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From an interview in HBR:
You often use the term “purpose” in talking about your business. What does that mean to you?
When I became CEO in 2006, I did a series of town hall meetings with employees. Few said they came to work for a paycheck. Most wanted to build a life, not simply gain a livelihood. And they were well aware that consumers cared about health and wellness. We realized we needed to engage our people’s heads, hearts, and hands. We had to produce more products that are good for you. We had to embrace sustainability. Purpose is not about giving money away for social responsibility. It’s about fundamentally changing how to make money in order to deliver performance—to help ensure that PepsiCo is a “good” company where young people want to work.
Would you be willing to accept lower profit margins to “do the right thing”? Surely, there have to be trade-offs.
Purpose doesn’t hurt margins. Purpose is how you drive transformation. If you don’t transform the portfolio, you’re going to stop top-line growth, and margins will decline anyway. So we don’t really invest in “purpose,” but in a strategy to keep the company successful in the future. If we hadn’t tackled certain environmental issues, especially with water, we would have lost our licenses in some countries. Now, sometimes when you’re changing the culture radically, you run into problems. Transformations sometimes hit your margins or top line because things don’t always go in a straight line. But if you think in terms of the life span of the company, these are just small blips.