Pepsi: Leadership Change

By John Dudovskiy
June 24, 2012

PepsiOrganisational Linkages in Pepsi 

According to Malloch (2004) honest leadership was the distinctive trait of CEO of Pepsi that was especially well expressed in Steve Reinemund. The secret of Reinmund’s leadership, according to the author, was his ability to recognise the personal aspirations of his employees and linking these aspirations with organisational objectives. Honesty is considered to be one of the leadership traits that can be adopted by other organisations as a result of organisational linkages with them

“Linkage analysis calls attention to ways of translating local gains into broader organisational benefits” (Goodman and Rousseau, 2004, p.3).  Organisational linkage can be undertaken by linking effective leadership practices within Pepsi into other companies within various industries. For, instance leadership development initiatives that proved to be highly successful for Pepsi can be implemented by other companies as well, in order to achieve similar results.

Collins (2010) mentions intensive rivalry between Pepsi and Coca Cola when analysing the leadership style in Pepsi and states that Coca Cola Company have to spend enormous amount of financial resources in their attempts to stay ahead in competition, whereas in Pepsi effective leadership style often results in gaining competitive edge for the company in many aspects with less financial resources spent. This example is a clear illustration of the importance of effective leadership. Efficient leadership not only has intangible positive impacts within organisations such as motivated employees and energised environment, but also has a direct positive impact on organisations in terms of financial gains which can be seen from the  case of Pepsi.

Explaining the reasons of efficiency Pepsi medium and strategic level managers operate in Cummings and Worley (2008) argue that Pepsi web-based manager development programs such as MyDevelopmentNet and MyCareerConnection play important role. These and similar programs can also be adopted by many businesses, as well as non-profit organisations through organisational linkages that will result in emergence of effective managers within these organisations.


Pepsi Leadership Change

Pepsi has a worldwide reputation in the business world for being an efficient company for fostering effective leaders that have contributed not only to the success of Pepsi, but also have fundamentally transformed many businesses and various industries.

Bringing an example of efficient leadership change Tichy and Bennis (2009) mention Pepsi, where CEO Steve Reinemund was replaced by Indra Krishnamurthy Nooyi in 2006. According to authors efficient leadership in Pepsi has been ensured by its leadership development program that was initiated by another CEO Roger Enrico, one of the most efficient CEOs in the history of the company.

Griffin and Moorhead (2009) inform that Indra Nooyi CEO of Pepsi has been named “The Fifth Most Powerful Woman in the World” by Forbes magazine, due to the fact that Nooyi was able to display true leadership qualities decisively acquiring Tropicana brand, spinning-off fast-food subsidiaries into Tricon and through a range of other measures.

According to Fox and Fox (2004) one of the principles in Pepsi that helps to foster exceptional leaders within the company involves encouraging employees to rely on their personal intuition and experienced instead of formal rules when faced with complex dilemmas in the workplace. Moreover, Pepsi employees are encouraged to take individual decisions even on the matters that can result in serious consequences in many levels.

The reasons why many successful leaders that have undertaken massive changes in many industries have emerged from Pepsi are provided by Church and Waclawski (2009) by pointing to the company talent management initiative that combines training, leadership development, 360-degree feedback, performance management, and executive coaching. These efficiency of these programs have been long underestimated by other major companies, including Pepsi competitors that this has resulted in additional competitive edge for the company.



  • Collins, R, 2010, Leadership in Wiki World, Dog Ear Publishing
  • Church, AH & Waclawski, J, 2009, Take the Pepsi Challenge, in “Strategy-Driven Management: A Leadership Imperative”, John Wiley & Sons, Editors: Sizler, R & Dowell, BE
  • Cummings, TG & Worley, CG, 2008, Organisation Development and Change, Cengage Learning
  • Goodman, P, 2000, Missing Organisational Linkages: Tools for Cross Level Research, Sage Publications
  • Goodman, PS & Rousseau, DM, 2004, Organisational Change that Produces Results: The Linkage Approach, Academy of Management Executive, Vol. 18, No.3
  • Griffin, RW & Moorhead, G, 2009, Organisational Behaviour: Managing People and Organisations, Cengage Learning
  • Fox, R & Fox, J, 2004, Organisational Discourse: A Language-Ideology-Power Perspective, Greenwood Publishing Group
  • Malloch, TR, 2004, Spiritual Enterprise: Doing Virtuous Businesses, Blackwell Publishing
  • Tichy, NM & Bennis, WG, 2009, Judgement: How Winning Leaders Make Great Calls, Penguin Publishers



Category: Leadership