Podcast

Episode: 363 |
Tekla Back:
Nutritional Labels:
Episode
363

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Tekla Back

Nutritional Labels

Show Notes

 

In this week’s episode, I talk to Tekla Back, McKinsey alum, former senior vice president of strategy at PepsiCo., and founder of the snack, Keho. Tekla reveals how she got into nutrition, the truth behind the nutritional labels, and how she developed the Keho snack bar. You can learn more about Tekla’s campaign on nutrition by emailing her at tekla@keho.life or visit her company website at keho.life.

Key points include:

  • 03:51: The problem with nutritional labels
  • 05:34: The math behind recommended daily amounts
  • 09:47: What you should know about cholesterol
  • 12:53: The missing information on sugar
  • 19:03: The factors influencing the FDA
  • 22:37: The process of certifying a nutritional label
  • 23:44: The impact the FDA has on changing what we eat

 

One weekly email with bonus materials and summaries of each new episode:

Tekla Black: Hi, this is Tekla.
Tekla Black: Hey, I’m very awesome, how’s you?
Tekla Black: Although I think I’m in that last few days of sprint before the holidays moment. Which is kind of great, but also like, holy crap.
Tekla Black: Yeah, I’m trying to. I fly to the U.K. on Monday. So I’m basi– yeah, I’m trying to like close things out and still open up new things for the next year, so kind of a combo.
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Mm-hmm (affirmative).
Tekla Black: Got it, makes a ton of sense.
Tekla Black: Oh, of course, go for it.
Tekla Black: That did it, yeah. Yeah.
Tekla Black: Yeah, so what if I recap my background and then … this feels like one of those that’s gonna have lots of random bits and then needs to be structured off though it’s conversation, because I won’t overly try and structure myself. I’ll let you do that afterwards.
Tekla Black: So I spend seven years at PepsiCo and I basically had three roles. I was first brought in in North American beverages, so both a geographic and a category focus. I was hired to set up a brand new group called Consumer Strategy. And they actually had an existing strategy group that’s starting finance. And most of their decision making had just evolved over years to be more about what they could do. So basically you have financial planning, so how much money you had left over, and that was kind of the marketing budget, to give a marketing-specific example. And one of my jobs was to basically turn the whole thing on its head or side. Which is to do much more of a consumer-out strategic planning process. And it kinda boiled down super simplistically to getting the whole organization to realize that sodas were in decline, picking the future categories, and then working out how to actually go and execute this stuff.
Tekla Black: At the time, we also bought out the bottlers and I invented all acquisition, forced Coke to do the same. Huge fundamental turnaround. Actually ended up with us gaining share quarter on quarter for nine consecutive quarters and basically becoming a hugely profitable part of the business, et cetera. Got promoted on– oh, and by the way, I basically got all of strategy the old team as well as the team from the acquired folks. And then from there got promoted, became general manager and I was given hydration category. And hydration, again, simplistically, is all the waters, so different forms of enhanced flavor, et cetera. And that was a really traditional marketing role. It’s about a billion dollar category, I think 60, 70 million marketing spend. Everything from developing, creating across all channels. From traditional TV to online, to experiential marketing. All of innovations pack, even some degree some of the manufacturing footprints and R&D innovation. And then all the sales. So, sales, customers, et cetera. And that was a core team of maybe at 30, expanded team, I don’t know, hundreds because basically the core. Core was at a, water, by the way is bigger than CSD. So it’s a really big category.
Tekla Black: And then from there, February 2012 is a big day in the PepsiCo History, which is when we took a financial leaser, and that’s when I got pulled by Indra to take on Head of Corporate Strategy. So this is now all categories, all countries. So I had global responsibility for strategy. And it’s Indra’s old job, it’s [crosstalk 00:06:22] Old job, it’s Addie Europe’s old job, it’s Adam [crosstalk 00:06:25]’s old job. It’s kind of a high profile thing so I didn’t want to go back into strategy. There’s a phrase in PepsiCo that’s awesome. “Voluntold.” I was voluntold to take on this role and basically did a huge transformation from my team of four to ultimately a team of like, I guess we’re like 60 people or so of a global integrated organization. And this’ll matter in a moment. Where I basically integrated all of our global strategy people and built all the necessary tools, structures, HR processes, aligned everyone on growth platforms, designed the whole strategic planning process, et cetera. A huge turnaround. It was part of this bigger PepsiCo shift from geographically-led functions to global band-led functions. And that clearly matters because part of my job was building all the capabilities that allowed us to do marketing on a global scale, across beverages, across snacks, across countries. And just embedding a whole language/methodology for how you do marketing and everything associated with it.
