After 12 years at the helm, Indra Nooyi has announced she will be stepping down from her role as CEO of PepsiCo.
The firm has been guided by her stable influence for a significant period of time, but this is not to say Nooyi’s successor, Ramon Laguarta, won’t step into her shoes successfully. He is the current president of the food and drink giant and has previously run its global operations, so his experience cannot be faulted. That said, onboarding a new CEO is well known to be a challenging and delicate process, even when they are already well versed on the business.
Typically, it’s important that a new hire will fit the company ethos and culture, but promoting a long-standing employee means the board can be confident this won’t be an issue. Understanding and quickly influencing business performance is also a key factor in a successful transition and technology can offer a huge head start.
Tech is the way forward
In some cases, the loss of a leader can also mean a loss of firm-relevant experience, particularly when the successor is an external hire. A new CEO will need to build their own confidence, but this often takes the knowledge that previous decisions have added value. Understanding key performance trends will be an uphill struggle but is necessary to make quick and impactful decisions. Incoming CEOs face an uphill struggle to understand previous decisions and the key business performance trends. Without the first-hand knowledge that the previous incumbent will have built up, successors can start on the back foot.
Under Nooyi’s 12 years of leadership, for example, PepsiCo’s net revenue grew from $35bn to $63.5bn. This growth will be based on a firm understanding of the sales trends across regions, products and markets. With financial analytics technology in place, Laguarta would be able to understand these trends relatively quickly, including what prompted those decisions and where they were most successful. Consolidating data from across the business, analysing it and making it easily accessible would help an incoming CEO make objective comparisons between past and current performance, regardless of how much company experience they have.
PepsiCo’s recent acquisition of Bare Foods Co to expand production of healthier options is a great case in point. If the CFO and finance function can show the original business sense for this acquisition and demonstrate clearly and succinctly the past and present performance, as well as predicting possible future scenarios, they can offer the new CEO a huge advantage out of the gate. Basing initial performance decisions on facts as opposed to intuition is generally the only option for an incoming CEO, so having those facts to hand quickly ensures the transition process will be far smoother for the business.
Finally, financial analytics technology can also help map all the key driving factors of performance across the complex business model in a way that can be used for future planning and scenario modelling. The ability to analyse ‘what-if’ scenarios based on various performance levers, or to test the impact of a divestment or acquisition in the existing product portfolio, is absolutely key if the new CEO is to successfully create a new strategy for the business.
Nothing lasts forever
No CEO is going to stay in the role forever. Companies – and indeed their leadership teams – recognise this inevitability and tend to prepare ahead of time to minimise long-term disruption to the business. Equally, there is no hiding from the fact that any incoming CEO will have to work hard to earn the respect and confidence of their employees.
Financial analytics technology can play an indispensable part in this process too. With access to insights into the business’ performance trends, Laguarta, or any new CEO, will be able to see a comprehensive history of the business at a glance. Not only that, they will be able to see how external factors affected the business and how their predecessor dealt with any adverse consequences. This deals with one major potential problem of succession – losing experience at the top. As such, technology can play a key part in helping the board ensure the new chief executive has the best possible start to their new role.