The Coca-Cola formula and brand was bought in 1889 by As Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500 brands in over 200 countries or territories and serves 1. Billion servings each day.  The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company owns its anchor bottler in North America, Coca-Cola Refreshments. The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the NYSE and is part of DEJA, 500 Index, the Russell 1000 Index and the Russell 1000 Growth Stock Index. Its current chairman and CEO is Mutter Kent.
In the past year, I’ve had the honor of speaking on a number of university amuses around the world from the London Business School to MID to MIT. Always walk away from these experiences energize and inspired by the fresh thinking… The rigorous debate… And the entrepreneurial spirit I find at our world’s leading business schools. Coming to Wharton, however, is truly special. This, of course, is where collegiate business education began. More importantly, this is where many of the leading ideas are coming from that will shape business leadership and business development in the years ahead.
Believe me… New ideas and new thinking have never been in more demand in the business world. It’s tough out there at the moment very tough. The global financial crisis has touched everyone in the world, and it will probably get tougher before it gets better. Last week, I met with Chairman Brenan in Washington and we talked about the need to keep the faith in our global markets. I acknowledged the issues were difficult but I also expressed my optimism about the future and our belief that this was exactly the right time to invest in our future.
We both agreed that the American economy and the world economy could come out of this crisis stronger and better prepared for the future than when we entered into it. M a firm believer that times like these are not an excuse to sit back and ride out the storm. Rather, this is the time to focus on what matters most to our business, shed what is wasteful and unproductive, and invest in our brands, customer-facing communications and execution. History has shown us, time and again, that world-class organizations and leaders proactively manage turbulence to sow the seeds for future growth and prosperity.
With that said, I’d like to spend some time this afternoon talking about leading in challenging times. My hope is that the world you will inherit upon completion of your MBA will have lamed down quite a bit. Rest assured, though, that whether it’s a financial crisis, or a geopolitical crisis, or an energy crisis, or an environmental crisis turbulence will be the new norm in the years ahead. And that’s not necessarily a bad thing, either. Believe that for every headwind we confront there’s an equally powerful tailwind to be ridden. The trick is finding it. We are living in a world of great paradox.
A world of seemingly insurmountable challenges… But also one of breathtaking opportunities. Your leadership will help shape and define that world. Want to get this leadership discussion started by sharing with you some beefing moments in my career and how they shaped my own personal leadership style. Then I’d like to share a few thoughts on how am putting those principles into practice as we lead The Coca-Cola Company and system through these times of great paradox. Mostly, though, I’m looking forward to hearing what’s on your mind, and my hope is that we can have a great conversation today as well.
So, let me start with my career journey and some of the key lessons I learned along the way. When I first went to work for The Coca-Cola Company in Atlanta 30 years ago, America and the world were in a situation surprisingly similar to today. Fuel rises were spiking. A recession was draining our confidence. Across America there was widespread fear that we were losing our global political and economic leadership around world. Many people feared that a surging Japan would cripple American industry, jobs and the U. S. Economy. Even greater numbers of people were worried about their jobs being replaced by technology.
But the system didn’t collapse. In fact, America got stronger… Much stronger… And that’s because this great nation did what it has always done best America innovated and reinvented itself. By the time I was 29, the early ‘ass economic boom was beginning to heat up tooth here in America and around the world. Was appointed to lead our first Pan European Customer Relationship function. A few years later, I was appointed director of International Accounts for Europe. Both of these roles taught me the importance of relationship-building and leading not by hierarchal control but by influencing and collaborating.
Four years later, I was named president of our small and troubled operations in Turkey that was back in 1985. Our business in Turkey at the time had $55 million dollars in revenue. Today it’s among the most successful operations in our system. Being president at the age of 32 in a crisis situation taught me a lot about compassion… Listening… Empathy… And building trust while leading with confidence. A few years later, as the Berlin Wall was falling, went on to lead our operations in East Central Europe. These were dynamic times half a billion people from the Baltic to the Balkans lived behind an Iron Curtain for half a century.
Our business had no relevance in this geography at the time. There was no infrastructure and no real currency. We did business through counter-trade. We ramped up quickly and built Western-style production and distribution acclivities in record time. In fact, we built 24 factories across 1 1 countries in 28 months. Today, we are the undisputed market leaders in these geographies and they are among the most innovative markets in our system. Key lessons here for me were parameterization acting with urgency… . Focusing on execution and keeping your eye on the prize.
