Brian Cornell, Chairman and CEO, Target Corp.
Steven Williams, Chief Executive Officer, PepsiCo Foods North America
In conversation with: Diane Brady, Fortune
Steven Williams, Chief Executive Officer, PepsiCo Foods North America
In conversation with: Diane Brady, Fortune
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TechTranscript
00:00So, you guys have actually known each other for almost 25 years?
00:04We did the update.
00:05Have your marriages lasted that long?
00:07Am I allowed to ask that?
00:09That's probably a sensitive way to start, isn't it?
00:11Well, they have.
00:12Oh, okay.
00:13Phew.
00:14Okay, that's good.
00:15Good.
00:16Well, let's start with since we're talking about culture.
00:17How did you both meet?
00:18I presume it was PepsiCo, given your background.
00:20It certainly was.
00:21We met about 25 years ago, and I think we've gotten to know each other pretty well over
00:25the years.
00:27I would say, Stephen, our relationship has probably been built on some commonality.
00:32Stephen's been always very consumer-focused, been a brand builder, a great servant leader.
00:38Is that what you sit and talk about at dinner?
00:39A great brand builder?
00:40No.
00:41Okay, I'm going to go to Stephen.
00:42Why does Stephen tell me something?
00:43We spend a lot of time talking about consumers and brands.
00:45I can tell you that.
00:46Okay.
00:47But tell me a little more.
00:48Tell me more about when was the first time you ever saw Brian in the work setting, just
00:51out of curiosity?
00:52The first time I saw him was at a meeting.
00:56I had come to PepsiCo through the acquisition of Quaker Gatorade, and it was a leadership
01:02meeting, and Brian was there.
01:03Like I told you in the back, I was like, I didn't think you would remember we actually
01:07met because you were a senior guy, I was a junior guy.
01:11We got to catch up for a bit, and that was the very first time I met Brian.
01:15Then I had the opportunity to work with Brian.
01:18He appointed me to a role, and the best advice he ever gave, he said, this is a turnaround,
01:23don't mess it up.
01:25That's them's fighting words.
01:28Anything you want to add, or can we go straight to the culture part now?
01:31We met as part of a big acquisition, so I had the pleasure of leading the acquisition
01:36of Gatorade and Quaker for PepsiCo, and onboarding that team, and along with great brands, we
01:44got some great talent.
01:46In an acquisition is when you go through and you have to re-audition for your job,
01:50so that can create a bit of a tension, but we're going to talk about external culture,
01:53and we're also going to talk about internal culture, because obviously we're dealing with
01:58a business landscape that's quite fraught at the moment, but let's start with internal.
02:04It's such a squishy concept, in all honesty, like it's, I don't know, raise your hand if
02:09you think culture doesn't matter.
02:11Okay, there you go.
02:13I want to set hello on the importance of this.
02:17Define it for me.
02:18I'm going to start with you.
02:19I'll start, Diane, I think about my 40-year career, if I would have gone back in time,
02:25we would have been sitting here, and Stephen's probably in the same boat.
02:28We spent a lot of time talking about strategy, and building capabilities, and making sure
02:32we had great talent, but I think more and more you recognize the glue that keeps all
02:36of those together is culture, and at Target, we talk about culture all the time.
02:42We talk about a culture of care, a culture of growth, and a culture of winning together,
02:48and I would tell you, if I go back just a few years during the pandemic, that culture
02:53of care, and we talk about caring for each other, caring for our teams, the guests we
02:59serve, and communities, that kept the company moving forward, and it was a really important
03:05component.
03:06Growth is important.
03:07We like to grow the top line, but we also think it's important.
03:09You would not be here if you did not.
03:10No, we wouldn't.
03:11Growth is like a prerequisite for the job.
03:13But I don't think we'd be here if we weren't growing talent as well, and that's a big part
03:17of our culture.
03:18How many?
03:19You've got 400,000?
03:20A little over 400,000 team members.
03:22Top that, Stephen.
