Leadership Lessons from Roger Enrico

PepsiCo's former CEO explains how -- and why -- he teaches his Advanced Seminar for Emerging Leaders at SMU's Cox School

Most people agree that business schools do a top-notch job of giving MBAs the tools they'll need to help them evaluate markets and devise business strategies. B-school profs also do a decent job of preaching the virtues of good leadership, based on their academic research and the case studies they teach from real life. But few professors have led companies as much as they've studied them, a disconnect that explains why executives are often asked to address B-school classes. The goal is to give MBA students the view from the trenches -- to show aspiring CEOs what it takes to run a business.

Roger Enrico, former CEO and chairman of PepsiCo, is going one step further at Southern Methodist University's Cox School of Business in Dallas. On Oct. 23, he'll begin teaching a six-week course called Advanced Seminar for Emerging Leaders, in which he'll be sharing his experiences and those of his former colleagues at Pepsi with a group of nine second-year MBAs. This course is the student version of Enrico's famous war colleges for Pepsi execs -- gatherings that he continues to host near his Montana ranch every year. Enrico spoke about his new gig with Mica Schneider, BusinessWeek Online's reporter covering management education, on Aug. 20. Here's an edited transcript of their conversation:

Q: Before joining the Cox School, you also taught some leadership courses at Yale School of Management. Why teach?


The course I developed for PepsiCo executives is about leading change in a business environment, and a fair amount of it comes from our own experiences over the years. So it's most appropriate for business students, and especially for second-year business students.

Q: Some claim that business schools can't teach leadership. They say that management lessons are best learned from experience.


That's an age-old discussion. The way I look upon it is that leadership is a skill like many others. Whatever leadership ability an individual has can be made better through practice and honing. That's what we try to do in this course [plus]...teach people how to get traction in an organization that is faced with major changes.

I believe in the notion that if you think about your leadership ability, and work at it, then you can get better at it.

Q: What can schools do to improve the teaching of management?


[They have to do more than] just offer one course where a guy like me comes talks to students. It has to be a continuous process and ought to be integrated into all of the courses, whether they be finance, marketing, or organizational behavior. Both management skills and leadership skills are required in virtually all of the work you're going to do in a corporation or any business. You shouldn't compartmentalize these things. The more [leadership] is worked into the curriculum, and the more professors are attuned to it, the better.

Q: You didn't complete an MBA, which lends weight to the idea that good work experience makes such degrees unnecessary. How does industry view MBAs? Would companies rather have people who've risen through their ranks?


No, I think we feel that that level of intellectual development is a very useful thing to have before you really lock and load on your career. Now obviously, all of these students have worked -- because the schools require them to do so -- for several years, so they do have good experience and intellectual maturity. B-school is also a screening mechanism. Not everyone can get into an MBA program, and not everyone can graduate.

So [an employer is] fishing where the fish are in terms of looking for talent and leadership ability at MBA schools, and I think that most companies feel that way -- though obviously not to the exclusion of every other source [of talent].

Q: Do B-schools do a good job of teaching soft skills?


That's changing a good deal. A decade ago there was so much emphasis at business schools on [analytical] tools, such as IRR calculations [which help managers figure out how a business investment might perform], present value, that sort of thing. People got the tools confused with the end result. It's important for students to learn to use the tools and that they learn which tool to use for what situation, but those are only guideposts.

Now, [schools are] realizing that the tools aren't the end. They are a means to an end. It's the leadership and team-management skills that will be most valuable in business.

Q: How do you know that schools are doing a better job?


From my own network. First, from my experience at Yale -- and Yale has always been more focused on leadership and team-building skills than some other business schools have been. I've also heard from people at Harvard, and from others like Bill George, [former chairman and CEO at Medtronic] who has been teaching. They sense that there's a lot more interest in [teaching soft skills] at B-schools now. That's partially -- maybe wholly -- driven by Enron, which is shorthand for Wall Street kinds of problems.

