Whole Power: Now that I know all about PepsiCo, consumers don’t go for our drinks or snacks until 10 a.m.
In January 1998, PepsiCo celebrated the 100th anniversary of Pepsi-Cola and held a super-large event on the Big Island of Hawaii. The party was spectacular: ocean breezes, food, and hundreds of executives and their spouses dancing the night away, while the Rolling Stones played on a small stage nearby.
But work didn’t stop. Roger took me aside one morning and said that Coca-Cola’s price-to-earnings ratio was around forty-five and PepsiCo was in the mid-twenties. He wants another in-depth analysis, now on Coca-Cola.
I went back to New York, led a team of about ten people, and started delving into the global beverage business. We read every internal and public document we could get our hands on. We hired Mars & Co., a consulting firm specializing in competitive analysis, to spend the next four months exploring how Coca-Cola made its money and why investors thought their stock was worth more than ours. Marth’s final report was three hundred pages long, and I had to digest it all, make a summary, and present the conclusions to the board.
After some discussion, we put together this material into six easy-to-understand, illustrated posters that were posted on easels and displayed in the conference room. In another important board meeting, I took the directors of PepsiCo, explained the charts one by one, and concluded that Coca-Cola’s stock price could not last. Much of our rival’s earnings growth has been underpinned by one-time items, including the sale of minority stakes in their bottling companies. Years ago, Coca-Cola spun off their soft drink bottling and distribution system as an independent public company, mixing syrup, water and other ingredients to make the final bottled product. Ownership may increase or decrease, but within a certain range, but quite at will.
At the meeting, I showed that Coca-Cola had a higher return on invested capital (ROIC) driving PE than PepsiCo because the company was primarily focused on making and selling syrups.
PepsiCo owns our bottling plants, but Roger is curious about the financial engineering of our competitors. We started talking about how we could spin off our North American bottlers as well. I worry about this because I think it might not be easy to relinquish control of our US beverage distribution: independent bottlers will want to set their own growth targets, and I worry that in the end it could hurt us in the future.
However, I am not in charge. Roger weighed all the arguments and decided that PepsiCo should form a new publicly traded bottling company primarily out of our North American assets. We will keep 20 percent of this company.
Our Coca-Cola strategic review reveals to our executives and board how our competitors are hitting their numbers. This is also proved in the conclusion. Once Roger decided to follow the same strategy, investors learned wisely. In the third quarter of 1998, Coca-Cola’s stock price fell 34 percent.
I worked non-stop on M&A deals during this period. In the middle of the bottling deal, the bankers who worked with Seagram called Roger to ask if we would buy its juice subsidiary, Tropicana.
I think it’s a great idea. Now that I know PepsiCo well enough, I can see the gap. One of them is that consumers don’t go for our drinks or snacks until ten o’clock in the morning. PepsiCo once tried to market a coffee product for coffee drinkers called Pepsi AM, but it failed. Tropicana is the largest fruit juice manufacturer and a growing retail brand in traditional industries.
After three weeks of intensive analysis, traveling back and forth between Florida, Belgium and the United Kingdom, and conducting substantive reviews, we purchased Tropicana in July 1998 for $3.3 billion in cash.
I started thinking more often about how we should be mindful of the nutritional value attached to the PepsiCo acquisition. Soda sales dwindled as consumers switched to non-carbonated or healthier beverages. Our bottled water, Aquafina, is gaining popularity and our tea and coffee are also doing well. We have no restaurants, and our balance sheet is about to make a big change.
To me, health and wellbeing are undeniably a realm of opportunity. I’ve seen this happen in my home. What I found weird to me was one year at Tara’s birthday party, two kids asked if they could make the phone, and asked their mother if they could drink the Pepsi we had prepared. This is a warning sign to me.
One day I asked our marketing team to help me figure this out. We decided to create a health and wellbeing advisory board, brought in six experts from outside the company, and added two professors and a nutrition expert to the team. At one point, we took over a seldom-used conference room and created a mock grocery store with shelves full of healthier products; those were the portfolios we imagined we would have in the 21st century manufactured products. Roger visited the arrangement and was very curious. After watching it, Steve was skeptical, partly because he thought it was just entertainment. We tore down the bauble and disbanded the Wellbeing Advisory Council.
Every few months, I wonder if I gave in too soon. Should I come back with arguments and numbers that health and wellbeing might matter to us? The truth is, it was a mountain I had to climb later because I had other, more important to-dos on my hands.
From 1994 to 1999, I worked non-stop. I’d come home at night, shower, change into my flannel robe, show my daughters I wasn’t going out, take them to bed, then sit up and read emails and review files until 1 or 2 in the morning . I’m almost never at the dinner table.
I don’t exercise and hardly have time to sleep.
At least twice a month, I travel to and from our companies around the world. During this period, I went to China at least eight times, including several times with Henry. Journey with Henry Kissinger, whose Kissinger Associates assisted us in our overseas ventures. We wanted to know how to invest in a market where Coca-Cola had three times the market share of PepsiCo. Roger once asked me to accompany him to Asia for two weeks. We have business meetings Monday through Thursday and long weekends with local senior executives. Roger felt that getting to know these people in an informal setting was a very important part. I want to go home and be with my family.
I didn’t stop. My own job responsibilities are huge, but I also feel like I have to make sure everyone else’s work is up to par. I trained and coached dozens of colleagues, and reviewed and rewritten presentations for them.
I worked so hard on so many days and still got hurt one day. Our beloved next door neighbor, Mary. Waterman died of breast cancer. But I didn’t go to her funeral because I stayed in the office and rewrote the slides to present to the board related to the restaurant spin-off, which was actually the work of two other colleagues on the team. They just dropped the report on my desk and said, “You’re good at this kind of report, and Roger trusts you.”
