PepsiCo Director Says MBAs Lack the Knowledge of Technology Needed

By Roy Young

Richard Velazquez is Senior Director for Emerging Technologies and Innovations in PepsiCo’s global R&D group. He is involved with the MBA intern program at PepsiCo, and he sponsors a nation-wide competition where teams of MBA students compete against each other to solve real-world business challenges. Since receiving his MBA from UC Berkeley in 2003, Richard has also worked at Microsoft and at Proctor & Gamble. We spoke with Richard a few weeks back to get his insights about how well MBA programs are providing the business technology fundamentals that grads need to be successful and make an impact on the businesses that hire them. Roy Young: What do you look for when you’re hiring MBAs for internships and permanent positions? Richard Velazquez: Most Fortune 50 companies hire from their own preferred set of ten to twenty MBA programs, so that’s typically the first criterion. Talent-acquisition teams will go to those campuses and look for candidates with the right backgrounds for various roles, such as finance, marketing, global strategy, etc. Next, the candidate needs to be a good cultural fit with the company. Hiring teams also want evidence of being a self-starter and being able to communicate and cross-collaborate with people in other job functions. Roy: Do you find that interns and MBAs are sufficiently prepared for possible technical aspects of their jobs, such as interacting with Web engineers or mobile-app developers? Richard: Even though PepsiCo is obviously not a technology company per se, many of our interns and MBAs do work on technology-oriented projects. These range from digital media and marketing projects to our interactive vending machines, which essentially have huge touch screens mounted on top of them. For those interactive vending machines, we have technical teams that create all sorts of apps and experiences, so customers can do things like gift a drink to a friend, play games, win a drink, watch videos, or enter drawings. We have a couple of MBA graduates on the marketing side who work with the technical folks on things like the user interface and the experience. They really need to understand basic things like the implications of working with Flash versus HTML5. In a lot of cases, though, they don’t have that background, so they’re at the mercy of the supplier or the content creator to tell them the best way to do things. These marketing professionals don’t need to know how to program, but they should know the difference between C#, iOS application development, Droid development, HTML5, and things of that nature. That’s essential so they can make informed decisions. In reality, they often don’t know the difference, and they might invest heavily in the wrong technology. Then, later on, they might find that their software platform is incompatible with other systems or equipment, and they have to waste money redeveloping their solution. Roy: Do you think that basics of application development like those should be foundational skills for all MBAs, then? Richard: Absolutely. Some degree of technical background can also help business people understand what time and cost requirements are reasonable for a given project. I’ve seen people accept ridiculously high quotes for creating digital assets, for example, just because they don’t have the knowledge to recognize it. My background at Microsoft working on Xbox helps me know what it takes to create software and digital content, so I’m not so prone to that type of mistake. I think it would be extremely helpful for MBA candidates to sit in on a technology project or two, as part of their education. After seeing a team come up with an idea, developing it, and then launching it, they would have a better understanding of scope for similar projects in the future. In fact, new MBAs really need to be more technologically savvy than the people they report up to. Many people in management don’t really have technical skill sets, so they may look to younger employees in supporting roles for guidance on technical decision making. Roy: That’s interesting in light of the fact that millennials have been disruptive to businesses because they’re digital natives when it comes to consumer technology. At the same time, they also seem to be playing catch-up when it comes to more business-oriented technology topics. Are there other areas, such as big data analytics, that you think are critical for MBAs to have some grounding in? Richard: Yes. At PepsiCo, we are moving to smart marketing equipment, which means networked versions of anything that dispenses our product. For soft drinks, that can range from fountain machines where you put your cup in and pour, to vending machines where you put your money in and the bottle is dispensed, to coolers in a gas station or convenience store where you can reach in and grab a beverage. For now, these are all dumb devices, but we are transitioning to connected digital marketing platforms that let us monitor contents, track maintenance, and even capture consumer information or tie in to marketing brand activations. We are talking about millions of pieces of equipment worldwide, the data they will generate is massive, and it’s a huge opportunity for us. Consider, for example, the old model where a driver fills up his truck and services maybe 30 non-connected vending machines along a fixed route. Some of those stops will be wasted effort, and other machines will have been empty for some period of time, which means missed revenue. In the case of an office building, the driver may need to go up 20 or 30 floors to check the machines. Clearly an inefficient model. Data from connected, smart marketing equipment can tell the driver which machines to skip because no one has been using them, or which ones to visit early because they sold out faster than usual or have a maintenance issue. We’re calling that “dynamic routing,” and it has excellent potential to increase service efficiency. MBAs may understand that conceptually, but do they know enough foundational technology to suggest something like that as an opportunity? They don’t. It’s very hard for them to bring creative ideas to the business when many ideas have a technological underpinning, and they are clueless about the technologies that would be brought to bear. They don’t have to be a data scientist, but they should know what can be done with Big Data and analytics. Roy: Are there other important technology areas that you think MBAs should know? Richard: The fact is that, more and more, technology touches every aspect of the business. For instance, we recently created a global design team to unify branding all over the world. Traditionally, if you traveled to Egypt versus somewhere in Latin America, you might see different branding, ranging from different packaging designs to even the use of the old Pepsi logo. The global branding team has taken on the task of making all that consistent around the globe, for our hundreds of brands, and technology plays a huge role. Recently, we have started using 3D printers, not only within the global design team, but also global R&D. This lets them do very rapid prototyping of packaging and other brand elements. We have a much quicker turnaround from marketing and global design to come up with new products as well as redesigns of existing ones. Roy: I understand that you work with a lot of different MBA programs in an advisory capacity. What advice or guidance do you give those programs so newly minted MBAs are better prepared to be productive in these technology areas that are proliferating at businesses? Richard: That’s true. I am the president of the National Society of Hispanic MBAs in Seattle, and I now serve on the corporate advisory board for that organization. I work with MBA schools all over the country on a regular basis. One piece of advice that I often give traces back to a new-product development class I took at UC Berkeley. It was jointly offered by the MBA program, the business school, and the engineering school. Mixed teams of MBA and engineering students would ideate a new product and then drive it through the new-product development process, all the way through launch and getting it into the consumer’s hands. This class was incredibly valuable to me, even though I already had an undergraduate engineering degree, because it helped me understand the differences in how marketing people and engineers approach the same problems. This kind of experience can help MBAs understand technical perspectives and technical constraints. At PepsiCo right now, we are having a challenge with newly hired finance folks as we try to get statements of work approved and POs open so we can start working on things. Because they don’t really understand a lot of what’s in the statements of work, it’s impeding a lot of projects. It’s incredibly valuable for MBA candidates to get technical exposure that will help them in situations like that, and it certainly makes them more attractive as potential hires as well. Roy: That product-development class sounds like a great idea, and I think that’s pretty rare in MBA programs. Richard: That’s true. It was also an elective, even though it was one of the most valuable classes I took during the two-year MBA program at Berkeley. Roy: We’ve talked about some technology skills that you identify as being important today, including application development and big data analytics. Looking ahead a few years, are there other technology areas that you think are going to be increasingly important? Richard: I think big data is going to continue to be the big story for a number of years to come. Everything is going to start having a sensor in it, and those sensors will generate huge amounts of data. The big challenge is going to be finding ways to build business benefit from that data and use it to grow the business. Integrating those opportunities into overall strategy is a huge undertaking and a huge growth area. People are talking a lot about it now, but we haven’t even started to scratch the surface of actually putting those initiatives in place. Being able to fully participate in that effort will be critical for MBAs going forward, and a key way for both students and programs to differentiate themselves. Roy: Thanks for taking the time to talk today. Richard: Thank you too.