The CEO of the Future

A few months ago, a colleague asked me to read a speech given by Indra Nooyi, the CEO of PepsiCo, at the Economic Club of Washington, DC on May 12, 2009. It was an inspiring speech. Even just reading the words - - without the benefit of seeing her deliver them - - you get a sense not only of Nooyi’s intelligence, but also her warmth and humor and humility.

Her message is that the CEO of the future must “marry performance with purpose.” This isn’t a new idea. Peter Drucker advocated that the deeper purpose of a company lies beyond producing a profit for shareholders. Contributing something useful that customers really need is the essence of business. Nooyi goes even further, arguing that the company of the future has to see itself as an organization rooted in the community, with ethical obligations to pay back to society.

She notes that CEOs of the future will still need to know how to operate a company, manage the economics of the firm, and lead people. Those capabilities will continue to be table stakes. But leading a company that both produces performance and serves a social purpose will take a different kind of leader than today’s typical cost-cutting whiz or a financial engineer, or short-term-returns-at-all-costs hard liner. This implies a different kind of shareholder, as well - - one with long-term interests.

There is a lot more to her speech, and you have the link so you can read it and decide what you think about her ideas. As often happens, I’m now seeing variations of these ideas everywhere…from IBM’s worldwide investment in Smarter Planet, including transportation, food, healthcare, utilities, and other public goods….to an article titled “Toward a Common Wealth” in my Cal Berkeley alumni magazine…to a new book by Rosabeth Moss Kanter called Supercorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good.

One more thing about Nooyi’s talk. Only a woman CEO could have given this speech. I love that she talked about her own mother in the speech and that she described how she writes every six months to the parents of her 29 Executive Committee members, telling them about how their grown sons or daughters contribute to Pepsi, and thanking them for the gift of these individuals.

So go read it, and tell me what you think!