PepsiCo works with startups to take advantage of new sources of innovation. Here’s how it’s done

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Photo: PepsiCo

Large companies with thousands of employees have access to great professional talent, but even the CEOs of these large companies realize that smaller companies have the potential to generate some of their own creative ideas.

That’s certainly the case at PepsiCo, where experienced CEO David Schwartz is helping the food and beverage giant tap talent outside the enterprise’s firewall and into some of the most innovative small businesses around the world.

Schwartz is the vice president of PepsiCo Laboratories, a dedicated team within the company tasked with harnessing the power of technological innovation.

While PepsiCo employs about 250,000 people globally, Schwartz knows that a company cannot be expected to generate all of its best ideas internally.

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Consultant McKinsey says it’s easy to see why Corporate partnerships with startups make sense: Startups can benefit from corporate finance, resources, and customer reach, while companies need to innovate to stay ahead of competitors and disruptors.

By working with smaller companies around the world, Schwartz says his company can generate a competitive advantage by strengthening its internal capabilities with external innovation.

From machine learning to artificial intelligence to bioplastics, PepsiCo Labs identifies and then collaborates with advanced startup companies to create digital solutions to key business challenges.

“We have exceptional talent at PepsiCo. But we also recognize that some areas of deep tech have a lot of support from the venture capital world. We knew we could take advantage of this innovation and bring these solutions to PepsiCo,” Schwartz told ZDNET.

“The market is changing fast and technologies are evolving rapidly. As this evolution happens, we want to touch on the best technologies that will help us get the right product in the right place at the right time.”

Schwartz, who previously worked as a consultant at McKinsey, says most startups are looking for one of three things: funding, expertise, and scope.

He describes the relationships built through PepsiCo Labs as a “win” for both parties – the startups get the support and expertise they require and his company gains access to leading-edge technology.

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Schwartz: “We want to touch on the best technology.”

Photo: PepsiCo

“We provide expertise because we know the challenge we are trying to solve,” he says. “We also provide scale because we have such a large footprint all over the world.”

PepsiCo makes a decision on its startup partners Through a careful selection process. Her lab accesses hundreds of startups and then shortlists potential candidates for experimentation and then scales up production.

To date, the company has expanded more than 30 startups in more than 200 countries.

One such partnership is with technology company WINT, which uses Artificial intelligence to prevent water leakage in PepsiCo factories.

Digital monitors collect water flow data, which is then analyzed through pattern matching and machine learning. PepsiCo estimates it can reduce annual water consumption by up to 25% using WINT technology.

“It takes machine learning and adds this smart element to the processes we already have and creates new efficiencies,” Schwartz says.

Another pioneering partnership is taking place in Turkey, where PepsiCo . is located Working with Pulse Industrial and BrenPower To monitor and detect malfunctions in steam traps in the company’s factories through an artificial intelligence system. The goal is to reduce steam loss and improve efficiency.

“It’s a great technology that takes advantage of the Internet of Things and this helps us reduce our carbon footprint through manufacturing efficiency,” Schwartz says. “It also saves automation and reduces the amount of wastewater.”

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PepsiCo also uses a patented conversion process Developed jointly with UBQ Materials To convert unsorted household waste, including organic materials and non-recyclable plastics, into biothermoplastic. PepsiCo is piloting this new material at Lay booths across Turkey.

“It’s a real-world circularity that comes alive,” Schwartz says. “UBQ takes the trash and makes thermoplastics in a process that equates to a significant reduction in carbon dioxide emissions.”

PepsiCo Labs continues to seek great ideas from the startup community. Schwartz says the goal of the program is to make it as easy as possible for small businesses to try their innovations and then scale those ideas into useful products.

For entrepreneurs and business owners looking to work with excellent companies, Schwartz offers three key tips:

1. Maintain openness and transparency

“If a startup knows what they’re getting into, and PepsiCo leaders know what they’re getting into, and have built a culture of open discussion, I think that sets us up for success. Making the most of talent in startups is all about how nimble we can tweak and adapt their technology. With business needs The people in our business know what the problem is because they live with the pain point every day. So if they can have a proper open dialogue – and we don’t expect the silver lining on day one – they know they will be able to develop the solution and solve the business needs truly “.

2. Working at parallel speed

“Startups need to understand that PepsiCo must maintain the highest standards of integrity. Following the right standards means that we know we will always have high quality products, and therefore, we will go at the right pace to rigorously test the solution. At the end of the day, our work is all about providing products Great for our customers. So if it’s something in machine learning, we want to know it fits our criteria. We also want to work at the pace of the startup ecosystem. I think it’s a great experience for us to work faster, stronger and get better at our goals.”

3. Bringing two cultures together

“Startups are often characterized by a belief in their ability to change the world. We want to work with companies that bring their passion to do great things. We want to take the passion of both companies — a startup that wants to change the world allied with the scale and expertise of PepsiCo. It’s great when both parties come together and go down things. I think what works is that we celebrate successes, we work as a team. What we do behind the scenes is facilitate the connection between great innovation and execution. We bring these two elements together to build great solutions.”

Schwartz says PepsiCo Labs’ goal is to find more solutions from across the startup community that help the company solve its short-term challenges and achieve sustainable long-term growth.

“The more successes we have in the short and medium term, the more we can experiment and push the limits to far-reaching solutions,” he says.

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