I should say no. I will never forgive myself for putting work ahead of my best friend Mary that day.
No matter what my work life took on my role at home, I still had Raj as my back. He is now a partner in a consulting firm, working wildly and traveling, but still a steady source of support. We also have a housekeeper who drives and cooks for us, and a babysitter who takes care of the housework and keeps the kids safe. In recent years, my mother has spent more time at my sister and brother’s house, but she is always available to help when we need it. If we asked, Raj’s parents would help too.
Tara started Montessori school when she was less than two years old, and transferred to Sacred Heart Academy for kindergarten when she was three years old. She has a lot to do during the day and is looked after. She also used to come to PepsiCo at night and hang out on the executive floor, running around and chatting with the people there. No one seemed to care about it. Sometimes she curls up and sleeps under my desk.
Priza missed me a lot these years. She is a teenager and she sees a busy and stressed mother. Our days of singing and dancing together in Chicago, and our early days in Connecticut, were all replaced by what she thought was Tara’s rivalry. I love and stand by me when things get tough, but not every day. She expresses her anxiety by losing control of her words, and I sometimes don’t know how to cope.
Tara was a calmer and quieter child. She once wrote me a note, which I still keep in the drawer of my desk, blatantly expressing the emotions of all these years. She begged me to come home on a large sheet of art paper decorated with flowers and butterflies. The paper read: “Please come home soon, I will love you again.” She spelled the word “please” seven times in cute crooked handwriting.
For many years, when I was traveling, I wrote notes and letters to Priza and Tara and kept them at home so they could open them when I was away. I write these letters whenever I can, whether at my desk, in a car or on an airplane, or in a hotel room before bed. I always look for stickers or small toys and knick-knacks at the duty free shop at the airport and put them together in an envelope bag. We ended up with a collection of dolls in clothes from all over the world, from Finland, Japan and Brazil. These notes and keepsakes are for me a small ongoing personal project while I work on my other tasks. It brings me closer to my kids, even though I know it’s a poor substitute for in-person presence. For years, the guilt of not being able to be a full-time mother when my children were young had gnawed at my heart.
I often wonder why I keep doing this. This job stimulates my mind and I really love what I do. I’m sure it would be miserable for me to quit, and I’m not willing to quit completely. On a more practical level, we are still paying some bills for home renovations, and with two private school tuition fees to pay, our expenses are high.
We also set a financial goal: one savings for our retirement and some extra to make sure our daughters are financially independent. Deep down, we’re always worried about what if we lose our job. Raj and I both have jobs, it’s our safety net, maybe it’s more of a typical immigrant mentality.
One day in the spring of 2000, Roger walked into my office with ease and said that it was the company’s chief financial officer, Mike. Mike White will be reassigned to Europe to direct the snacks business. Roger asked me to be Treasurer, adding to the other responsibilities I already had. I told him I would consider it. I already have too much work on my hands and don’t want to take on any more.
Two days later, on Friday, he came and said he was going to announce my appointment next week. And he said, “You’re basically already doing this job. You just move me over to that office.”
Not long after, I packed my belongings and moved into the treasurer’s office, which is next door to the CEO’s office. This room has six windows. There are now nine departments reporting to me: Financial Accounting, Tax, Treasury, Investor Relations, Risk Management, Global Sourcing, Information Technology, Mergers and Acquisitions, and Planning.
That weekend, I dug out my old MBA finance books and started reviewing everything I needed to relearn as CFO. Things never get done.
Time is an important asset in my life, and I spend almost all of it on PepsiCo. To stand out among my ideal employees, I had to be one myself.
PepsiCo’s human resources department offers job sharing for certain junior employees, and my first two administrative assistants shared a job. No one else, let alone in my class, is going to ask for less work, perhaps because they worry about the so-called resilience taint.
During this period, another woman rose to the most senior rank at PepsiCo. Brenda. Branda Barnes was named CEO of PepsiCo North America in 1996 after serving the company for two decades. She has three children under the age of twelve, and she resigned after less than a year in office. She moved to Chicago, spent eight years at home with children, and served as a director. She remains an excellent executive. In 2005, she took over as CEO of Sara Lee Group.
Brenda’s decision, like that of thousands of other talented and ambitious women leaving big companies, couldn’t have been more logical. The rules of engagement for corporate leaders are absolutely ruthless. Compromises to accommodate family life are unimaginable.
Brenda didn’t have the kind of extended family support I’d come to rely on. And with jobs that are constantly traveling, we have no way to truly connect with our children’s daily activities from afar. “The sticking point is timing,” she said in 1997, when interviewed by the media about her departure. “Hopefully one day, corporate America will fight for this.”
We still only have twenty-four hours in a day, and we must use them wisely. When we take on more responsibilities, like caring for a child or a sick family member, the best way we can handle it is to use our time more efficiently without sacrificing performance.
Now that we have the tools for seamless remote communication, I believe that work flexibility and the ability to work remotely for everyone who needs it should be completely the norm. This can bring home the opportunity to take care of the responsibilities of home life during the workday without feeling burdened by the emotional consequences.
Shift workers have to constantly deal with impromptu scheduling, or changing schedules, messing up their ability to plan their schedules. Steady hours combined with readily available scheduling technology should be the norm for all shift workers, especially those with caregiving responsibilities of any kind. Employers have no reason to refuse this kind act.
Alleviating time conundrums also includes an element of dealing with the culture of urgency that consumes our economy and our workplaces. Deadlines are very important, but people often get their way.
I’ve worked on hundreds of projects with very tight deadlines, maybe a few days late. Does that make a difference for projects? Not most of the time. Would that make a difference in the family life of my colleagues as carers or as part of the community? I think the answer is yes.