President and Chief Executive Officer
The Coca-Cola Company
Global Business Forum Address
University of Miami
Coral Gables, FL
January 16, 2009
President and Chief Executive Officer
The Coca-Cola Company
Global Business Forum Address
University of Miami
Coral Gables, FL
January 16, 2009
PDF / VIDEO
Thank you, President Shalala, for that very kind introduction.
I’m truly honored to be here today on your beautiful campus, and in the company of such great business and education leaders, students, faculty and friends of this wonderful university.
I also applaud you, Dean Kahn and your conference organizers for producing such a bold and timely agenda for these past couple of days.
I say “bold and timely” because when I look at the range of issues you’ve covered already, including entrepreneurship and innovation, global energy and water demand, urbanization, health and technology, customer engagement strategies, and the interplay of brands, cultures and globalization, it’s clear to me that this forum is addressing the most critical business issues facing our world today. And your timing is impeccable.
There’s no question that we are in very different place today than we were a year ago, and even four months ago. The global financial crisis, which has been discussed throughout this forum, has created an environment of great uncertainty and confusion. It’s tough out there, very tough. Most financial experts and economists tell us it will likely get even tougher before it gets better.
That said, in my heart and in my head, I also believe that America will come out of this crisis stronger and sooner than most people anticipate.
This nation’s entrepreneurial energy and heritage of innovation are unrivalled, and America still has the most flexible labor laws in the world.
I’m also a firm believer that tough times like these are not an excuse to sit back and ride out the storm. Rather, this is the time to confront our current reality head-on – with courage, with tireless determination and with great strategic dexterity.
For the past several months, I’ve been telling our people at The Coca-Cola Company that “we can’t waste this crisis.”
This is exactly the time to focus on what critically matters most to our business, shed what is wasteful and unproductive and keep communicating with our customers and stakeholders, and investing in our brands.
History has shown us, time and again, that world-class organizations that proactively manage turbulence exit the tunnel in much better shape than when they entered. There’s really no better example of this than the University of Miami itself.
In preparing for today, I learned that this very university was borne out of incredible turbulence. As many of you know, when the University of Miami was chartered in 1925, the Florida land boom was at its peak. The state’s economy was soaring. Optimism prevailed. Times were good.
Within a few months, however, the world shifted on its axis. The land boom had gone to bust. The infamous Category Four Hurricane of 1926 laid much of the city and the campus to waste. Capital dried up. Infrastructure was in shambles. South Florida’s economy sunk into a deep abyss, a condition many called a precursor to the Great Depression.
While lesser leaders would have rolled over and quit, that wasn’t the case here. Instead, the university’s founders battled through a decade of great adversity and built a world-class university one student, at a time; one professor, at a time; one benefactor, and one new building at a time.
They did all this by keeping an unwavering faith in the future, knowing that their noble cause would prevail in the end, regardless of the difficulties. Belief in the future was what it was all about.
During this same era, a similar act of courage was displayed by one of the great founders of The Coca-Cola Company – Robert Woodruff. Mr. Woodruff took another one of the most defining, chaotic, and frightening moments of the 20th century – World War II – and positioned our business for unprecedented international growth.
Mr. Woodruff’s vision of providing a Coke for a nickel to every U.S. soldier -- no matter where they were stationed -- led to the development of 64 bottling plants behind the front lines in Europe and throughout Asia.
What started as “a Coke for every soldier” turned into a global footprint that remains to this day a critical competitive advantage for our system.
I mention these two examples to make a broader point. There’s no reason why we can’t apply these same degrees of courage, entrepreneurial spirit, and inspired thinking to navigate through the current global crisis.
This is not a time to be fearful or skeptical or pessimistic. It’s a time to think about how to best come out of this positioned: stronger, more responsive, more flexible, and more open to new possibilities than we were coming into this period.
For business big or small this is a time to: focus on the core and the future. Here are the questions we need to ask for each business: Is it core to our future value? Can we grow those businesses profitably in today’s future? Can they generate attractive returns? This is a time to prepare so we can weather the storm: simply said, reduce our break-even.
This is a time to anticipate the future industry structure, and finally, a time to have the right priorities for expenditures.
At the end of the day, it’s really about leadership. It’s about looking hard into the mirror – looking hard at our current reality – and having the courage to confront our challenges head-on while never losing our faith in the future. It is about making the tough decisions and choices. It is about taking the necessary and needed risks. “Always remember, where there is no risk, there is no reward.”
“Harnessing the power of the connected world” is more than just a great theme for a business forum. It’s also, I believe, the most important antidote for solving the mess the world finds itself in today.
Scaling back or disengaging completely from the global economy, as some leaders from around the world have suggested, is not the answer. Unilateral actions won’t accomplish much of anything in a world that is increasingly multi-polar.
Unfortunately, there is growing sentiment today to promote economic isolationism here in America and around the world. Part of this is being fueled, quite frankly, by some of the serious misteps we’ve seen in business in recent years. Today, we in the business community are facing a significant disconnect with the greater public.
