Opening Remarks with Mehmood Khan of PepsiCo
Dr. Mehmood Khan, M.D., Vice Chairman of PepsiCo., and former Executive Vice President and Chief Science Officer, gave the opening remarks for this year’s International Conference in New York City this morning. He had a lot to say about the role of disruptive innovation in business in the 21st century, and about the unique challenges our generation will face as we take the reins of the business world over the decades to come. Dr. Khan, an endocrinologist by training, spent the first decade of his career leading programs in diabetes, endocrinology, and metabolism. As a former faculty member at the famous Mayo Clinic, Dr. Khan found his way to PepsiCo by way of pharmaceutical research & development; upon realizing that food is possibly an even more important resource than medicine, Khan began devoting his time to solving PepsiCo’s challenges. One of the things Dr. Khan made sure to emphasize in his talk is that although people are more familiar with PepsiCo’s cola and soft drink brands, these products make up less than 20% of the company’s overall profits. Rather than being a soft-drink company, PepsiCo is (from a R&D standpoint) foremost an food grower, wholesaler, and agricultural company that focuses on looking for new and improved vertically integrated food production systems. This is important because, as Dr. Khan sees it, the Earth’s population is only going to continue to rise, and rise faster than before. By the time we are his age, there will be 9-10 billion people on Earth, an increase of nearly 3 billion from our current population. Those people will need to be fed or they will go hungry; and this is not, as Dr. Khan pointed out, not something that can be fixed with a few mere lines of code. Food production requires boots on the ground at some point of the growing process, and serious investment in land and infrastructure. Everyone wants to start the next Google or the next Uber, Dr. Khan said, but what use will that be if one-third of all potential customers cannot afford enough to eat? If they have to sleep on an empty stomach night after night? Governments, Dr. Khan said, cannot substitute for private industry; they can only spur or dampen its progress. Food production relies on bringing to bear the entire skill-set of the private sector to use microbiology, satellite imagery, sophisticated soil data analysis - a huge range of ideas and factors - to make the crops of the future. This is why companies like PepsiCo are important today, Dr. Khan said. Companies such as Pepsico provide means for vertical and horizontal integration that allows them to differentiate and continue to innovate, thinking about the entire production process from start to finish rather than having a piecemeal view. In Dr. Khan’s view, not only does this approach enable PepsiCo to achieve breakthroughs in crop viability, survivability, and overall yields, it is also key to keeping PepsiCo profitable. Given the current croup of “disruptive” companies rising and filling every day, companies need to constantly innovate, constantly need to disrupting themselves at a faster pace than their rivals can dynast the. Screen Shot 2015-11-23 at 12.21.58 PM Screen Shot 2015-11-23 at 12.27.26 PM

  • Richard

    I agree. A wise businessman in the Caribbean named Sir Kyffin Simpson always said that the key to success is progression and humility, and clearly he’s done very well for himself as a self made man!

  • John Andrews

    The Airgain IPO launches this week, and they’re a one-brand company.

    Some investors don’t think it’s a good stock though:

  • Cincinnati World Cinema

    Well said, Joe, and worth rereading on a regular basis! Another advantage of small-to-midsize city living is pace and competition. Living in NYC, LA and SF entailed a hectic pace, hallmarked by capital S striving, as one realized there were a ton of others doing what I do. Spending so much time in one’s car in SoCal meant much less time for quality pursuits and pleasures. A smaller pond with relaxed pace allows one to savor life and special moments.

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