03:23I'm just kidding.
03:24You know we're competitive.
03:25I can't top that.
03:26Even worldwide, PepsiCo is lower than that.
03:28We're about 320.
03:29That could mean you're more efficient, by the way, but go ahead.
03:34My team has about 75,000 team members, and if you think about it, culture is super important,
03:41and I agree with everything he said, particularly when you have a workforce that is distributed.
03:46I mean, about 70,000, 90% of those either make, move, or sell something.
03:51They're either in a factory, in a truck, in a distribution center, or in a store putting
03:56products on the shelf, and so being in touch with not just the management culture of the
04:03company, but the teammate culture of the company is important, and that's how you win.
04:07I spend a lot of time, in fact, I'm leaving today to go to Lynchburg, Virginia, where
04:11we have a site, and I'll spend a day at the site, a day in the market, because if you're
04:16not in touch with the frontline culture in the company, you lose, so culture is how you
04:22win.
04:23I know we're going to talk about the partnership you have, which I think is quite interesting
04:26in how you've aligned around culture, but let's talk about the external environment
04:30for a second.
04:31Brian, I know you've been front and center of this.
04:33I was talking to somebody this morning, even about the effectiveness of the ads that ran
04:38in some of the swing states around trans individuals and the threat that poses.
04:45You felt that in a very visceral way, and I know PepsiCo has too, in terms of just how
04:50polarized the country is, and how cancel culture and some of the other issues might even impinge
04:58on your values.
04:59How have you dealt with that?
05:00We've tried to make sure we stay in step with the consumer, and do the right things
05:05that are true to our brand, and fundamentally, we try to bring joy to millions of guests
05:10who shop in our stores, either in-store or online, every week, and being just true to
05:15who you are, and in an environment where there may be some tension, how do we become that
05:20joyful spot where people can say, all right, I can put all this aside, and really just
05:25enjoy the moment, enjoy the shopping experience, the value, the newness we provide?
05:31I think you've just got to be true to your brand, and really stay in touch and in step
05:34with the consumer.
05:35Do you have to be considerate to the fact that you're in blue states, red states?
05:39There are some consumers who ... I really want to capture that, because in essence,
05:45your culture is a very inclusive culture, both of you.
05:48We are in a country right now that half the country is hurting, half the country has different
05:52views of others.
05:53I'd love to just hear a little more, and I'm going to go to you, Steve, because you deal
05:56with this too, in terms of the influencers.
05:59You're both very much in touch with the consumer.
06:01What are you seeing and doing?
06:02Yeah, well, we have the privilege to be in 94% of US households, so we are everybody.
06:08When you talk about the workforce, I'm in Perry, Georgia, our largest manufacturing
06:14site, and I'm in Cucamonga, outside Los Angeles, so you have very different work groups and
06:19very different consumer bases.
06:21It's the same.
06:22You have to be true to who you are.
06:26We have brands that speak differently to different consumer bases.
06:30We leverage those brands.
06:32From an employee base, I would tell you, we want PepsiCo to be a place that everybody
06:38can thrive.
06:39It doesn't matter what color you are, where you're from, where you live, who you love.
06:45It doesn't matter.
06:46If you can't reach your full potential here, then we're doing something wrong, and that's
06:51how we think about it.
06:52Diane, we've got almost 2,000 stores in all 50 states.
06:57We talked about almost 400,000 frontline team members.
07:01I say this all the time.
07:02They represent a cross-section of America, and they've got to feel like Target's a place
07:06where they can thrive and they can grow their careers.
07:10You've got to find that through line.
07:11It means being considered as well if somebody feels maybe offended, but some things maybe
07:16putting it a little bit aside.
07:20Let me ask you a question about how you work together.
07:25He certainly knows your name now because you're a vendor, but talk a little bit about ... I
07:29think the nature of the partnership that you have actually goes deeper than most.
07:34Speak a little bit about that.
07:35I'll start with you.
07:36I think it gets back to some of the things I started with.