In 1998, I became CEO of Fees Beverage Group, a small Turkish beer company that had just invested in the Coca-Cola bottling system. At the time, we were a local business, with less than $300 million in revenue. Our vision was to establish “Beverage Leadership from the Adriatic to China. By 2005, Fees had expanded to eight countries, was the No. 5 beer company in Europe, and was among the top 10 bottlers in the Coca-Cola system. Revenues had grown to nearly $3 billion, we were listed on both the Istanbul and New York stock exchanges, and we had indeed become the largest beverage company from the Adriatic to China.
The big lessons for me here were… Respect for cash… Governance… And executing by building emotional networks among people. In May 2005, I came back to work for The Coca-Cola Company, first to run our Asia-Pacific operations in Hong Kong. In 2007, I became president and COO. I assumed the CEO position this past July. The big lessons of the past two years have been the importance of getting our system aligned and our people believing in winning again. Throughout my 30-year career, I’ve been fortunate to interact with some truly wonderful leaders leaders from business, government and civil society.
Regardless of their background, I’ve noticed one overarching and essential trait found in all leaders and especially leaders who manage through challenging times. They have the ability to create a clear and compelling vision for their organization, and to inspire their people to achieve that vision. Let’s face it, vision without execution is merely daydreaming. And execution without vision is like running in the dark you’re moving but probably not in the right direction. One of my first priorities as CEO has been to guide our entire system toward a system-wide vision for our business… ND to develop the capabilities to execute against that vision. It became apparent to me and to my leadership team that the world we inherited at the beginning of 2008 was shaping up to be significantly different than it was even a year ago. We saw some things happening today and over the near horizon hat were going to fundamentally and dramatically reshape the nature of our business over the next decade and beyond. Changes that were going to make the last 10 years seem downright tranquil. Specifically we saw and continue to see four massive global trends unfolding that will have great bearing on the world and our system in the years ahead.
These are: 1. The rising demand (and cost) for energy. 2. Rising food prices. 3. A growing middle class and… 4. Rapid arbitration. Collectively I refer to them as the “New Equilibrium” because they are shifting the balance of the world and will so for next decade and beyond. The current global financial crisis while painful and pervasive did not make this list because believe it will be a distant memory in a few short years. As traumatic as it seems today, it will have little material impact on the much broader global developments already in place.
Let me just take a moment to review these four key developments in more detail because they are really the triggers for the strategic renewal process that we are going through right now. First, the energy situation. Despite recent fluctuations, most energy experts today believe that oil demand and prices will rise significantly over the next aced as consumption continues to surge. This is already fueling one of the largest transfers of wealth in history. The United States will transfer nearly $500 billion dollars to oil producing economies this year alone.
This will join the $2 trillion dollars that will be transferred out of the E, China, Japan and India this year. Of course, oil booms and busts are not exactly uncommon. What is different today, however, is the surging energy demand we’re seeing from fast-growing economies around the world, adding to the already huge demand from the developed world. The second component of this New Equilibrium is producing some unintended ND far-reaching consequences. The surge in production of bio-fuels like ethanol, along with erratic weather, is partly responsible for food shortages and rising prices.
So, here we are with both higher energy costs… And higher food costs. As populations continue to expand and living standards continue to rise across the world, we will have to manage our business in an economy of constant scarcity and cost pressure. This is the new normal. The third major shift we’re seeing is the rapidly growing middle class. Think about this: A billion new people worldwide will enter the middle class by the ear 2020. These new middle class consumers will strive for the same things we want out of life better quality food and better quality beverages.
And like their counterparts in the developed world, most of these new middle class consumers will reside in urban areas. This brings us to the fourth component of this New Equilibrium the stunning rate of arbitration taking place around the world. Within the next 12 years, China, India and the Southern Hemisphere will be more urban than North America, Europe and Japan. So, clearly, what you have here with these four global shifts are significant halogens and opportunities that impact the sustainability of our industry… Our business… And our planet.
For our industry, this also means more people… With more wealth… Leading highly mobile, on-the-go, urban lifestyles that are conducive to greater demand for ready-to-drink beverages. It also means increasing cost pressures, environmental pressures, commodity scarcity, NAG pressures, global talent competition and a host of other implications. Amid this backdrop of opportunity and turbulence, we truly believe that there is no better consumer products industry to be in than non-alcoholic ready-to-drink averages. At Coca-Cola, we think we’ve really just scratched the surface of our potential.
