What a Potato Chip Campaign Says about the New Role of CFOs

Lays-2

Bean counter. A person who constrains, but does not enable. The kind of person who says, “It can’t be done.”

These are just a few of the criticisms traditionally lobbed at chief financial officers from the creative side. But these days, in a challenging global economy — where technology is constantly changing the rules of the game, and the populations of developing countries are rapidly becoming more urbanized — collaboration and cooperation of the finance and marketing sides are essential, said Laxman Narasimhan, CFO of PepsiCo Americas Foods.

Today, the role of CFO is all about intersections, noted Narasimhan during a presentation Monday at the Retail and Consumer Goods Growth Summit. Those intersections include the point where finance meshes with supply chain management, information technology, sales, innovation and marketing.

“Our business is an execution business,” Narasimhan said during the conference, organized by Knowledge@Wharton, Wharton’s Jay H. Baker Retailing Center and Momentum Event Group. With the explosion of data created by the Internet and increased connectivity, “in the next 10 to 15 years, how we execute will fundamentally transform.”

PepsiCo has a massive product portfolio, including 22 billion-dollar brands ranging from internationally-known names like Lays to goods that are only sold in one or two countries.  “How do we make investments?” Narasimhan asked. “Where do you put the money?… You’ve got to make sure the money goes to places where you get the biggest bang for your buck.”

Often those decisions have to be made on the fly, based on the multitude of customer feedback that is now available immediately online. This was the kind of situation that PepsiCo was faced with in 2012 in Argentina, when it introduced chocolate chip cookies under the Toddy brand, which got its start as a powdered milk drink.

The launch was successful — but it went a little too well. PepsiCo ran out of cookies. “We literally did not have the capacity to meet demand.” On social media, Argentinian consumers were talking about the cookie shortage, and where, if anywhere, they could find the product.

So PepsiCo made the swirling gossip, rumors and cookie cravings the cornerstone of its strategy. The company built a “cookie finder” app. It also created a special “Toddy convoy” delivery team and popularized its whereabouts on social media. “You have to set a brand guardrail for what you can and cannot do and unleash local entrepreneurship,” Narasimhan said. “The campaign was completely developed by the local team in Argentina.”

To work collaboratively with marketers, CFOs must “create resources, guide investments, measure relentlessly, and enable transparency and consistency,” Narasimhan noted. “If we are spending a certain amount of money, is it touching the consumer?… We’re happy to invest more in our brands, but we want the money to touch the consumer.”

As an example, Narasimhan cited another successful recent campaign: the Lays “Do Us a Flavor” promotion, which asks consumers to submit their ideas for creative, often off-the-wall new potato chip varieties (among the winners last year in Canada — “maple moose.”) “We run this program by thinking end-to-end about execution,” Narasimhan said. “We literally measure every element.”

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"What a Potato Chip Campaign Says about the New Role of CFOs." Knowledge@Wharton. The Wharton School, University of Pennsylvania, [02 May, 2014]. Web. [30 August, 2014] <http://knowledge.wharton.upenn.edu/article/potato-chip-campaign-says-new-role-cfos/>

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What a Potato Chip Campaign Says about the New Role of CFOs. Knowledge@Wharton (2014, May 02). Retrieved from http://knowledge.wharton.upenn.edu/article/potato-chip-campaign-says-new-role-cfos/

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"What a Potato Chip Campaign Says about the New Role of CFOs" Knowledge@Wharton, [May 02, 2014].
Accessed [August 30, 2014]. [http://knowledge.wharton.upenn.edu/article/potato-chip-campaign-says-new-role-cfos/]


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