07:39Both of our companies, very consumer-focused, very focused on managing brands.
07:46We're very true to our partnership to make sure it is that win-win.
07:50Part of our culture to make sure ... I don't treat Steven and his team like they're a vendor.
07:55They're a partner.
07:56We work together on strategy.
07:58We work together to make sure we've got the right differentiation in the marketplace.
08:02We want to make sure we're both growing.
08:04To grow, we've got to make sure we're taking care of the consumer.
08:06Is there any friction here?
08:07It feels like there's a lot of love, but where are the pain points?
08:10I don't think there's any friction.
08:11Here's what I would tell you.
08:13The best thing for me as I was growing in my career was getting to spend time on customer
08:18calls with Brian.
08:20All he talked about, the first thing he would do when he sat down, how are you seeing the
08:25customer?
08:26How are you seeing the consumer?
08:27We weren't selling anything.
08:29It was really about getting to a joint understanding of the consumer and figuring out a way to
08:35build co-developed plans so we could win together.
08:39He models that.
08:40He's one of the best at it on this side, and he is on the customer side as well.
08:46We have a lot of co-development together.
08:48He has a few-
08:49Such as what would you co-develop?
08:50Obviously, I suppose, what?
08:51Is there some special brand-
08:52Yeah, absolutely.
08:53Popcorns.
08:54We're doing a specific item with them that we co-develop together.
09:02We had a meeting a couple of ... Was that a month ago, a month and a half ago, where
09:06we talked about standing up a build your own multi-pack, leveraging their online system.
09:14We're doing things together that are significant and unique to the relationship.
09:19Diane, we do big things and small things together.
09:21That's right.
09:22PepsiCo and Target worked the thing about, it's going to be Super Bowl season here soon.
09:27This is when our companies have to come together and make sure we really harness that big event.
09:32It's even talked about it, regionalizing assortment, making sure, market by market,
09:36we understand what's the mix going to look like to really connect with that local consumer.
09:40I think part of it's big, part of it's small, but we're always thinking about, all right,
09:45how do we serve that consumer?
09:46Since you know your consumers so well, were you surprised by the election results?
09:52Because obviously, the economists and the people in the polls found one thing.
09:57You're on the ground, you're talking to people.
09:59Did you sense that the country was moving a certain way?
10:03Well, I don't think either one of us want to be pollsters anytime soon.
10:10So if there are some pollsters in this room, my apologies.
10:14But I don't think there was any crystal ball.
10:17And I think for companies like ours, you've got to control the things you can control.
10:22We certainly were tracking, like most of America, looking for visibility to the outcome.
10:27It's not a trick question, so much as really understanding, you're out there,
10:31you see the pain of the consumer as well with regard to inflation and
10:36some of the sort of, you're nodding your head, Steve, what do you think?
10:40Yeah, but you don't know how people vote.
10:42I mean, it's unknowable.
10:44If anybody, the pollsters, obviously, they polled what happened in what they polled.
10:50So, and they're experts at it.
10:52What I would say is, no, nobody has a crystal ball.
10:55I mean, do we understand how consumers are behaving?
11:01Absolutely. Do we understand what we hear from our people?
11:03Absolutely.
11:04You don't know what happens when people go into a voting booth.
11:07Yeah, but Diane, we've been talking about this for
11:09probably now coming up on three years, coming out of the pandemic.
11:13And at every earnings call, I talk about the fact that it's a consumer
11:18who's been shopping for value.
11:19They're on a budget.
11:21The impact of inflation has impacted their spending ability.
11:26They've had to pull back in certain areas.
11:28So that message around consumers looking for value every time they shop,
11:34we've been talking about that for multiple years now.
11:36That's not a surprise.
11:37I think we heard some of that feedback during the election.
11:41But we've been very focused on making sure we run a great business,
11:46we bring great newness, we have the right assortment.
11:49But we've gotta pay that off with a focus on value.
11:51And we've been doing that for several years now.