Tekla Black: So to your question. Long-term decisions, mid-term decisions, short-term decisions. I mean, my first reaction was immediately, “Are you a public company or not?” ‘Cause it makes a huge difference. If you’re managing quarter to quarter your decision making, I personally believe, ends up being fundamentally different than your quarterly decision making if you’re not a public company. Just because you have to hit a certain set of numbers, and those numbers will have changed by the end of the quarter, which require you to do a bunch of adjustments. And there’s a whole financial set of headaches to make sure you deliver what you said you would in order to hit the plan, or a plan, a revised plan.
Tekla Black: Big annual stuff. So clearly, the big questions annually are, “How much money do you give to different categories? How much money do you give to different countries?” Which require a whole bunch of, and a degree of sophistication, tools around forecasting your performance, competitive performance, volume, value, et cetera. Additionally, it requires you to have some sense, ideally, of what you think your competitors are gonna be doing so that you’re actually talking to your customers in the right way, et cetera. And then, ideally, you’ll have some sense of how you’ll actually allocate across channels, because you’re actually doing your contract negotiations for buying media or buying sponsorships, et cetera. So there is clearly this set of big annual decisions that relay on the same set of tools that you tend to update and revisit year on year.
Tekla Black: On a quarterly basis– and by the way, the degree of sophistication is highly variable. So what I did at PepsiCo is I build a marketing ROI capability globally, which were these … Depending on your view, they started off being complicated, and now people say they’re sophisticated. Which I think is kind of amusing. So being able to get to ROIs at the level of category, country, channel is clearly freaking awesome. ‘Cause you can make different decisions based on it but having done the access and all of those numbers means that at least you’re making database decisions.
Tekla Black: On a quarterly basis, some different things come into play. Because here you’re not just planning. You tend to be adjusting dynamically. So things like, here’s a good example for you. All the major corporations do something called curving A&M, because for financial reporting, A&M is a big bucket of money and you need to know roughly how you’re gonna allocate it across the year to give forecasts. In reality that doesn’t ever happen quite like that and because you’re always worried about hitting goals, A&M tends to be one of those buckets you kind of hold onto until the last minute. So I was in marketing spend. Largest single discretionary spend for a CPG company. And often the plug that you use to hit an overall company’s performance. And it means that you are maintaining at a relatively rigorous level some sense of what you’re spending, where. And it tends to be much harder to make true financially based decisions because you don’t have that many data points in the space of three months. So it’s less of a purely data-centric thing. You can’t plug that stuff into an ROI model and get something out. So this ability to curve A&M to allocate it by quarter and having some sense of what you’ve spent, what you’re going to spend, and your alternative scenarios is a huge one. A very, very fundamental conversation.
Tekla Black: And that then ties into every other marketing decision, ’cause how much money you have to spend drives how much you pay for your agencies, and what other agency do you employ to do that experiential marketing thing? Or do you drop that rebranding of a product you were planning to do? That one’s very fundamental. The other things that you tend to do is things like brand health, which is a whole other bare bug of mine, is a big thing that you follow. As well as things like, let me actually take it up a level. One of the things you’re trying to monitor quarter on quarter is how are you doing in term of how well did your creator work? How well did your brands launch? What did your competitors do? Because that quarterly feedback or input is what allows you to adjust your plan.