Consider this: This year, people around the world will consume 1. 5 billion servings of our products every day… But 50 billion servings of ALL other beverages. There is an incredible opportunity for growth. Ours is a $650 billion dollar industry that is growing faster than the world’s GAP and faster than all other consumer packaged goods, including cosmetics, alcoholic beverages, and household care. By 2020, the non-alcoholic beverage space will be a trillion dollar industry. That’s a huge opportunity. If our industry were a nation, we would be among the top 18 largest economies in the world today.
We know that capturing new opportunities, however, is going to require both vision and execution across our Company and our wonderful system of bottling partners. And that’s where our vision ? which we call Vision 2020 comes into play. It’s a look at where our Company and our bottling partners need to be heading over the next decade. Our vision is centered on capturing the unprecedented opportunities emerging over the next decade in the global non-alcoholic beverage industry… S a billion new people enter the middle class… … As expanding youth markets and affluent aging populations seek new beverage experiences and requirements… ND as breakthrough technologies and innovations reinvent consumer marketing and shopper experiences. In short, our vision is to harness new wealth, new beverage requirements and new innovations to accelerate growth and create the world’s most respected consumer goods system. I’ve been spending a lot of time this year getting my leadership team assembled and aligned in a way so that I am confident we can execute against our vision and strategies. Hind it’s Professor Seem here at Wharton who refers to “leadership as a team sport. ” He couldn’t be more right.
Getting the right team in place to execute our vision and strategies has been absolutely critical. Equally important is getting our bottling system leadership and our Company employees aligned behind our vision. About two months ago, we assembled our top global bottlers and Company leadership for a rigorous two days of discussion on our vision. This was the first time we had convened as a system since the Roberto Goutiest era. We spent a lot of time looking at our business and where we wanted to take it, ND we also listened to some leading outside thinkers give their perspectives on the future.
We heard from Feared Karri, the noted international affairs experts, former U. S. Secretary of State Madeleine Albright, the CEO of Goldman Cash, Lloyd Blanking (who joined us just days after the start of the global financial meltdown), and Dry. Regard Pushchair, the Nobel Prize winning climate-change scientist. Most importantly, we received great input from the leaders of our bottling system about what we need to be doing better to grow as a system. It was a rich discussion and we followed that with another important gathering just two weeks ago when we brought together our employees for a town hall to discuss our vision in Atlanta.
Getting our system leadership and people behind the vision and giving them an opportunity to contribute to the vision will play an essential role in the success of this renewal process. Other extremely important constituencies that we need to communicate vision to are shareowner, retail customers, suppliers, government officials, Nags and other parties who directly and indirectly influence our ability to grow. There are two critical things a CEO cannot delegate and will have to own. 1 . The first is communicating vision… And I’ve already talked a bit about that. 2.
The second is owning the development of leadership talent and succession planning. F you look at my senior management team, you’ll see that we’ve got leaders from Mexico, Lebanon, the I-J, Australia, Liberia, Turkey, France, Colombia, Ireland and the US. At times, Coca-Cola resembles the United Nations… And in fact we are in more markets than our represented by the UN today. This extraordinary diversity of ideas and cultures and beliefs is undeniably one of the most important competitive advantages we have as a business system. Ensue more and more businesses will begin to resemble us in this regard in the coming years.
In fact, Coos in the US and Europe recently told an Economist survey that their senior management teams will become more international over the next three years. We feel strongly that the next generation of leadership will need to be able to recognize and harness the power of diversity. One of the most fulfilling diversity programs I am personally involved in is serving as the chair of our Company’s Women’s Leadership Council. In this role, I work with senior women executives throughout our company to identify strategies to attract and develop more women into leadership positions.
The keen insights women bring to our business are profound, to say the least. Today, women account for the majority of purchase decision makers for our beverages. Globally, women make up 70 percent of all grocery shoppers. As more and more women around the world gain economic power, we need to be there with the right shopper insights, the right mix of products, and the right marketing and merchandising strategies. Women’s leadership has never been more important. As the CEO, my job is to create a climate of success for our people and inspire hem to achieve the vision we have created for our business.
