Sagging sales in key markets. Two failed CEOs in a row. Horrible employee morale and a class-action, racial-discrimination case.
Those are just some of the problems that plagued Atlanta’s most famous company long before the current financial crisis.
How companies like Coca-Cola overcame tough times can offer key lessons to others going through them now.
I talked with Neville Isdell, who is credited with straightening out the mess that was Coke, on the day last month when he gave up his position as chairman of the board to return to retirement in Barbados.
What did he do that worked?
Three actions, in particular, helped turn around the company.
For starters, Isdell did something revolutionary. He listened.
Publicly, Isdell kept his mouth shut for three months when he first got the top job five years ago, so he could travel the globe listening to employees, managers, bottlers and retailers. Coke operates in more than 200 countries.
“You can’t sit in the corner office,” he said.
He had been a Coke system veteran for 43 years, but he knew he didn’t know everything and couldn’t stabilize the company by himself. He needed to fill in gaps to his knowledge, since he had been working on his golf game in Barbados for 2 1/2 years.
Secondly, Isdell parked his ego, as best he could. “We all have egos. I just subsume mine more than others.”
He organized a group of 150 top managers from around the world to come up with a strategic vision called “Our Manifesto for Growth.” He knew the process was as important as the strategy, because it helped with buy-in from the people who could then drive the plan with the troops. And the troops had been decimated by a reorganization that eliminated 5,200 jobs, along with a massive amount of institutional knowledge.
Unlike many top dogs, Isdell really did want to hear honest feedback, so he tried to guard against becoming isolated. He knew the company could not afford a CEO whose arrogance or authority position muted opposing views.
Finally, and perhaps most importantly, he did something his two predecessors did not. He found a No. 2, Muhtar Kent, who was both compatible and complementary to his skill set.
Coke succeeded for much of the 1980s and 1990s because of the Roberto Goizueta-Don Keough one-two punch. But trouble set in, partially because Douglas Ivester, who succeeded Goizueta when he died in 1997, never picked a No. 2. And Doug Daft, who followed Ivester, picked two No. 2s, both of whom departed abruptly.
Isdell, who worked with Kent for many years, knew he needed him.
“You have to surround yourself with people who complement you,” Isdell said. And people who are willing to express themselves to the boss without fear.
“Over the years, we’ve had our ding-dongs,” Isdell said of his relationship with Kent.
In the end, Isdell said, his tenure will be judged by whether Kent is successful in taking the company further.
“The car is back on the road and going forward,” Isdell said. “Muhtar has to make it go faster.”
Since Kent just added the chairman’s role to his CEO calling card, it’s likely to be awhile before he names a No. 2.
Hopefully, he won’t wait too long.
We’re watching, Muhtar. Isdell is, too.