PepsiCo-Foods-in-Peru--More-than-Small-Potatoes

REV:APRIL11,2012ROSABETHMOSSKANTERRAKESHKHURANARAJIVLALMATTHEWBIRDPepsiCoFoodsinPeru:MorethanSmallPotatoesOnAugust3,2010inLima,Peru,IndraNooyi,ChairmanandCEOofPepsiCo,announcedthecreationoftheAgriculturalDevelopmentCenterofPeru(CEDAP).“ThereisunlimitedpotentialforPeruvianfarmerstoday,andwewanttohelp,”shesaid.JorgeTarasuk,theinitiative’ssponsorandtheVicePresidentofOperationsandSupplyChainforSouthAmericaFoods,listenedintheaudience.Thecenterwouldbeginwithafocusonbreedingnewvarietiesofpotatoes,acriticalinputforPepsiCo’sFrito-Laychipsbrands,whichcontributedover60%ofsalesinPeru.ButTarasukandhisteam,manyofwhomsatbesidehim,hadabiggervision.Frito-LayaccountedforthemajorityofrevenuesintheSouthAmericafoodsbusinessandasignificantportionofglobalfoodssales.Withoutnewvarietiesbredforwarmerclimates,thecompanyriskedlosingitslocalsupplyofpotatoesinemergingmarkets,suchasChina,Egypt,India,andVietnam.CEDAPcouldaddressthisissuebycreatingmoreproductiveandhealthiervarietiesofpotatoesnotonlyforPerubutalsofortropicalandsub-tropicalregions,wherethecompanyexpecteditsfuturegrowth.Itmayevenseektodevelopnewvarietiesofotheragriculturalinputsasthecompanyshifteditsproductportfolio.Nooyi’sannouncementwastheculminationof10yearsofeffortsbyTarasukandhiscolleagues,especiallyNewtonYorinori,AgriculturalDirectorforSouthAmericaFoods,andGiorgioBollo,AgriculturalHeadforPeru.Despiteinitialrejection,feelingsofstrategicmarginality,andmultiplecareermoves,theyhadrefusedtolettheideadie.Tarasuk,anativeBrazilian,hadservedthroughoutLatinAmericainprocurementandoperations.NewtonYorinori,alsoBrazilian-born,hadworkedunderTarasukandhadrisenfromBraziltoMexicototheUnitedStatesandback.GiorgioBollo,anativePeruvian,hadadvancedinhiscountryandwouldbecomethenewDirectorofCEDAP.Despitethedistances,theyandotherswhojoinedthecoalition–fromMexicoandColombiaandbeyond–maintainedcontact.WhilelisteningtoNooyi,Tarasukreflectedonthelongjourneyofinnovation.Nooyi’smentionofPerformancewithPurpose(PwP),firstarticulatedaftershebecameCEOin2006,remindedhimofhowithelpedcreatesupportandstrategicalignmentbygivinggreateremphasistoenvironmentalandlonger-termconcernsinthecompany.TarasukcataloguedhowBolloandhiscolleagueshadpavedthewaythroughanativepotatoesprojectinPeru–asmallmarket,contributinglessthan$100milliontothecompany’s$60billioninrevenues.Theinitiativeovercametheoddstoproduceamarketplacesuccessandlentcredibility(andawards)totheCEDAPcase.TarasukalsothoughtbackProfessorsRosabethMossKanter,RakeshKhuranaandRajivLalandResearchAssociateMatthewBirdpreparedthiscase.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2011,2012PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto:MorethanSmallPotatoestohowNewtonYorinoribecameaninternalchampionandstartedhisownnewvarietiesprojectandherememberedtheAgroCouncilmeetinginSeptember2009,whentheythoughttheyhadbuyin,butlearnedseveralmonthslaterthattheydidnot,promptingTarasukandYorinoritoseeksupportelsewhere,beginningwithAntonioEscalona,GeneralManager(GM)ofSouthAndesFoods.ByAugust2010,theymanagedtocobbletogetherthesupportandresourcesneededtobuildthecenterandsecureaninitialoperatingbudget.Butnowthehardworkofforgingaglobalinnovationwouldbegin.CEDAPwouldbebuiltandactivitieswouldstartinearly2011–despitethesmallbudget.TarasukhadalsocreatedacoalitionofsupportwithinLatinAmericaandtheResearch&Development(R&D)division,andYorinorihadmadein-roadsglobally,especiallywithagriculturaldirectorcounterpartsinAsia.ButTarasukwonderedwhetherthefoundationwassolid,iftherewerevulnerabilities,andwhatnextstepswereneeded.Thecompanycontinuedtowrestlewithhowtobalanceshort-termrevenueswithlong-termgoalsandCEDAPwasatinyresearchcenterinasmallcountryoperatingwithinaglobalfoodandbeveragescompanywithrisingcompetitionfrominternationalgiantsandlocalupstarts.Tarasuk,Yorinori,andBollocelebratedthesuccessthatcamewithNooyi’sannouncement–butthenextdaytheywouldneedtoidentifyhowtomaintainthemomentumandmoveforward,beyondPeru,inthecreationoftrulyglobalinnovation.PepsiCo:PerformancewithPurposePepsiCoformedoutofthemergerbetweenPepsi-ColaandFrito-Layin1965.In2010,itwastheworld’ssecondlargestfoodsandbeveragescompany,withapproximately285,000employees,nearly$60billioninrevenues,andaportfolioof19billion-dollarbrands,includingPepsi,Lay’s,Quaker,Gatorade,andTropicana.(SeeExhibit1)Thecompanyorganizedoperationsintofourbusinessunits–PepsiCoAmericasBeverages,PepsiCoAmericasFoods,PepsiCoEurope,andPepsiCoAsia,MiddleEastandAfrica(AMEA).(SeeExhibit2)From692manufacturingfacilities,itsentproductsvia100,000distributionroutestoabillionretailoutletsinroughly200countries.IndraNooyiannouncedthePerformancewithPurposestra