Muhtar Kent, President
and Chief Executive Officer, The Coca-Cola Company
Philadelphia, PA
November 20, 2008
As prepared for delivery
Thank you, and good afternoon, everyone. It's a great privilege
to be here with you today.
In the past year, I've had the honor of speaking on a number
of university campuses around the world -- from the London Business
School to IMD to MIT. I always walk away from these experiences
energized 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 Bernanke 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.
I am 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 calmed 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.
I 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.
I want to get this leadership discussion started by sharing
with you some defining moments in my career and how they shaped
my own personal leadership style. Then I'd like to share a few
thoughts on how I 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 prices 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 '80s economic boom was beginning
to heat up both here in America and around the world. I 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, I 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 facilities in record time. In fact, 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...
... 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 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... and
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 that 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 urbanization.
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 I 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 decade 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 EU, 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 and 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 year 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 urbanization 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 challenges 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, NGO 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 beverages. 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 GDP 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...
… as a billion new people enter the middle class…
…as expanding youth markets and affluent aging populations
seek new beverage experiences and requirements...
… and 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.
I think it's Professor Useem 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 Goizueta era.
We spent a lot of time looking at our business and where we
wanted to take it, and we also listened to some leading outside
thinkers give their perspectives on the future.
We heard from Fareed Zakaria, the noted international affairs
experts, former U.S. Secretary of State Madeleine Albright,
the CEO of Goldman Sachs, Lloyd Blankfein (who joined us just
days after the start of the global financial meltdown), and
Dr. Rajendra Pachauri, 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 shareowners, retail customers, suppliers, government
officials, NGOs 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.
If you look at my senior management team, you'll see that we've
got leaders from Mexico, Lebanon, the UK, Australia, Liberia,
Turkey, France, Colombia, Ireland and the U.S. 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.
I sense more and more businesses will begin to resemble us
in this regard in the coming years. In fact, CEOs 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 them 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...
and 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.
And I hope to be back here in the future to give an update
on our success to some of your successors at Wharton.
Our Company
