Bill Schultz presentation
Bill Schultz presentation
Coca-Cola's President Reveals the 3 Ingredients of their Secret Formula
  •        
Hamoon Ekhtiari, CPA, CA        

I had the opportunity back in the fall to listen to Bill Schultz who has been Coca-Cola Canada’s president since January 2016.
He opened by asking who the person in green in this picture was.


It turns out that’s St. Nicholas and until 1931 that was him until Coca-Cola invented Santa Claus to combat The Great Depression and boost sales.

Here is another one: did you know the word ‘Coke’ is the second most known word on earth? 2nd to Okay.

That gives you a sense of Coca-Cola’s global scale and influence.

Quick History: Coca-Cola was founded by a guy named Pemberton in Atlanta, Georgia. About 100 years ago, Coca-Cola, thinking the model would never work, promised bottlers a price of $1 in perpetuity for each of their small territories which is probably the single largest mistake a business that is still in operation has ever made. Some of those bottlers are still not willing to give those rights up. That very mistake became Coca-cola’s key to global domination as it then leveraged that model globally, with much better unit economics.

While the real secret formula sits in a vault the outside of which you can visit, here are the 3 ingredients to Coca-cola’s business formula:

1. Innovation

When you have a product that is 130 years old and you’ve tried once before to improve it and that didn’t go very well (remember New Coke?!), innovation becomes a different type of challenge. So they focus on innovating on the brand but not the formula itself. Some examples include…
Product innovation: Simply (recombined molecules from pure orange which is now a $1B business just in North America), fairlife milk (double-protein, no-sugar milk made on an almost 0-carbon farm), and their most recent (which we were the first ‘normal humans’ to try in Canada) in Coca-Cola Life (stevia-based to reduce calories and solved for liquorish taste by finding a new molecule)
Marketing innovation:
  • Putting Coke beside food items (pizza, rotisserie chicken, etc) facilitates what’s called ‘processing fluency’ which increases the chances of the consumer buying more of both which is a win-win for both coca-cola and its customers (e.g. grocery or corner stores). They call this ‘occasion-based marketing’ and have started shifting from ingredient-based marketing to recipe-based marketing
  • Moving from Yes or No to This or That (large Coke or small Coke) increases sales. You use this with your kids all the time. It also applies to how we get work done - from ‘Can I do this?’ to ‘How do I get this done?’ Reframing the question changes the answer and opens up new possibilities.
Partnership innovation:
  • In Canada, they represent Monster - both produce and sell the brand as part of their portfolio.

Execution

Critically important given the vast global supply chain (unmatched in the world) and made up of two seemingly opposing elements...
Be consistent:
  • They use an internally-created tool called RED (Right Execution Daily) which is used to measure the ‘picture of success’ for each customer around the world. They hire outside people, auditors essentially, to randomly check across the customer base around the world every single day. While the picture of success looks different at every customer, it’s then meticulously measured and assessed - comparable across markets on a daily basis.
  • While RED is an older metric, they have created a new metric called GREEN (GRow by Excellent ExecutioN) which are all the sub-drivers for sales staff that will deliver RED - all the way from calling on your customers everyday to the perfect product mix. They are also investing their own dollars to help transform small mom-and-pop shops and corners stores into sustainable, ongoing enterprises through make-overs. The exchange is that they will exclusively sell Coca-cola and be outfitted by their coolers.
Personalize + surprise:
  • Coca-cola Freestyle which gives you 100s of combinations of drinks you come up with. Not only does this give you as the consumer choice but the moment you make it, Coca-cola knows what it is which is a treasure chest of data and insights. Finally, it also helps their customers as it significantly simplifies and reduces spaces requirements of the beverage-making process.
  • Share a Coke (this video was done organically as a way of telling their family they were having a baby!) turned out to be a phenomenon and continues to be an evergreen program.

Sustainability

They think of it from top to bottom and their view is that doing good helps to build a trusting relationship with all their stakeholders (customers, consumers, communities, & partners). Their strategic approach focuses on
Me focused on Well-being (shape choice, innovate, promote clear facts, market responsibly, lead engagement)
  • Shape choice: They have always focused on offering choice (every major product they make, they have a low-calorie or no-calorie version) and are now moving to shaping choice (making it as easy as possible for the shopper to make a low-calorie choice)
We focused on Women (community foundations, human & workplace rights, safety)
  • Coca-cola 5by20: A commitment to empower 5 million women entrepreneurs across their global value chain by 2020
World focused on Water (recovery, carbon, sustainable agriculture)
  • Water neutral by 2020: Replenish 100% of the water used in our finished beverages and their manufacturing by 2020 (have already achieved the objective early in late 2016 and are continuing to push the reduction of the amount of water used)
  • And in case you were wondering what intiatives they are supporting here in Canada...
 While I didn’t try Coca-cola Life during the morning session (fortunately I don’t have to drink Coke for breakfast like Bill did during the presentation), I found his presentation incredibly insightful and full of ‘aha’ moments.
There is no doubt that on the Audacious Business scale, Coca-cola’s story would rank pretty highly - one of the oldest, largest, most recognized companies innovating on many dimensions of the business (despite having a core product that’s untouchable) and even re-imagining what is possible when it comes to impact and sustainability through the entirety of their supply chain.
That said, perhaps the final picture Bill showed perfectly captured the questions I ended up leaving the session with which were much more on the Audacious Society scale:


  1. What’s the line between marketing genius and consumer manipulation? And how do you know when it has been crossed?
  2. How do you differentiate between scientific ingenuity in mixing ingredients to drive constant demand (one of the metrics they look at is how many people in the world haven’t had a coke in the last 30 days) and being a cause for addiction and its consequences in a consumer’s life?
  3. How much power do small mom-and-pop shop customers really have when they are entirely dependent on a single global, conglomerate for their livelihoods?


...and because, of course, we must end on a high note, here is what happens when nobody is watching...




 #innovation #sustainability #impact #cocacola



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source:    https://www.linkedin.com/pulse/coca-colas-president-reveals-3-ingredients-secret-ekhtiari-cpa-ca/?trackingId=l5vHHt2qp5hpR39Qt64K6w%3D%3D