What is your view on these approaches?
Traditionally, companies like PepsiCo and many of our peers were sceptical of ideas that were “not invented here”. We have invested a lot of time, energy and capital to be best in class in the food and beverage business. But the pace of change today is such that being the best at current state-of-the-art technologies is no longer enough.
The biggest threat to companies is not another product coming out from a competitor. We will come up with better one the following year. It is about someone coming up with a very different business model and changing the game completely – disruptive Innovation. That means that we have use every resource available to us to make sure that we are on the edge of that disruption and you cannot do that by exploring only within the four walls of your company.
In the past five years we have signed more than 50 partnerships with a mix of food entrepreneurs, universities, technology companies and suppliers across the globe. Partners help us refine existing ideas, source entirely new ones, and so on.
At the same time we have addressed gaps in our internal capabilities to make sure we have the right thinkers working on what is next.
Building a new technology, a new business model and creating what I describe as an innovative new value chain is a challenge to a core business. Give us some insights to the key challenges you see in your business and your customers changing their business models.
Diversity of thought is one key to developing the type of innovation-centric culture that we have at PepsiCo. Today, our product offerings are more diverse because the people developing them come from truly diverse professional and technical backgrounds.
My R&D team now includes experts in areas such as agronomy, exercise physiology, metabolomics, rheology, computational analysis nutrition science, in addition to the traditional food and beverages science skills we have relied on for decades to bring great products to market.
With the diverse R&D team we have assembled, a strong signal was sent to the world about our approach to product development, innovation and design. And my leadership team today is globally-sourced and more than 50% female, which makes sense considering that 70% of our products are purchased by women.
Intergenerational talent transfer is a huge priority. This is why we have R&D Fellows, the equivalent of tenured professors in our R&D group – very senior scientists who mentor young talent – and what we call the PepsiCo Academy of Sciences Awards to recognise innovation across R&D.
Talent transfer is not just occurring vertically inside our organisation, but horizontally on the outside too.
How do you measure your innovation financial and strategic performance?
Almost a decade into the “performance with purpose”, we have nearly doubled our net revenue. During that same timeframe, we have more than doubled our investment in research and development.
For the past three years, we have had at least 10 of the top 50 new food and beverage products introduced in North America. A number of our recent product introductions, like Tostitos Cantina, Mountain Dew Kickstart and Pure Leaf tea achieved more than $100m in retail sales in their launch year.
What do you spend your time doing when you are not driving the changes in PepsiCo?
I am busy with children and now grandchildren. I am also a keen pilot of twin engine planes, so that takes time keeping up the flying hours.
You can listen to this and other interviews on a podcast available at gaulesqt.podomatic.com
Andrew Gaule leads the GCV Academy, developing the capabilities and expertise of organisations leading open innovation, venturing and corporate venturing programs to drive strategic benefit. He also supports innovation programs and collaborations in “innovative new value chains” in global organisations.
To contact Andrew Gaule and for future interview ideas, email andrew.gaule@aimava.com or James Mawson, jmawson@globalcorporateventuring.com