11:52So technology is one of the big themes that every CEO is dealing with, AI.
11:57And one of the most valuable components of that is data, sharing data.
12:02I mean, I'm not going to say if that other brand was up here,
12:08Coca-Cola, etc., if you would have as much love.
12:11I'm sure you do, you love everybody, right?
12:13But talk a little bit about that technology question.
12:17How much do you share data?
12:20What do you do in ways that are unique that only the two of you could do that
12:23perhaps would be more difficult for some other brands to replicate?
12:27Well, we've made it almost 15 minutes without talking about Gen AI,
12:31which is pretty impressive.
12:32You have 7 minutes and 14 seconds, then I'll go back to Robby Starbuck,
12:36I'm just kidding.
12:37But the data is really important.
12:40The data leads the insights and the action.
12:42So we've gotta share data and make sure we're looking at it the same way.
12:46To make the right decisions on behalf of our collective businesses, and for
12:50that consumer.
12:51So the insights that we can glean from data are really important.
12:55And as technology evolves, hopefully we're going to get more and
12:58more precise with some of the choices we make.
13:00Can you give me some tactics?
13:02I'm going to go to you, Stephen, because everybody would love to work with you,
13:04and with you too, but it's different.
13:06But- I can see them really enjoying working with Stephen.
13:10Something about PepsiCo just sings to me.
13:12But I'm just saying, what advice do you have?
13:15Let's get tactical.
13:16You've seen partnerships that work well.
13:18I mean, I'm sure none of them are terrible, but what is your advice in terms of
13:23making it something where you want to get on stage together and
13:26talk about culture and partnerships?
13:29So there's a couple things.
13:30One is, take time to build a relationship.
13:33Transparency is your friend.
13:35Transparency builds trust.
13:36Trust adds speed.
13:38In this environment, speed is a competitive advantage.
13:41I would also say, it's not just Brian and I, right?
13:44It's not just Brian and I.
13:45It is multifunctional, multilevel.
13:49The guys that go into the store that use the AI to make the order,
13:53that's his store's specific order, they have a relationship with store manager.
13:56Could you say that with every retailer?
13:58I'm not going to, again, name other names, but
14:00would you say there's a deeper relationship with Target?
14:02I would say there is a very strong relationship with Target.
14:06Multilevel, multifunctional.
14:08There are few that I would say we have that depth and
14:12breadth of relationship with.
14:15It does start at store level.
14:17And certainly, there's other members of our team that work together every day.
14:22But it's also grounded in execution and delivering results.
14:27So great trust, a lot of time coming together, building plans,
14:31sharing information.
14:33But at the end of the day, it's about performance and execution.
14:36And that happens with the front line, in front of the customer.
14:40So that's where we keep score.
14:43But great consumer insights, you put together great plans.
14:47But we're both in a business where, ultimately, it's all about execution.
14:50Well, and I didn't ask a chance for some of the tactics you have.
14:53because again, everybody would love to get more shelf space,
14:57a deeper relationship with you.
14:58What advice do you have for people not, or
15:01even are there new types of partnerships that you're looking at?
15:04I mean, I'm looking at a very literal product focused level.
15:07There's obviously other types of partnerships, tech, etc.,
15:10that I'm not mentioning here.
15:13Again, Diane, at the end of the day, consumers vote with their feet,
15:17now their clicks, and their wallet.
15:19So yeah, the shelf space is important, but
15:22it's got to deliver the right results.
15:24So ultimately, it's that consumer, market by market,
15:27making sure we do the right thing in California that may look different in
15:31Texas, have the right representation in New York City that might look different in
15:34San Francisco.
15:36Consumer gets the vote.
15:37We've got to make sure we're putting the plans together that please that consumer.
15:41But ultimately, the consumer still has their wallet,
15:44their footsteps, and now their clicks.
15:47That's what really drives results.
15:48Let me put on one other quick hat,
15:49which is there's some policy makers here in the audience.