Tekla Black: So anything that allows you to aggregate information, which is not gonna be that great ’cause you don’t have that many data points, is critical. Because that is the course corrections that you’re gonna do. And that goes from classical financial metrics– volume, value, price, nexus, et cetera. To more strategic methods, like share, volume, value, and debate how many breaks you need by channel, by customer type, by target, by retailer, whatever. To more operational metrics, like an out of stock service levels, inventory turns, velocities, et cetera. To competitive metrics, ’cause basically whatever numbers you’ve put in, you wanna know of your competitor, too. Clearly a huge part of your quarterly planning for any CPG, which I’m sure you can remember from the [crosstalk 00:13:24] today’s pricing. The single largest lever that drives bottom line or top line typically, depending slightly on the brand, is your pricing. So any and all input to managing pricing in a more rigorous way tends to be huge. And you always wanna be ahead of it, because it can be hard to get into a retailer program on a short-term basis. Because retailers are planning … the July Fourth right now is probably pretty down planned. But if you wanna run a price cut you’re gonna have to be negotiating that stock with a whole host of people.
Tekla Black: Shorter term decisions, it’s kind of the same with probably more emphasis now on those operating metrics further down the line as opposed to those outcome metrics. Because you’re really trying to monitor, “How well are you doing?” stock. So how well are you … again, how you categorize, but … How well are you putting up displays? How much inventory do you have? Are people buying stuff so you actually have it out in there? It’s just more practical tactical stuff. And this is where how your marketing organization is structured and what their metrics are makes a huge difference. So, for example, at P&G, to my understanding they own the whole P&L. At PepsiCo, you own the advertising and marketing line. You’re still responsible and overseeing the work of things like operations, but it’s not part of you’re P&L. So the information and the decision criteria that you’re providing more on that operating level has to reflect the org structure of what you’re actually accountable for. And I’ve seen really different models work differently. Does that make sense?
Tekla Black: So clearly, a huge part of it is a brand review, which is anything from, “Where does your brand play?” Which sounds likes a simple question but can be a highly complex one because there are so many different axes and so many different ways of visualizing your space. Let me pick a simple one, like sparkling waters. Like La Croix. Why has La Croix, the sparkling water, been so successful? Is it because it’s a water that’s sparkling? Is it because it’s a flavored beverage? Is it because it’s actually drawing volume from carbonated soft drinks like CSDs? Is it just because it’s perceived to be healthy? Is it because it doesn’t have a sweetener? So you’d end up doing a whole bunch of collation of research. Which could be anything from fielding research with your inside’s organization, it could be working with advanced analytics to do sources of volume analytics, it could be switching behavior analyses, it could be price sensitivity, it could be consumed segmentations, in 50 billion different ways.
Tekla Black: Just so that you really understand the category structure in the consumer decision-making hierarchy. Would be an example of trying to work out, “Where does a brand play?” And then once you work out where it plays, clearly you understand the competitive dynamics. Are you winning? Is someone else winning? Do you need to, once you understand the dynamics, do you need to pump up the flavor? And then how do you pump up the flavor? And then working with marketing to actually land on the innovations, or how do you communicate that flavor in different packaging cues, for example. Or it could be doing a piece of work on, “Hey, what’s our new innovation?” So how do you go and identify white space?
Tekla Black: And then do everything from defining the consumer segment, what they want, what is the product, what is the packaging, what is the price? Like traditional product development. Is there such a thing as traditional product development? In product development, it could be a, “Holy crap we’re dying in category X. Why are we dying in category X?” And doing a assessment of the drivers and you don’t know. It could boil down to price, it could boil down to distribution, it could boil down to a competitive action. It could be a, “Hey, we know as a portfolio, not on a brand level, we are struggling to get to millennials. Why are we struggling to get to millennials?” And again, it could be any number of levers. It could be a, “Hey, why is our marketing created not resonating? Why is it not working?” And it could be working with a database creative agency to actually understand what is wrong with a specific ad or try and get an ad to go from red to green in testing responses.
Tekla Black: It could be a, “Hey, should we enter this new category entirely? Do we have the inernal capabilities to go and play in dairy? Only it requires a whole bunch of different packaging capabilities, I’ve studied. Or even, “What does it take to be in this new space?” It could be a, hey, we have this marketing campaign. How do I extend this marketing campaign to six different countries? Or how many different variants of this campaign do I need for the football World Cup? If I was sponsoring Messi I can’t use Messi in a competitor’s country, but I could probably use him in a whole bunch of other countries who don’t really care. How do I work out how many countries I can use Messi in and who do I use in the other countries?