That’s really the true essence of leadership. At the end of the day, it all comes down to execution. As I mentioned earlier, vision without execution is simply daydreaming. For The Coca-Cola Company, execution involves focusing on our three core capabilities of… Consumer marketing which generates that bond and emotional connection with our consumers… Commercial leadership which involves all the strategic actions we take with our 20 million retail customers who sell our brands around the world each day… ND franchise leadership which is working with our 300 bottling partners around the world to create greater system alignment.
Fore effective leadership especially in these times of challenge, there can be no substitute for strategic thinking and tireless, relentless execution. There can be no alternative for attracting and retaining the absolute best people to lead and creating a dynamic environment for them. And there can be no job more important than communicating effectively with your customers and all your key stakeholders. As you can see, our strategic renewal is a journey that’s at its beginning stages. But by formulating a clear and compelling vision… Getting our system aligned behind it… Executing… And constantly communicating our intentions I’m extremely confident that we will succeed. Mutter Kent is Chairman of the Board and Chief Executive Officer of The Coca-Cola Company. Mr.. Kent joined The Coca-Cola Company in Atlanta in 1978 and has held a variety of marketing and operations roles throughout his career. In 1985, he was appointed General Manager of Coca-Cola Turkey and Central Asia. From 1 989 to 1995, he served as President of the Company’s East Central Europe Division ND Senior Vice President of Coca-Cola International, with responsibility for 23 countries.
Between 1995 and 1998, Mr.. Kent served as Managing Director of Coca-Cola Amatol-Europe, covering bottling operations in 12 countries. From 1999 until his return to The Coca-Cola Company in May 2005, he served as President and CEO of the Fees Beverage Group, the majority shareholder of Turkish bottler Coca-Cola Choice. Headquartered in Istanbul and listed on the London and Istanbul Stock Exchanges, Fees is a publicly traded beverage enterprise whose Coca-Cola and beer operations extend from the Adriatic to he Pacific Ocean. Under Mr..
Ken’s leadership, Fees experienced extraordinary growth, with triple-digit revenue growth and a 250 percent increase in market capitalization. During that time, in addition to taking Fees Breweries International public on the London Stock Exchange, Mr.. Kent also served as a board member of Coca-Cola Choice. Mr.. Kent was named President and Chief Operating Officer of The Coca-Cola Company’s North Asia, Eurasia and Middle East Group from 2005 until early 2006, where he was responsible for the operations across a broad and diverse geographic region that included China, Japan and Russia. Mr..
Kent served as President of Coca-Cola International through most of 2006, responsible for operations outside of North America, until his appointment as President and Chief Operating Officer of The Coca-Cola Company, overseeing all operations of the business, including Bottling Investments. He succeeded Unveiled Sidles as Chief Executive Officer of the Company on July 1 , 2008, and as Chairman of the Board of Directors on April 23, 2009. Mr.. Kent holds a bachelor of science degree in economics from Hull University, England, and a master of science degree in administrative sciences from London
City University The news last week that The Coca-Cola Company’s heir apparent and chief operating officer, Mutter Kent, is to succeed E. Unveiled Sidles as chief executive officer in July next year will have come as a huge relief to those with a vested interest in the soft drinks giant’s success. Kent has been groomed by Sidles for the position since he rejoined Coke in May 2005 and became president in December 2006. However, Coke’s recent track record in executive succession made nothing a certainty, and a repeat of the last two CEO appointments, which left the company demoralized and hemorrhaging executive talent, could never be ruled out.
Most recently, this was seen four years ago when Sidles came out of retirement to beat then COO Steve Here to the Coo’s chair. For some, Here was Coke’s natural heir and the decision to pass him over left the boardroom and management divided. Although Citadel’s track record over the last four years suggests the move was the right one, at the time it summed up a company that was struggling to convince itself or its investors that it had any direction at all. Sidles, who will remain as chairman until the company’s annual shareholders’ eating in April 2009, has worked hard to turn that situation around.
Those looking back over his tenure will judge positively a man who has overseen rejuvenated beverage sales and profits across the world, improved bottler relations and the arrival of new talent to replace that which had been lost during a difficult time in the company’s history. But perhaps, given the past, his greatest triumph has been to ensure a smooth handover to Kent, as this epitomizes the new confidence the Atlanta-based group wants to portray. “l have a very, very strong belief that successful management transition is one f the key jobs of the CEO and the chairman,” Sidles said in an interview recently. It’s one of the key goals I set for myself. I’ve been working on it for three and a half years, and I’m trying to do it the right way.