The Real Thing - Truth and Power at the Coca-Cola Company

Abstract: In the book The Real Thing, Constance L. Hays describes the growth of Coca-Cola, its establishment as a national (and international) icon, and the many ups and downs the company faced in its growth, both within the US and overseas. The story of how a company that makes what is essentially sweetened, carbonated water, came to represent the face of American business for common people all over the world is a fascinating one.

 

About the Author: Constance L Hays has worked as a reporter for The News and Observer in Raleigh, North Carolina, and, since 1986, for The New York Times, where she covered the food and beverage industry for three years. She lives in New York City with her husband, John A Hays, and their children.

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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. 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.

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.