Tekla Black: True story. I mean, all of these are true stories. It could be how much of my spend should I put on digital next year given the fact that I suck at digital marketing, I know I need to go and build capabilities. Or it could be, hey, I have a meeting with Google. I know I want to be doing something with Google. How do I partner with Google in a way that actually gives me something?
Tekla Black: Yeah, I know them. Honestly, that thing dates back to the days when I was still at McKinsey. Which is kinda mind blowing, if you think about it. I think it’s come a long way, but principles haven’t changed.
Tekla Black: Yeah. Oh, by the way, pricing is also one of those things that sometimes lives in marketing and sometimes lives in sales. So understanding that is very important. It, again, depends on who holds pricing budget. For me, pricing has got multiple pieces associated with it. One is your, call it every day pricing, which is, very simplified, typically driven more by your brand positioning and the aspiration put out there. And then there’s a separate one which is much more about how much should I spend on promotions overall, i.e. call it promotional stance of that product. Which is tied to things like what category is it in, what’s it’s competitive stats. For example, all the brand new call innovations, they barely promote. Pepsi versus Coke, one or the other is permanently on display and being promoted.
Tekla Black: And then clearly there’s the, call it bread and butter of every day wheeling and dealing where you’re trying to come up with your promotional programs that are often tied to the retailer programs. And even those I think break into two things, one of which is more around heating major consumer events. You know you wanna have something on the Fourth of July. You know you wanna have something for back to school. And you’re gonna plan these sort of big annual known promotions often tied into more marketing centric programs. In Target, your Fourth of July is gonna have some cool little well designed bag takeaway, or some cup holders, ’cause Target’s more design centric. In Walmart, that Fourth of July promotion might be tied to a cross promotion with lawn chairs or something. So you kind of plan these bigger thematic things and tailor them to the retailer.
Tekla Black: And then there’s a whole bunch of just day to day stuff of having your 30 percent price discount, or it’s in this week’s flyer at Giant Eagle, or it’s a Kroger, et cetera. Again, that decision making, you could argue is sort of more long-term, mid-term, shorter-term. And my understanding, and by the way, I’m sure I’m out of date, is that Periscope is more about the former and establishing these rules and guidelines for how to thin about stuff. And then you tend to go and buy a more robust enterprise level. Every single skew, every single price integrated into price wide system models that integrate into SAP, et cetera, to do more of the day to day work. But you’ve gotta the former set up to make people buy the stuff and then spend ages putting in the data only to realize they have no idea what instructions to give the machine. And then they wonder when all the pricing goes awry.
Tekla Black: And by the way, there’s a huge strategic element to all of this. Even before you open up a single model around what should be your every day price point, how do you think about price surge, should you have three, should you have 10, how do you optimize different customers? How do you make sure that you can sell to Walmart and Target and give one of them a deal one week but not the other and then don’t have the person on the phone every three minutes, going, “Why do they have a better deal than I do?” And you’re like, “Well, that’s because you have a deal in two weeks.” It’s not simple.
Tekla Black: What’s their core data? What data do they use?
Tekla Black: Yeah, so I’m kind of looking for the reason for why would I buy from them? Because what you tend to do is buy the source data. Like if you think of what one of these information companies provides, you can almost break it down across a set of steps. Almost like the, call it McKinsey problem solving process. There’s the data, then there’s analytics of the data, then there’s getting insights from the data, then there’s making recommendations on the data, and then it’s implementing the recommendations and then maybe interchange management. And the companies tend to have different capabilities along the spectrum. Clearly, McKinsey’s in the right hand end. So they would argue, maybe not all the way to the right, maybe something like, I know Ernst & Young is even further to the right because they do more of the implementation.
