No Need for AI Unicorns: PepsiCo's Colin Lenaghan

**Shervin Khodabandeh** (0:02)
Is there really such a thing as an AI unicorn? There might not be, but for sure there are horses for courses.
Find out more when we talk with Colin Lenaghan, Global Senior Vice President of Net Revenue Management at PepsiCo.

**Sam Ransbotham** (0:17)
Welcome to Me, Myself, and AI, a podcast on artificial intelligence in business. Each episode, we introduce you to someone innovating with AI.
I'm Sam Ransbotham, Professor of Information Systems at Boston College. I'm also the guest editor for the AI and Business Strategy Big Idea Program at MIT Sloan Management Review.

**Shervin Khodabandeh** (0:38)
And I'm Shervin Khodabandeh, senior partner with BCG, and I co-lead BCG's AI practice in North America. And together, MIT SMR and BCG have been researching AI for five years, interviewing hundreds of practitioners and surveying thousands of companies on what it takes to build and to deploy and scale AI capabilities across the organization and really transform the way organizations operate.

**Sam Ransbotham** (1:06)
Today we're talking with Colin Lenaghan. Colin is the global senior vice president, Net Revenue Management at PepsiCo.
Colin, thanks for dialing in today from the UK. Welcome.

**Colin Lenaghan** (1:15)
It's my pleasure, Sam. It's an honor to be with you guys today. I'm excited to be in such a esteemed company. Really looking forward to the session.

**Sam Ransbotham** (1:24)
Yeah, we'll definitely keep the esteemed comment in there for sure. Colin, can you tell us a little bit about your current role at PepsiCo?

**Colin Lenaghan** (1:31)
My role globally very much is around building capabilities that help our business units win in the future.
There's three major legs that I try to push or that I am pushing, right? One is solidifying our foundation. That's like, have we got the right talent in the right roles, at the right seniority to integrate all the different elements that have to come together for revenue management? The other leg then is, are we building for future growth, right? So if you take the potential of our brands and how we can position them with the consumer as relates to pricing and promotion, et cetera, that's a huge unlock for PepsiCo.
And then this whole third leg is this digital transformation that we're calling it, right? And that goes from everything from standardizing the analytics that we want all our businesses to be looking at across the world, to speed up diagnostic, to speed up decision making and solutioning right through to this more advanced AI agenda. And we call that our AI program, right? So it's those major three areas. And clearly we sort of orientate with what the business need is across the world and what are the capabilities that we need to help and support to deploy and clearly work to implement those and hopefully extract the value out of them.

**Sam Ransbotham** (2:51)
What is the scope of this that you're working on?

**Colin Lenaghan** (2:54)
The scope is right across the full spectrum of the PepsiCo portfolio. Everything from beverages to snacks, of course, dairy.
This is a classic capability that can help to solve some of the problems that we're facing. So I think the categories, we're almost agnostic on the category. If there's a really clear use case of where this capability can help us address a business problem, it really then can go across wherever we want.
And I would see this applying as much to Quaker in the US as our Quaker business in China or our beverage business in Latin America to the UK. It's everywhere.

**Sam Ransbotham** (3:34)
I think you've been at PepsiCo for 23 years, if I remember right.

**Colin Lenaghan** (3:38)
I'm 23-odd years at PepsiCo. And I actually started what you might call a net revenue management transformation in the UK eons ago, it seems like now. And at that time, we were building capabilities on systems, but very much analog, very much linear.
I would say literally in the last 18 months, what we've had to adapt to has been very rapid indeed. PepsiCo clearly sees advanced analytics, AI as a core to how we're going to have to operate in the future.

**Sam Ransbotham** (4:10)
So Colin, if you can give us one specific example of a place you've used artificial intelligence. What's one project you're excited about?

**Colin Lenaghan** (4:19)
I think the example is very much related to pricing, right? Around how do we take very high level, very average pricing insights and transform that from, if I could give the example, operating with 60 elasticities that help you understand where your pricing opportunity is to 40,000. I mean, that's the sort of scale that you're getting to. And then the decomposition of that elasticity around what it drags and draws from across your portfolio, across the portfolio in one retailer versus another retailer really is sort of mind blowing around what that can do. And that's a real live example of a product that we're scaling up as we speak. Capabilities like that give us insight around what the right bets to make are and how we can journey towards an end state around what that portfolio price architecture could look like. I think if we didn't have this type of capability, you would be flying quite blind. I think you'd be spending a lot of time with consumers trying to get answers out of them that they're maybe not equipped to give.