Consider this: Recent Gallup polls show that “big business” is held in high esteem by just 7 percent of the American public today. Equally alarming is that less than 3 in 10 Americans and less than 3 in 10 Europeans believe that global trade and business ties are good for their nations.
Even in the developing markets of Latin America and Asia – nations that have most benefited from trade in recent years -- less than 4 in 10 people believe that globalization is a positive force at this very moment. Clearly, we have our work cut out for us. And clearly, none of us can reverse this course alone. We need to think systemically and holistically to find solutions.
Business, government and education must come together – and partner like we’ve never partnered before – to promote the social, economic and environmental benefits of a world coming together through: greater trade, greater investment and greater development. We must collectively do a better job in promoting our position and showing how international trade and investment benefit each and every person they touch.
As you know, anti-Americanism abroad is a significant concern. The world needs a strong Brand America more than ever before. I have a fundamental simple belief: “At least for the next 30 years or so the world will be a better place for our children to live in if Brand America is strong.” And a strong Brand America needs more than just strong political leadership. It also needs strong business and civil society leadership both here and internationally.
At the end of the day, it all comes down to leadership -- our own leadership and the leadership qualities of those we are grooming to move our organizations forward in the coming years.
And in that vein, I’d like to spend the remaining few minutes talking about some of the specific leadership qualities we at The Coca-Cola Company believe will be necessary to navigate through the challenges we face today. And more importantly though the new landscape that will emerge over the next decade.
I also would like to propose a couple of ideas about how we in business and education can partner closer to develop the kinds of leaders equipped for this new world.
Tomorrow’s leaders are going to have to be prepared to manage in an environment where the balance of global economic power is shifting, and in many instances shifting significantly.
Fareed Zakaria, Tom Friedman and President Shalala, among others, have written and spoken eloquently about this, and indeed we are seeing the emergence of a multi-polar world where economic, political, social and cultural influence now radiates from several nations and regions around the world. For all of us without exception, this development is going to require shifts in our own thinking shifts in behavior indeed, shifts in our own view of the world. How well future leaders understand these new realities, accept them and prepare for them will determine their success and the success of our world in the coming years.
Over the past year, I’ve given a number of speeches on college campuses and to executive education groups. Every single time I have been asked the same question: “What leadership qualities are we looking for in tomorrow’s rising managers?” More than ever, we’re looking for future leaders who possess a world view. We need people who can move seamlessly across borders and across cultures and who feel as comfortable working in Mumbai and Moscow as they do in Miami.
We look for people who want to know our business inside-out but who also spend a lot of time in the markets soaking up knowledge and experience outside the four walls of The
Coca-Cola Company; people who naturally like to be close to the point of impact. In our case, inside the four walls of our customers where our consumers invite our products into their lives
1.5 billion times every day.
With 20 million customer outlets around the world that we serve with the Coca-Cola system, we need people who can speak the language of traditional mom and pops as well as the large modern trade. At the same time we need people who are flexible enough to understand the pressures and local cultural nuances associated with being a sole proprietor of a small street-corner bodega in Peru or Paraguay or Nigeria or Vietnam. We’re looking for people with diverse backgrounds and diverse points of view. We make a point to find young professionals who want to be stretched – who relish the challenge of working outside their comfort zones, and who are not afraid to make mistakes. Entrepreneurial spirit is key to business success today more than ever before.
I meet regularly with a group of high-potential young managers from our company who are part of a global leadership development program we launched last year. We call that program Catalyst. We pick 20 to 30 high-potential managers from all over the world for special stretch assignments that benefit our business. We place them far outside their comfort zones and deep into interesting new roles. They are put into cross-functional and cross-cultural teams and given challenging assignments. One team, for instance, was sent to a Southeast Asian nation to develop a 5-year market-entry plan. Another team was sent to Eurasia to work on a water profitability model. Another team was dispatched to Africa to work on a juice supply chain business model, while another came to Latin America to work in our marketing function.
True innovation, we have found, comes from this beautiful fusion of cultures, ideas, beliefs and experiences. That’s why at our headquarters in Atlanta we have over 50 different nationalities represented at our corporate center alone. It’s why we have Latin Americans assigned to top level jobs in Asia, Europeans in high level positions in North America, etcetera.
The next generation of leadership will need to be able to recognize and really harness the power of diversity. Inside our company, it’s an absolute business imperative as we conduct business in over 200 countries around the world.
Another 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 general management – not only functional 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. In fact, it’s 70 percent of all grocery shoppers. As more and more women around the world gain economic power, we need to be there to ensure the right shopper insights, the right mix of products, and the right marketing and merchandising strategies.
The same message was echoed last week when Anne Mulcahy, the CEO of Xerox, came to speak to our Women’s Leadership Forum as my guest. Anne was gracious enough to visit our headquarters in Atlanta and we truly place a premium on bringing in leadership insights from outside our system.