Tekla Black: McKinsey’s pretty far to the right because they buy other people’s data and they get insights from it, they make recommendations from it, and then they manage to change. Someone like Neilson, maybe that’s an example. At its core, their entire market positioning is grounded on the fact that they have scanned data. Now, they’ve tried more than once to shift and they do the analytics, to a degree. They’ve tried to shift to more of a consulting model so they’ve tried to draw out the insight to make the recommendations. They even hired a whole bunch of McKinsey people. Do you remember this a few years ago? IRI did the same. Both of them failed. Neither one of them has super successfully managed to provide consulting stances. So they are in the data and analytics. Now both them have gotten much better at increasing the sophistication of those analytics so they’re no longer simple charts. They are like the marketing ORI analytics, they used to be around multi-variant regressions and now they’re getting smarter about how to do that in analytics. But they really live in that space.
Tekla Black: And if I think of a CPG company, their, call it insights organization is that insights column. So they’re the ones who tend to bring a bunch of data and analytics from multiple sources and they draw up the insights, they make the recommendations, and then marketing makes the decision on do I take that recommendation or what do I go and do with it? And hence what data you provide is really important ’cause if Garner just takes the same data as everyone else and analyzes it, as a CPG company I’m like, “Well, why would I pay that premium for you to do the analytics ’cause I can buy it cheaper from someone else?” Versus any CPG company is always gonna have an IRI already as well, ’cause they will always need scanned data. They will always have some sort of a brand tracking company, Nelwood Brand or someone equivalent, because they want that data. They will always have someone like Euromonitor or Canadia, that gives them global information. So I have to admit I am not 100 percent sure. As I think of that value chain I think of the different data options. What does Garner do? What are they selling?
Tekla Black: I’m on their website. I’m just looking at, it says, “CMO Spends survey.” So I think they’ve gone out and asked CMOs what they’re gonna spend. And I’m like, that’s interesting if it’s the people industry because, oh my god, it’s hard to, I’m trying to cover so much ground very quickly. But if I’m PepsiCo, I know in amazing level of detail who my peers are and why. And my number is not comparable to anyone else’s number, by the way, because you only have to go and pick up the top 50 Fortune 50 companies, even in my category, and look at their K-10s or their annual reports for how they spend their marketing. Not a single company defines marketing in the same way. Not none of these numbers are comparable. Now, I’m willing to bet neither are Garner’s. I’m willing to bet they have not done the work to actually try and make those budgets comparable. If they did, that could be interesting. Even then, I’m not sure I’m gonna believe a single one of these numbers.
Tekla Black: Because Pepsi and Coke, we’re DSD systems. We have an unfair advantage in the marketplace because we own distribution. We don’t need to market as much. Or, like they’re showing percentages of spend. Percentage is a useless number unless you know the size of the company. Because clearly for a small company in order to break through, you have to have the same minimum spend to hit certain viewership, et cetera. So I’m looking at this thing going, “Hmm, interesting. Not sure I’d pay for it. I would just buy the media metrics information from Neilson. And I actually know that’s real data measured across thousands and thousands of households. Yeah, I know, I look at this survey, I’m like, “Nope, wouldn’t pay money for that.”
Tekla Black: It’s not real data. And these survey things are notoriously terrible.
Tekla Black: Yeah. See, here’s the thing. I’m sure you’re familiar on the particulars in insights organization. You ask a person, “How much do you think you’re gonna spend next year?” What I say and I actually spend, the only thing that it measures is sentiment. It doesn’t measure reality. McKinsey does a bunch of these, too, and no one really reads them.
Tekla Black: I did, I did. I controlled the consulting dollars. I controlled the BCG budget effectively. And the marketing budget. So what I did is BCG is very expensive. We actually had an exclusive deal. I don’t know if you know this, but McKinsey has signed one category specific exclusive deal in its whole life and that’s with Coke. So basically promised not to serve competitors. It’s the only time McKinsey has done it. It’s been in place for like a gazillion years. So BCG effectively has been complemented with PepsiCo. So there is almost an exclusive deal. To supplement it, I would personally use companies like BTG that would not be considered a traditional consulting firm and as a competitor. And again, clearly they use people who are segment specific experts, but comparable to BCG, that would be considered competitor.
Tekla Black: Yeah. Yeah, yep. That’s the idea.

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