When a company gets off track, it takes more than a plan to get things moving in the right direction. According to Muhtar Kent, the president and CEO of The Coca-Cola Company, it takes vision and execution.

Speaking as part of the Dean’s Leadership Speaker Series (co-sponsored by the W. Cliff Oxford Executive MBA Program) at Emory University's Goizueta Business School, Kent discussed his 31-year career at Coca-Cola, the economy, and offered advice to students who are job hunting in a tough economic environment.

Kent’s response to the evening’s first question regarding Coca-Cola’s initiative on strategic renewal (posed by Jeffrey Rosensweig, associate professor of finance and director of Goizueta’s Global Perspectives Program) set the candid tone for the evening. “Sometime after 1997, we had lost our way at The Coca-Cola Company—I say that openly,” Kent told the audience. “In one word, we’d become arrogant. We’d moved away from the touch points that mattered.”

Kent, who succeeded E. Neville Isdell as CEO in July 2008, noted that as a result of that arrogance, the company stopped growing. “It’s the best business in the world—the non-alcoholic beverage industry,” he said, adding that over the last two decades the industry grew at six percent, out-pacing even the cosmetics industry. “It’s a wonderful business and we didn’t grow,” Kent underscored.

To get back on track, the company adopted its current vision—the “Five Ps” that will position it for sustainable growth well into the future—a portfolio of brands made available to consumers through the company’s partners, its profit matrix, its people and its regard for the planet. Kent added that a good plan isn’t enough. “Vision without execution is daydreaming,” he said. (The newly added sixth "p" is productivity.)

Approximately 3000 companies manufacture and distribute non-alcoholic beverages in the U.S. alone, accounting for annual revenue of $70 billion. The Coca-Cola Company and its main rival, PepsiCo, control more than 50 percent of the U.S. market. Globally, Coca-Cola is the number one provider of sparkling beverages, juices, juice drinks and ready-to-drink teas and coffees, and owns four of the top five brands: Coca-Cola, Diet Coke, Fanta and Sprite.

For the fiscal year 2008, The Coca-Cola Company’s worldwide unit case volume grew five percent—led by growth in China and India. Double digit growth also was seen in Mexico, Brazil, and Turkey. Consumers in more than 200 countries enjoy Coca-Cola’s beverages at a rate of 1.5 billion servings a day, and according to Kent, bad economy or not, that number is going to grow.

By 2020, a billion new members will join the ranks of the middle class and, in the process, become more urbanized. Translation? More people with more money living lifestyles that will be “demanding our product,” noted Kent. These urban-dwelling, middle class consumers will demand ready-to-drink beverages and The Coca-Cola Company plans to give them plenty of choices in the countries they serve around the world.

Kent admits the current economic landscape is a difficult one, but he doesn’t believe it will affect the company’s overall outlook for 2020. While energy and food prices are predicted to climb higher in the short and long term, The Coca-Cola Company is positioning itself to handle such increases. Certain trends, explains Kent, won’t be affected by macroeconomic upheaval—including population growth.

When it comes to the company’s portfolio of brands, nearly 10 percent of the company’s volume—the equivalent of two billion unit cases—comes from the sale of products that didn’t exist four years ago. Coke Zero, introduced in 2005, was the company’s biggest product launch in more than 20 years. And proof, explained Kent, that the sparkling business isn’t saturated. “You just have to be innovative and create products that appeal to today’s consumer,” he said.

The company also is creating new ways to reach consumers, including marketing in new environments like social networking site Facebook, virtual world Second Life, as well as via messaging on cell phones and other technologies.

Kent is optimistic about the future. He believes the country will come out of the current financial crisis “quicker than people think” as long as “Brand America” continues to improve and remains strong. However, MBA students who graduate this spring face a tough job market, and Kent advised students to consider working for a small business. Not only would they be more involved in all aspects of the business, they’d learn to respect cash. “In big business, you never touch cash,” Kent noted. He considers the lack of connection business leaders have to their company’s balance sheets one of businesses’ biggest ills.

Kent envisions a new equilibrium, tied to sustainability. “Not because it’s nice or fashionable,” added Kent, “but because it makes business sense.” The company collaborated with Greenpeace to develop eco-friendly coolers, with the World Wildlife Fund to restore some of the world’s endangered watersheds, and with the United Nations to develop a plan to reduce global water usage. Coca-Cola is partnering with local communities and agencies to create innovative recycling solutions for its beverage packaging. The company also developed a hydrofluorocarbon (HFC)-free vending machine. “If we don’t play our role to create sustainable communities, we won’t be in business,” Kent said.    

Kent learns from the communities in which Coca-Cola products are sold. He likes to go to markets in various cities to pick up what he can about brands, pricing, packaging and different distribution channels. It helps him prioritize and “focus on the right things,” he explained. “As long as we add value to our customer and as long as we are part of the growth strategy we will win.” That has meant rebuilding trust between the company and its bottling partners. In the last several years, noted Kent, bottlers around the world have regained their financial health. “The Coca-Cola Company can’t be financially healthy and successful unless its bottling partners are healthy and successful,” Kent added.

The company is working with its customers and bottling partners to add value, increase efficiencies and execute “without flaw,” said Kent. Until recently, the company operated 68 business units. Now there are less than 40. To date, the consolidation has saved the company more than $100 million and Coca-Cola is on track to deliver $500 million in annualized savings from productivity initiatives by the end of 2011.

Like Coca-Cola Chairman and CEO Roberto C. Goizueta before him, Kent, who is of Turkish descent, came to the United States with little more than the cash in his pocket. And also like Goizueta, Kent answered a newspaper ad and landed his first job at The Coca-Cola Company. A little more than three decades later, Kent, who is 55, became the company’s President and CEO. This month, the Board of The Coca-Cola Company is expected to name Kent Chairman of the Board.

 

Photo: Coca-Cola CEO Muhtar Kent, left, answers questions posed by Goizueta's Jeffrey Rosensweig, before a packed audience of Executive MBA students and guests.