15:53Let's give some quick advice to them as to how they can create a landscape
15:58that either helps the consumer, but also helps your companies.
16:01Any thoughts?
16:02Well, I think it starts with transparency.
16:05Both of our companies are better when we've got clarity and certainty.
16:09And we understand what steps to take.
16:11I'm going to give advice to the regulators.
16:12I'm a regulator.
16:13What do you want me to do?
16:14How can I help you, Brian and Stephen?
16:17Well, I think in an environment where we've said consumers are looking for
16:21value, we've got to find ways to deliver that.
16:24Consumers said time and time again right now, hey,
16:26I'm still recovering from the pandemic, from 30 year high inflation.
16:32I'm trying to make my ends meet.
16:33How do we work together to make sure that happens?
16:36Stephen?
16:37We're an agricultural company at our core.
16:39I mean, we have 160 plus farmers we work directly with in the US and many others.
16:46One, farming is super important to the country and it will be for
16:49a very, very long time and we need to support them, right?
16:53And we spend a lot of time with regulators and our farm partners in farming.
16:58I would also say for the regulators that are working in the food space,
17:03spend time with us, get to know us, get to know the things we're working on.
17:08We really are, we put the consumer at the center of everything we do and
17:13we take making safe food very, very seriously.
17:16And so making sure and spend time, and we do, but for
17:21anyone that wants to come to Plano where we have our R&D for
17:27the PepsiCo food business, that'd be awesome.
17:30I've been to Plano, it's a great.
17:31Well, one thing I want to end off and
17:33then give each of you some quick final thoughts is you're both, and
17:37I'm projecting here, but I know it to be true.
17:39You're both kind people and you've built kind cultures.
17:42One of the concerns we have looking around the world right now is,
17:45is this a kind country?
17:48And how do we, you're reaching consumers, obviously,
17:51on an individual basis and a collective basis.
17:54Any advice you have as to how you interact in a time when
17:58not everybody's as kind as you are?
18:01I'm going to come back to the importance of sharing data.
18:04One of the things we do with regulator, administrators,
18:08is we've got a $100 billion plus business.
18:12We're in the food business, we sell household essentials,
18:15we're a big toy retailer, we sell lots of apparel and home items.
18:19We've got a pretty good sense for the pulse of the consumer.
18:21And we're always open about sharing what we see.
18:24It's one of the roles that we know we play.
18:26What's happening with consumers, what's happening in retail, the economy,
18:29that data's really important.
18:31Getting people as close to the front line as possible,
18:34where it's really happening, I think it's a really important step.
18:36Empowering and creating a performance culture.
18:39So in the time we have left,
18:40I'd love to give each of you some final thoughts.
18:42I'm going to start with you, Stephen.
18:45I've got nothing.
18:45This was great.
18:46I really appreciate it.
18:47This was very good.
18:52Focus on the consumer, guys.
18:53I mean, Brian and I are common in that way.
18:56I mean, if we didn't come through the last several years and
19:00understand the consumers of both, then we got another problem.
19:04The importance of your own culture, right?
19:06So let's bring it back to culture again.
19:08Talk about your own culture and how that drives performance.
19:12Well, I think culture for us does drive performance.
19:15As I said, strategy's important.
19:17You've got to have the right capabilities, the right team.
19:20But culture keeps that organization churning and moving forward.
19:23Is that happiness?
19:24Is it?
19:25No. I don't think it's happiness, but it's understanding the whys.
19:28And I think if I was going to leave with some advice, it's always important.
19:32And I had a meeting with my top 50 leaders just a couple of weeks ago.
19:37And we spent a lot of time making sure they understood the why.
19:40Why do we make certain decisions?
19:41Why are we making certain investments?
19:43Why is culture so important?
19:45And having the patience and the time to talk about the whys,
19:48not just the what, is critically important in today's environment.
19:50Perfect.
19:51Well, please join me in thanking our two guests here about culture.
19:55Really good.
19:55Thank you. Appreciate it.