Remarks to MIT Sloan Fellows

Muhtar Kent, President and Chief Operating Officer, The Coca-Cola Company
Cambridge, Massachusetts
March 5, 2008

As prepared for delivery

Thank you, Stephen (Sacca)... hello, everyone, and congratulations on being part of this wonderful Sloan Fellows Program. Seeing you here... and knowing the rigorous work you've experienced... reminds me of a quote I am very fond of.

I wrote it down so I'd get it just right. It goes like this: "There has to be this pioneer, the individual who has the courage, the ambition to overcome the obstacles that always develop when one tries to do something worthwhile, especially when it is new and different."

That actually came from Alfred Sloan (namesake of Sloan Fellows) himself and he could have been describing a Sloan Fellow.

That statement also probably best describes my point of view on what it takes to become a global leader and innovator.

You have to have courage... ambition... and a willingness to get out of your comfort zone.

Mostly, I think it takes a continuous mindset of "constructive discontent."

Innovation... leadership... and growth don't usually spring from those who are content with the status quo.

I'm told that this is one of the most global executive business programs in the world. That's fantastic because this is how business is conducted today.

This great collision of cultures, ideas and points of view are exactly where breakthrough ideas and leading strategies are coming from today.

In that spirit, over the next few minutes, I want to give you some insights on what I've learned about leadership in an increasingly global environment. Then I want to show you how I am applying those lessons today as we continue to transform The Coca-Cola Company into a sustainable growth organization.

Mostly though, I want to hear what's on your mind -- so I look forward to the question and answer session.

Let me start out by briefly taking you through my career, and some of the critical learning that has stuck with me.

At age 29, I was appointed to head up 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. It had $55 million in revenue then; 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, I went on to head 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. No infrastructure; no real currency. We did business through counter-trade.

We ramped up quickly and built Western-style production and distribution facilities in record time.

We built 24 factories across 11 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 prioritization... acting with urgency and sense of purpose. Focusing on execution and keeping your eye on the prize.

In 1998, I became CEO of Efes 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, Efes had expanded to eight countries, was the No. 5 beer company in Europe, and among the top 10 bottlers in Coca-Cola system. Revenues had grown to nearly $3 billion and we were listed on both the Istanbul and New York stock exchanges.

Key lessons -- respect for cash, governance, executing by building emotional networks among people. In May 2005, I came back to Atlanta to work for The Coca-Cola Company. In 2006, I became President and COO. I will assume the CEO position in July. That's my journey so far.

What I've learned over the past three decades about leadership certainly colors my thinking today -- especially when it comes to the traits I look for in our global leaders and innovators.

We want people who know how to work in teams, navigate well across cultures, and build lasting relationships.

Sounds like the mission of the Sloan Fellows program, doesn't it?

At Coca-Cola, we're not looking for people who choose to surround themselves with others who see the world exactly the same way they do.

We look for managers who seek out a variety of diverse people, attitudes, beliefs and experiences.

Keep in mind, the vast majority of our business -- about 80 percent -- comes from outside North America.

And that's why we have more than 50 nationalities represented at our corporate headquarters in Atlanta.

And it's why we have Asians assigned to top level jobs in Latin America... and Europeans in high level positions in North America... and Africans working in Australia.

We want global leaders who are as comfortable in Bombay as they are in Boston.

And those leaders must have a social conscience.

They must understand that, long term, our business is only as healthy as the people, environments and economies of the communities we serve.

I imagine we could compile of huge list of competencies needed in order to lead effectively.

Thematically, though, I think it comes down to three essential qualities.

1. Every great leader and innovator I've met possesses the ability to create and communicate a compelling vision and strategy for their organization.
2. Every great leader has the discipline and influence to align their organization so that it can execute behind that vision.
3. And every great leader builds a bank of credibility and integrity by matching words with deeds -- practicing what they preach.

Vision... Discipline... Integrity -- that's the virtuous triumvirate of leadership.

Now that you know a little bit about my background and POV on leadership, let me show you how I am trying to apply it to our business today.

First, a few vital statistics about The Coca-Cola Company and system, which is the vast network of bottling partners that we work with around the world.

We started in Atlanta in 1886.

Today, we operate in more than 200 countries.

Last year we generated over $80 billion in sales system-wide -- vast majority, as I said earlier, outside the U.S.

Our $50 billion supply chain includes 900 plants, 300 bottling partners, and the world's largest commercial vehicle fleet.

We service 20 million customer outlets that sell our 400 brands and 2,600 products.

About 10 million units of refrigerated equipment enable us to refresh consumers with 1.5 billion servings a day.

We are not only the world's largest sparkling beverage company, but we are also No. 1 in juice and juice drinks, tea and coffee. We're No. 2 in sports drinks and No. 3 in packaged water.

