On November 28, 2018, Professor CHEN Yubo, Associate Dean of Tsinghua University School of Economics and Management (Tsinghua SEM) engaged in an insightful dialogue with James Quincey, President and Chief Executive Officer of The Coca-Cola Company (Coca-Cola). During the one-hour conversation, Mr. Quincey discussed Innovation and Growth at The Coca-Cola Company.
Professor XU Xin, Associate Dean of Tsinghua SEM kicked off the program by welcoming the distinguished guest speaker James Quincey, along with the top leadership team of Coca-Cola. Professor XU indicated that in 2017 the Coca-Cola brand was unsurprisingly ranked among the top 5 most valuable global brands and the topic of the following dialogue was “Innovation and Growth @Coca-Cola”.
Dialogue with Associate Dean CHEN Yubo and James Quincey
Innovation and Authenticity
Professor CHEN Yubo started the conversation by asking Quincy how Coca-Cola, the only non-tech company among the global top 5 most valuable brands, manages to continually innovate and maintain its global relevance. Quincy addressed that Coca-Cola stays true to the heart of how the business originally began. Quincy cited an early Coca Cola president, Robert Woodruff, who famously said that “the future belongs to the discontented”. This sentiment captures Coca-Cola’s approach to innovation. If one is happy with the status quo then inevitably a competitor will come and take over. Quincy shared his belief that it is crucial to continually reinvent the brand and to not be complacent.
Quincy explained that Coca-Cola’s ability to continually communicate with its customers in ways that effectively optimize engagement while also retaining authenticity is key to maintaining brand value. Coca-Cola has always strived to strike a balance between innovation and authenticity; between staying relevant but also staying constant at the core. Despite the frequent innovation and change, some core elements of Coca-Cola remain constant. Quincy explained with a chuckle that even the cursive on the Coca-Cola bottle has not changed since the inception of the company as somewhat of an homage to the company’s original bookkeeper.
Product is the Key
CHEN then asked about the nature of Coca-Cola’s massive research and development center situated in Shanghai. To address CHEN’s question, Quincy began by circling back to brand and innovation, and explained to the audience that the product is the start and the core of everything. Coca-Cola operated its first 80 years selling 1 product in 1 package, but now there are over 500 brands with thousands of different product lines. Quincy asserted that “the world is not flat” and that different consumers around the world have different tastes. Coca-Cola addresses these differences by positioning R&D centers in the world’s biggest markets.
The Shanghai center focuses on staying in touch with Chinese consumer preferences. Quincy and the Coca-Cola team recognized that though many of the world’s largest brands in recent history may have been born in the west, the global business landscape is rapidly changing. Increasingly more companies with roots in China are becoming global leading brands, and even within Coca-Cola, products that are developed here are becoming market leaders.
The Future Belongs to the Discontented
CHEN pointed out that not only is Coca-Cola’s primary business different from the other 4 top global brands, but the other companies are also much younger. Quincy joked that you could add up the ages of all of the other brands and Coca-Cola would still be older. What has allowed Coca-Cola to stay relevant is its commitment to stay connected with its customers. Quincy explained that every one of the top global brands have designed a business system that is innovative and disruptive. Coca-Cola has continually disrupted itself to stay connected to customers and this ability to continually reinvent itself has kept it on top.
Quincy believes that it is crucial to remain open-minded and willing to disrupt the company even though it may not yield high returns in the short-run. He enlightened the audience about the theory of the “Innovator’s Dilemma” which is the idea that a new innovation will likely destroy more business than it creates in the early years of implementation. Coca-Cola accepts these sacrifices as it firmly believes that the business must continually be reinvented, because again “The future belongs to the discontented.”
Quality Leadership and Lofty Sustainability
When asked about the biggest challenges that he had faced in his first year as CEO, Quincy responded that on the business side the key challenge was to grow with discipline as Coca-Cola rapidly expanded its portfolio of offerings. To address this challenge the company had to make sure that quality leadership is in place in all areas of operation, and then critically examine whether each segment is succeeding, improving, or outright failing, and make some tough decisions around these observations.
Achieving lofty sustainability goals is another challenge that Quincy faced in his first year as the head of Coca-Cola. To achieve healthier societies in Coca-Cola’s areas of operation without waiting for local government or other groups to take initiative is a continual project. Quincy also has a clear strategy for the company to help create a “World without Waste” by cutting down on the use of virgin raw materials and on one-time-use plastics.
Decoding the “Secrets” to Success
When asked about whether Quincy was a top student at school, much to the appreciation of the audience, the answer was an immediate and emphatic “No”. Quincy shared his belief that when people do something that motivates them, their chances of success are greatly improved; and conversely when motivation starts to decline, quality of work quickly follows. Each job that Quincy took, he took for the job itself and not for the trappings or the title. Quincy shared that he never had a plan but rather trusted that his interest would lead to success and to better opportunities.
CHEN asked Quincy to offer some advice to the gathered students in the audience. Quincy shared his belief that along with staying motivated it is crucial for young people to learn how to accept responsibility for their choices. It is great to chase their dreams, but one must realize all that is encompassed in the career choices that they make, and they must learn to be comfortable with that choice. Quincy explained that work-life balance does not mean a bit of everything. Rather, Quincy emphasized that it is important to find what works for everyone in the chapter of life that they are in.