Q: Since the collapse of Enron, B-schools have warmed to the subject of ethics. Critics say schools still don't give it enough airtime. What do you teach MBAs about ethics?


One of the exercises I do is to ask students to project themselves many years forward, to envision how they would like their peers and the people who work for them to think about them.

The thing that comes home to them is that at the end of the day, what you contributed to the team, or to the larger community, is what people will judge you on. It's not by how much money you made or what successes you had commercially. None of the executives talk about beating a competitor. They talk about the customer, the consumer, fellow team members, and the larger community. So the message to students is...remember that the end doesn't justify the means. You reap what you sow.

Q: You've been quoted as saying that "the soft stuff is always harder than the hard stuff," and that "the trick is to make the soft stuff hard, to operationalize it." How will you accomplish that at SMU?


Each individual comes to the course with a project...something that...would be difficult to implement, because it would require significant change in an organization or the way people think. What we do during the six-week course is to work on these projects in the context of leadership principles.

We keep reworking the [students'] projects in a disciplined way. And hopefully, by the end of the course the way the students think about the project and how they might implement it is better than when they started.

Q: It sounds as if the course is going to spend a lot of time honing entrepreneurs.


There are a number of students in this course, as well as the previous one I did at the Yale School of Management, who have an entrepreneurial bent. [But] we don't underplay the role of basic management.

The course [originally] was designed for executive group members at PepsiCo, who were in positions where they were expected to break some eggs to make a new omelet. When we tried it out at Yale, it seemed to resonate with students in a different way than it did with the people at Pepsi. I convinced the students -- to their amazement – that the fundamental, enduring principles of how you operate a business, and how you lead people, were actually true. They weren't just ideas in textbooks.

In the end, values, culture, and communication are the most important skills that a leader can bring to a business. The point is, younger students might get something different from this course than senior executives did.

Q: How will you teach this class?


We have a structured way of thinking about leaders as change agents. We'll re-frame the students' projects over six weeks.

There are only nine students, because there's a tremendous amount of class discussion. They present and discuss, then re-present and re-discuss their projects. Midway through the class, they do an envisioning exercise, where they write a [mock] BusinessWeek article about their business idea, writing about what happened, who did what to whom, what the problems were along the way, and what they did to overcome it. In addition to that I spend two hours with each student, one-on-one, during the course.

Q: What are your plans after you finish the Advanced Seminar for Emerging Leaders at SMU?


I think I would do this again at SMU. But I haven't closed myself to the notion that I might do it at another school at some point as well.

There were a couple of reasons for me to do the course at SMU. One, I live in Dallas. Second, I'm on the executive board of the school, and I'm also on the advisory board for the Temerlin Advertising Institute for Education & Research. It's an excellent school, and I've got a soft spot in my heart for it.

I'll [also] continue to do the leadership courses at PepsiCo. We do it at a fishing lodge I'm a partner in, near my ranch, teaching nine executives at a time, once per year. Well over 200 people have been through this [course].

Q: It sounds like the legacy you want to leave includes the leadership lessons you're imparting to MBAs and the people you worked with at Pepsi.


I always say that if at the end of the day, people who worked with me could think of me as someone who helped people to see things in ways they hadn't seen them before, that would be great. That would be enough for me.

Q: Can you give us a peek at some of the lessons you'll stress to the MBAs you mentor this fall?


The first thing that comes to mind would be that I've always felt that the truth to every situation is out on the front line. You have five senses available to you. You have to use them all to fill the brain, to get the right answers, and the right creative conclusions. You can't do that by sitting in headquarters. You've got to get out with customers, get out into the plants.

If you've got a manufacturing thing you're working on, the answer is with the people who are on the production lines. If you have a customer thing, the answer is with the people who interface with the customers, and so on. If there's any one thing that I hope students take away, it's that you have to smell it and taste it and feel it, as well as see and hear it in order to make sure you've got truth in your hands.

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