I’ve talked a bit about the pressures coming down on the next generation of leadership and what we expect from them. At the same time, that generation has their own expectations about what kinds of companies they want to work for and the brands they want to sell. In the U.S., for example, a survey commissioned last year by Sun Microsystems shows that almost three quarters of workers want their employers to be environmentally responsible. The percentage is even higher in Europe.
Another survey of young global professionals in their 20s, conducted by an international survey firm, shows that the ideal employer reflects “a down-to-earth blend of idealism and pragmatism, of concern for self and others.”
Young leaders want opportunities to stretch and grow quickly. They place a huge premium on work-life balance, and they want their work to be meaningful and productive to society.
Those sentiments were echoed by thousands of young professionals who participated in this survey. I know from talking to my own children, that they have much higher expectations of what they want out of an employer than I had when I entered the workforce over 30 years ago. People want to work for companies and brands that share their values.
Today, when we recruit new talent to The Coca-Cola Company, one of the first things we share with them is information about the many projects we are involved in around the world to help build sustainable communities.
They learn about a number of important initiatives, from what we’re doing to reduce our water usage and carbon footprints to recycling efforts to green coolers and lightweight packaging.
We have seen through our own experiences – time and time again – that our business in any market is only as healthy and sustainable as the communities we serve. There is a clear one-to-one regression in terms of healthy sustainable businesses and healthy sustainable communities. In our world today, promoting economic sustainability has never been more important.
I’m sure many of you are familiar C.K. Prahalad’s work on the “fortune at the bottom of the pyramid” – the business case for making your products available, affordable and acceptable to the lowest-income consumers. This is an area we’re fortunate to be familiar with at Coca-Cola.
Our strategy has always been to be the first to gain access to a market and to grow along with that market by providing jobs and economic opportunities. Our business in Brazil, and many other markets throughout Latin America, is a great example of that. It took us many years to become profitable in Brazil, but we kept investing because we believed in that nation’s future.
Today, of course, Brazil’s economy is among the most powerful in the world, and has fueled one of the most profitable markets in the entire Coca-Cola system.
Helping play a role in improving the economic development of the markets we serve has been another important strategy for growth in emerging nations and regions.
In Africa, where our system today is the largest private employer and where we are the No. 1 beverage brand, we are using a number of innovative business models to drive our business and create more sustainable communities at the same time.
One of the most exciting is our manual distribution center network that’s been established across the continent from North Africa to South Africa. This program allows independent entrepreneurs – including many women – to set up distribution centers on behalf of the Coca-Cola system.
Instead of trying to serve thousands of small retail outlets with small drop sizes, our bottling partners distribute to carefully selected manual distribution businesses that sell Coca-Cola products exclusively to retailers.
So far, more than 2,000 distribution centers have been set up by independent entrepreneurs across Africa. Our goal is to help create 1,500 to 2,000 additional distribution businesses across the continent – enterprises that could generate as many as 8,400 jobs and another half a billion dollars in revenue over the next three years.
This program was recently recognized as an important contributor in the drive to achieve the Millennium Development Goals of the United Nations.
Another entrepreneurship venture that has proven to be successful is in Chile, where we have created thousands of jobs through an innovative street-vendor program that works with over 3,000 retail outlets to increase availability of our products to on-the-go commuters. In both the examples from Africa and Chile – as well as other markets throughout the world – our system has done well by doing good.
So far this afternoon, I’ve laid out some thoughts on leadership attributes and sustainable leadership qualities we think will be necessary to compete and thrive in the coming years.
I’d like to leave you with just a thought or two about how business and higher education can work together to groom the next generations of global business leaders.
For starters, I think we can do a better job of getting students out of the classroom and into the business world to learn. I agree with the thesis that conventional approaches to business education need to be rethought. Business can play a big role in being part of the curriculum, and this can stretch far beyond conventional internships. I think we need to develop learning modules that actively place students in corporate environments as part of the curricula.
At the same time, we can work together to bring the markets to the students. I like the approach one small liberal arts university here in America takes with its MBA program, where the first class students enroll in is not a class at all. Rather, it’s a series of seminars and interactive discussions with executives from the business community. Before a book is opened – before a lecture is taught – students have the chance to get a look into the minds of active business leaders.
Finally, I think there’s so much more we can do to partner in promoting sustainable business practices. Together we have a responsibility to show today’s young managers that competing in a global economy takes more than gaining market share. It also requires a deep sensitivity to the consumers and communities we serve, the natural resources we consume, the people we employ, and all the stakeholders we touch who place their trust in us.
Business and education – working together – can play a huge role here and in doing so we’ll be better positioned to hopefully win back the hearts and minds of those folks from the survey I spoke of earlier. More than shouting our beliefs from the rooftops, we need to speak louder with our actions. And I can’t think of a more honorable action than working together to help produce the next generation of enlightened, worldly, relationship-minded and effective global business managers.
Thank you so much for your valuable time and attention this afternoon and congratulations to President Shalala and everyone here at The University of Miami for putting on such a fine forum for us.