Pepsico Innovation Measurement Essay

  • Length: 11 pages
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  • Subject: Engineering
  • Type: Essay
  • Paper: #66770137

Excerpt from Essay :

FMCG company

PepsiCo Research on future consumer trends

Section 1 deals with pertinent models and concepts to technology-led innovation management. It includes models like, Research and Development Model (RDM) which is about relevant product knowledge with respect to customer demands; Market Actors Model (MAM), which is all about gathering market knowledge and consumer's expectations; Operations Management Model (OMM), which is about creating a valued food culture; Culture Technology Model (CTM), which is about marketing and product development teams work closely; Corporate Identity Model (CIM), which is about focusing on building a brand; and lastly, Strategic Foresight Model (SFM), which is about focusing on long-term plans.

Section 2 deals with debriefing the SFM model which is going to be used to measure PepsiCo's innovation management. Key reason for choosing this model to measure Pepsi's innovation management is because Pepsi itself uses this model to enhance its Research and Development Efforts and puts this model at the core of its innovation activities.

Section 3 deals with measuring Pepsi's innovation process with the 4 phases key phases of SFM Discovery, Extrapolation, Integration and Planning. The results show that PepsiCo is strongly aligned and has put in place robust instruments and process at each step of the innovation phase.

Lastly, section 4 discusses the implications and conclusions and it is noteworthy that both leading and emerging companies should learn from PepsiCo's collective effort in achieving a balance in their present and future products as they have sufficient market knowledge with respect to future trends. Furthermore, Pepsi too needs to rigorously test al instruments in its innovation model as the current innovation process will still have to go through the uncertainty factor because no matter how much in depth research has been done, future can't be predicted. With the help of continuous testing, PepsiCo can remain alive whilst coming to terms with market conditions and differing consumer's trends and needs.

Section 1: Going through important concepts (for instance frameworks, theories and models)

A number of models have been developed to measure the strengths and weaknesses of technology-led innovation and how innovation is being managed. These models can be divided into 2 meta categories; market-based models and corporate-based models. A few of these have been illustrated below.

Market-based models

In the Research and Development Model (RDM), technology-led product innovation is measured by the shared knowledge about a specific product and its process with respect to customer values. It also entails elements, which combine these two processes (Tollin, 2008).

Another model, MAM, which stands for Market Actors Model measures technology-led innovation by the level of accumulation and expanding knowledge about the target market, decision processes of resellers and corresponding reaction of the rivals in the field. One more market-based model, CBM, which stands for Customer Brand Model, differs from Market Oriented Models by keeping both marketing and product development close to chest whist measuring and integrating technology-led innovation. The basic intention is to ensure that end users are kept in the loop as firm works according to their ideas and values (Tollin, 2008).

Corporate-based models

One corporate-based model for innovation measurement is referred to as Operations Management Model (OMM), wherein technology-led product innovation process is jointly collaborated upon by manufacturing and marketing departments. They use hit-and-trial method to measure the success of innovation. Apart from that, OMM emphasizes on complex product innovation can emerge from using present knowledge regarding food in new ways (Moreira and Silva, 2010).

CTM, which stands for Culture Technology Model, focuses on the concept that technology-enabled product innovation is based on an agreed passion for local culture. For instance, creation of a diversified food culture is important for creating an understanding of the key characteristics values people in a food firm can relate to (Moreira and Silva, 2010).

CIM, which stands for Corporate Identity Model, focuses on the real against the perceived identity of the brand. In CIM spheres, new product development testing and measurement solely relies on common and agreed ideas relating a product. The method used here isn't market analysis but rather internal discussion to attain excellence and integrate technology in the innovation process (Madhavan, 2010).

The fourth and the final innovation measurement model discussed in this paper is called Strategic Foresight Model (SFM). It measures firm technology-enabled innovation by its thorough study of the nearby future and long-term future ahead. According to this model, strategic foresight takes place when planners make use of:

Scanned input

Future exploration

Future analysis


It affects and changes the actions / plans of a firm. The foresight projects are always aligned with goals of a company regarding the future. The leaders are hence able to employ them with immediate effect (Ted et al., 2012).

Section 2: Applying the chosen Strategic Foresight Model (SFM)

According to the literature, the foresight approach moves from one method to another sequentially. It does not recommend chasing a single method for that matter (Hines and Bishop 2007). According to SFM, this prevents many strategic blunders which sometimes the management can't view keeping the reality in context. Sometimes the management can't view some trends and their relevance in the future. The SFM method focuses on averting the development of foresights products which don't tests the futuristic view. Hence, the SFM approach is being applied so as to link back the end result of the innovations to present day business as well as enabling leaders to think logically in their understanding of future trends. The steps of foresight approach can be segmented into four parts which can be understood easily in a corporate environment:





This paper uses the aforementioned 4 phases to discuss PepsiCo's Innovation management success. Key reason for choosing this model to measure Pepsi's innovation management is because Pepsi itself uses this model to enhance its Research and Development Efforts and puts this model at the core of its innovation activities.

Section 3: SFM's evaluation and reflection in case of its application in PepsiCo


The competitive advantage of PepsiCo remains with having proprietary knowledge about the future trends in the consumer market. The phase of discovery was initiated for providing pointers on industry wide drivers of change and drive new factors of change altering the trends. Discovery phase consists of two processes:

Weak signals environmental scan

Internal future audit

Internal futures audit

By definition, the internal future audit is the assessment of a company's immediate future. What are the belief systems which drives strategy and plans of a firm? What is necessary for a firm to comprehend regarding its goals and future? The results will show the firm's actual future which the top leadership dictates by making such decisions (Ertel and Randall 2005). As the official future is not so official in the present tense, it can lead to judgments and choices not neatly aligned with the present.

By interviews, the audit of PepsiCo was conducted in which 25 executives from PepsiCo were taken in consideration from different regions, functions and businesses. There were fifty internal reports compiled to work out the goals of the corporation. SWOT analysis was also done in this case to analysis the strength and weaknesses of the company. Key notable features and future trend drivers were recognized by the PepsiCo's audit team and set aside which are namely:

Global calorie imbalance

Resources and constraints


Government's role


The PepsiCo's auditors noted that above mentioned drivers are instrumental in keeping this company alive in the future and hence the present decisions are all based on these five "Discovered" drivers.

Weak signal environmental scan

The weak signal environmental scan is a general scan of the present indicators and future trends which could be potentially vital in a span of five to ten years. Fundamentally, the environmental scan has been disregarded by the internal future audit as potential trends are weak and uncertain. These same weak signals may become a force to be reckoned with in the long run. The a number of external companies specializing in research market dynamics had been tasked with collecting 300 uncertain potential future trends which were narrowed down to around 40 by the PepsiCo's team feeling their probable link to the future of this company. A few of these trends have been discussed below.

DIY technology making inroads

The cost of biotechnology is going down and with the help of handy biotechnology equipment, wonderful applications are being developed. The food producers can test, examine and manipulate food products at will. There are two crowd sourced biotech labs currently operational; the first is Gentech and the second is Biocurious.

Personalized medicine at crossroads

With the help of genome mapping, medicine will be made available according to each person's requirements. Different people have different medical needs, lifestyle and personal preferences.

Genetics and their relation to food

New research has indicated that foods can change and affect genes in living organisms such as human beings. This changes everything in terms of human diet.

BRIC's intellectual leadership at helm

The impact of developing economies is being really…

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