Now, if all that sounds pretty rosy -- it mostly is... but you also know that over the past decade Coca-Cola has experienced some significant challenges.

As recent as two years ago, some industry experts were thinking sparkling beverages, the lifeblood of our business, were all but dead.

We were struggling in some very important markets, including the U.S., Japan, the Philippines and Germany. Analysts were concerned that our innovation pipeline was faltering, and that our relationships with our bottling partners were not healthy. Many of our leading customers were calling on us to expedite innovation and deliver more value to their businesses. Consumer expectations were changing around the world.

To move our business forward, it was clear that we needed to create a compelling vision for the future... we had to better align our business to execute behind that vision... and we had to get our people and stakeholders believing again and create a culture of winning.

For the past two years, I have been focused on getting the Company and system believing that we can win again-winning again with sparkling and still beverages... winning again with our bottling partners... winning again with innovation and with a culture of disciplined execution and urgency.

It required painting a portrait of the opportunity -- the vision -- that's out there for us and communicating it religiously.

The opportunity is immense: $650 billion beverage industry -- growing faster than every consumer products sector and faster than world GDP.

We have favorable macros -- urbanization, middle class, conversion.

Most of my energies have been focused on communicating that vision.

Turning vision into reality is the role of execution.

It requires building a discipline around execution.

We believe that the most effective strategies and execution spring not from top-down directives but rather from the people who are on the front-lines, living the daily realities of the business.

If they haven't had a role in creating the strategies, in believing in them, in championing them, then ultimately the effort is doomed because they are the ones who have to execute.

Executing at The Coca-Cola Company means driving our own business forward and also leading our system, which includes our bottler franchises and the customers who sell our products.

We have focused most of our execution efforts on refining our three forward-facing capabilities of marketing leadership, commercial leadership and franchise leadership. At the same time, we restructured our operations both in North America and internationally, not to save pennies but to simplify decision-making and expedite the speed in which we execute.

It's resulted in a host of wins and big bets including our Coke Side of Life global marketing campaign; new acquisitions in the form of Glaceau, Jugos del Valle, Moulton, Illy Café, and Fuze, among others; new innovations like contour grip bottles; accelerated growth of Coke Zero®; a turnaround in our business in Japan and improving conditions in North America and other key markets.

Last summer we combined our marketing and commercial leadership functions into one group -- reflecting a concerted emphasis on winning at the point-of-sale -- the moment of truth for our brands.

On the franchise leadership side, we're seeing marked improvement in relations with bottlers across our system as we work together to better align incentives and work toward a common goal of winning in the marketplace.

While there is still much work to be done, we are executing better today at The Coca-Cola Company than we have in a nearly a decade. We've been delivering and exceeding targets -- we just recorded our 11th consecutive quarter of volume growth of 4 percent or more. We've strengthened our portfolio, and we're seeing balanced growth across sparkling and still beverages.

We're seeing balanced geographic growth as well, with more and more contribution coming from BRIC and other emerging markets. Japan is growing Trademark Coca-Cola at rates we haven't seen in 30 years. Our operations in the Philippines and Germany are back on track.

We're also restoring stability back to North America -- but still have a journey ahead in our flagship market.

In the coming year, we've outlined 5 critical priority areas of focus: 1. expanding our sparkling beverage leadership; 2) rapidly growing our still beverage business; 3) balanced growth across geographies; 4) expediting our innovation pipeline; and 5) enhancing our system capabilities through consumer marketing, commercial leadership and franchise leadership.

The pieces are in place for continued execution.

Getting that buy-in initially from our people was the critical link.

And when people see the business turn around, they start to believe in themselves and the company again. If our people sense it, then our other stakeholders sense it and believe it, too. This is how momentum is created.

Momentum works to your advantage.

If execution doesn't produce momentum, it's probably not execution at all.

The last thought I want to leave you before we move on to your questions is the importance of sustaining leadership by practicing what you preach.

Let me give you one quick example. I've been telling our people the importance of spending more time outside the company. The biggest danger we all face is disappearing inside a large company. When you are close enough to the outside, you don't depend solely on reports.

That said, I spent a thousand hours in the air last year doing just that and encouraging our system to be more market focused.

The other area that builds credibility is knowing how to manage yourself. Find out what you are really good at and make sure you place yourself where your strengths can produce the best results.

Alfred Sloan expressed the same idea many years ago when he said... "The greatest real thrill that life offers is to create, to construct, to develop something useful."

I couldn't agree more. Insert yourself where you'll have the most impact, influence and success. Enjoy your journey as a Sloan Fellow and best of luck to all of you as you continue your dynamic careers.