Case study: Pepsi

The challenge:
In 2006, Rajendra Gursahaney, the senior director of engineering at Pepsi Beverages Company, the bottling division of the drinks group, wanted to create a thinner, lighter and more environmentally friendly plastic beverage bottle that would contain a small dose of nitrogen to maintain firmness. The idea would either revolutionise the bottling industry or cost his company millions of dollars in delays.

The story:
Non-carbonated drinks are vulnerable to bacteria if they are not bottled properly. So most companies heat beverages to a temperature that destroys micro-organisms. The hot liquid is then poured into a bottle until it is full, destroying any bacteria on its inner wall. Bottlers must use a thick plastic that will not deform, which means it is expensive, heavy and has a big environmental footprint. Mr Gursahaney, known as “Guru”, wondered if he could add a harmless gas, such as nitrogen, to the liquid that would expand as the bottle contracts upon cooling to mitigate the deformation. That way, there would be no more need to make a thick-walled bottle. The difficulty was that nitrogen could not be added to a hot drink, as it would instantly vaporise and the fluid would bubble out.

Getting buy-in:
Pepsi encourages a degree of risk-taking, as long as it is based on a well-founded analysis. Guru knew the company was about to roll out a new product line in Russia with Lipton Tea and devised a plan to tackle the problem. He was upfront with management about the risks and answered a lot of hard questions, including how the new technology would be different from current systems, what was the last possible date a traditional bottling technology could still be implemented and what impact there would be if the idea failed. Guru set check-in dates and did the maths. If the idea worked, it would not only save millions per year per line in plastic costs, but could actually be good for the planet.

The right people:
Guru then assembled a team that was not risk-averse. It included personnel from Pepsi, Lipton, the bottle maker, the nitrogen dosing company, the filling company and the Russian operations team. This team of six was based in Hamburg and worked for more than a year in the laboratory. On a bench they improvised an assembly line. At one station a bottle was filled with hot water. It then moved to the next station where a small dose of nitrogen was added. Next, the cap was attached and finally the bottle was dunked in a tub filled with ice. The team then studied the shape of the bottle, twisting it in the light, including pulling out callipers and measuring every square inch.

Overcoming obstacles:
The team developed a bottle, but for the first few weeks of testing on a production line, 10 per cent of the bottles were not fit to put into the market. The team worked on the problem for six weeks – tinkering with fill levels and nitrogen doses in an attempt to get the system working properly. Finally, one team member suggested running a high-speed camera to see if a small amount of nitrogen was missing the bottles. “We couldn’t see it with the naked eye. But that helped us get the nitrogen to dose precisely each time with no spillage,” says Guru.

The solution:
After 14 months, the team had discovered a process to keep nitrogen from evaporating and the hot tea from spilling, and they had created a significant reduction in weight from a thick-walled bottle. A traditional 1.5 litre bottle weighs 63g; Guru’s bottle weighed only 48g. Pepsi forecasts $7.5m in annual plastics savings in Russia alone. And the environmental benefit is also substantial. Pepsi has chosen not to patent this idea, but instead is willing to share the technology with other companies. In 2009, Guru was awarded Pepsi’s “best of the best” sustainability prize. He admitted that he couldn’t have created this breakthrough alone, so he shared the reward with the people on his team.

The lesson:
While “risk” is not the most popular word in boardrooms right now, improvement and creation demand it. In the conversations we had with team members, a similar insight emerged time and again: individuals who create world-class results for their organisations know calculated risk is necessary and they understand the impact – both positive and negative – of taking one.
- Financial Times, 03 Nov 2010