THE REAL
THING
Truth and Power at The Coca-Cola Company
Book Author - Constance L. Hays
Book Review by - S S George
Dean, ICMR Case Studies and Management Resources
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Ivestor, in that although he had spent
more than 25 years with the company, he had not worked much at the company’s
corporate office in Atlanta. Don Keough, the former president and COO of the
company was believed to have had a significant role in the selection of Daft. It
was also believed that Keogh was one of the principal figures behind Ivestor’s
removal.
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The book hints at Keogh’s behind the scenes
machinations in the ouster of Ivestor and the appointment of Daft. Keogh
was extremely popular with the bottlers, and at one time, had been
considered a strong contender for the top position. However his ambitions
were thwarted when Woodruff chose Roberto Goizueta as the Chairman in
1981.
Keogh had to be content with the position of number two in the
company, a position that he later had to share with Ivestor. When he
retired from the company in 1993, Goizueta retained him as a consultant.
After Goizueta’s
death, Ivestor had more or less ignored Keough, and when the contract
ended, it was not renewed. However, Keough still retained some links with
the company. After retirement, he had joined the board of Allen & Company,
a firm owned by Herbert Allen, a Coca-Cola board member, as Chairman. In his new position, he was still able to keep in touch
with the developments in his old company. |
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Keough may have believed that with
the relatively inexperienced Daft as chairman, he could once again assume a
significant role in the running of the company. Several major developments have
taken place at Coca-Cola since the events described in the book. Daft stepped
down as Chairman and CEO in 2004, to be replaced by Neville Isdell, a former
senior Coke executive brought back from retirement to take over the job. In the
four years of Daft’s term as Chairman, he had presided over the cutting of
thousands of jobs and revamping the company’s distribution system. The company
had also faced a number of embarrassments, including the bungled launch and
subsequent withdrawal of its bottled water brand Dasani in the UK, and a rigged
marketing test involving Burger King. The board of the company too had come in
for criticism, with even the legendary investor Warren Buffet, who had served
on the board of Coca-Cola for 15 years, facing opposition for reelection.
While the company’s Indian operations appear only peripherally in the book,
Coca-Cola has had more than its share of setbacks here. Now though, in India at
least, Coke’s approach towards its bottlers seems to be changing. It was
recently announced that the company would decrease its emphasis on company
owned bottlers, and would begin to rely more on independent, franchisee
bottlers to make the necessary investments for growth and expansion.
The contrast between the organizational culture at Coca-Cola, as described in
the book, and the image of the brand, is striking. While the brand is projected
as a good clean, all American emblem, the company had its dark sides.
Sycophantism and favoritism were rampant in the top levels of the organization.
The management was obsessed with their main rival, Pepsi – so much so that the
name Pepsi was never mentioned in the company. An extreme manifestation of this
obsession appeared in the news recently, when an employee of the company was
fired for drinking Pepsi while on duty. Coca-Cola has also been in trouble for
discrimination against women and minorities in the work place.
The story of Coca-Cola, as told in the book, offers lessons relevant to many
issues facing businesses today. For example, the board’s role in ensuring good
corporate governance in a company is widely accepted. However, it seems that it
is not enough to have a strong board. The board must also be independent, and
there should be no conflict between the interests of the members of the board,
and the interests of the company itself and its shareholders.
Another lesson relates to succession planning in large organizations. After
retirement, senior officials do not ride away into the sunset. Many of them do
all they can to retain their ties with their companies. If Coca-Cola’s
experience is anything to go by, this is not always a good thing. At some
point, the departing CEO or senior executive must make a clean break from the
company – and the board must ensure that this happens.
2004, ICMR Case Studies and Management Resources. All rights reserved. No part of this publication may be
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This case study is intended to be used as a basis for class discussion rather
than to illustrate either effective or ineffective handling of a management
situation. This case was compiled from published sources.
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