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Which “younger” formula does 134 year old Coca Cola use

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When Zhan kunjie took office on his first day in 2017, as chairman and CEO of Coca Cola company, he wore jeans instead of traditional suits. This detail was seen by employees as a sign of change.
in Silicon Valley, the birthplace of lean entrepreneurship, technology companies here are known for being faster, more efficient, and more consumer centric, and this strong wind has also reached the headquarters of Coca Cola in Atlanta. In his first year in office, Zhan kunjie delivered a speech on investor day on the “beverages for life” strategy. He did not talk too much about products, but frequently involved the keywords in the digital age: “digitalization”, “fundamental change” and “social media”. He changed the distance between products and consumers from “within reach” to “touch the key”.
growth, growth, growth!

in 2018, the Nobel Prize Committee awarded the economics prize to Paul M. Romer. Romer is the founder of the new growth theory. His endogenous economic growth model includes the factors of knowledge and human capital, and emphasizes the great role of innovation, so as to get rid of the theory that economic growth is determined by the natural growth rate of population in neoclassical growth theory.

in the growth driven by new technologies, it is difficult to define the first year of the birth of a technology until these technologies appear in the guise of apple, Facebook, Tesla and airbnb. Matching with the new technology is the new organizational form, which makes the adaptability and agility of enterprises far beyond the traditional large companies which win by scale and transaction cost, and obtain exponential growth in new fields.
on August 28, 2020, Coca Cola officially announced its restructuring. With the help of technological innovation, digital transformation and management reform, Coca Cola has adjusted its organizational structure and is committed to reshaping the Coca Cola system, so as to further promote the “whole category beverage” strategy launched three years ago.
has to mention that, until the fourth quarter of 2019, Coca Cola has achieved or exceeded its long-term development goals for the tenth consecutive quarter. Like other industries, the sudden outbreak of the new crown has disrupted the pace of development of the company to a certain extent. Although the announcement of the reorganization is not an overnight decision, but the direction confirmed by the company after continuous lean and Digitalization for several years, the epidemic has accelerated the progress of organizational transformation and once again reflected the determination of management to change.
speaking of Coca Cola, the biggest advantage is scale. The company’s business covers more than 200 countries and regions around the world, with about 225 bottling partners, 27 million customer outlets, covering 20 different channels, and benefiting 1.3 billion consumers worldwide. Since 2007, the number of its multibillion dollar brands has doubled.
however, when natural population growth and emerging markets are no longer an important engine for business growth, what are the potential growth opportunities?
these opportunities are actually contained in the refined operation, one is to compete for more consumers in the stock market, the other is to compete for the proportion of “8 bottles of drinks” per day for individual consumers, which may be composed of any one or more products in tea, coffee, nutritional drinks, juice, milk, plant drinks, bottled water, etc. To achieve this goal, we should not only rely on product innovation, but also use digital tools to understand the consumer’s “one person, thousands of areas” needs, and the related knowledge, human capital and innovation are the sources of new growth.
all companies are facing a challenge that can not be ignored: retail upgrade. Industrialization brings the advantage of production scale, but informatization brings personalization and diversification, which brings challenges to Coca Cola’s traditional production and service mode.
In the future, Coca Cola will face not only the management of 27 million customer outlets in the physical world, but also a 1.3 billion + consumer terminal composed of the physical world and the virtual world. No matter which port they appear in, what Coca Cola needs to do is to turn every purchase into an experience and become the starting point of the next communication, which requires a highly sensitive and flexible Living tissue and body.
should be moved according to the situation.
“the Chaozhou fungus does not know the obscure, the Squilla does not know the spring and autumn.” The advantage of a century old enterprise lies in the fact that it has experienced four seasons and is accustomed to changes in the environment. There is a saying in Coca Cola company called “kiss the past hello”, which means summing up the success and failure of the past and guiding the way for tomorrow. This is contrary to the cicada, who only knows the present and does not foresee the future.
A 6031 Coca Cola company in the research found that consumer preferences changed. They focus on the ingredients of drinks, asking for lower sugar, more organic, more natural, and even the origin of raw materials. Such changes can be divided into mature markets or emerging markets. Like a deep-sea undercurrent, it impacts on the traditional consumption and diet concepts. As a result, some beverage categories and products in some categories fade out, while some new products are growing vigorously. At the same time, consumers’ shopping behavior is also changing. They will care about the channel of purchase, the convenience of purchase and the sense of experience. What affects their behavior change is no longer the traditional “authority”, but may be a comment from social media, or an inadvertent sentence from the circle of friends. At the beginning of the birth of the new civilization,
always attracted those who were eager to change at first, and then gradually became a trend. Those who were conservative gradually declined because of losing power. This is happening in the migration of digital civilization.
as early as a few years ago, the Coca Cola company has been embarking on the “digital migration”. Companies not only use data to understand who is talking about their products and where they are talking about them, but also use it to publish relevant content at the right time and to motivate consumers to participate in content creation. The company found that in almost all brands, consumers create more stories than companies create. The key driving force behind dynamic stories is technology. After the research, the consumers and the consumers are connected to each other to find out the emotional connection.
Coca Cola company has a lot of data on hand, which comes from sales terminals, vending machines, production and distribution channels and user feedback. In fact, Coca Cola is one of the early adopters of big data to guide strategic decisions.
可口可乐首席数字官大卫•戈德曼(David Godsman)曾在2018年Adobe峰会上谈到公司为期五年的数字化转型之旅。
他谈到,消费者选择参与的方式在改变,这些方式有移动、计算机、社交、增强现实、虚拟现实、语音……参与方式的改变会抹去品牌在传统渠道的努力,因此,传统的品牌营销人员需要成为全新体验的制造者,并且以截然不同的方式去思考世界。
为了将传统的实体企业转变为数字第一的企业,可口可乐确定了四个关键领域:
  • Experience transformation: create more personalized experience for consumers and retail customers;
  • Operation transformation: with the help of data and technology, some processes are accelerated or removed from the company, and finally the operation obstacles are removed;
  • Business transformation: before the external factors force the company to change, the internal first subverts;
  • Cultural Transformation: tear off the label of traditional consumer goods companies.
因为突发的新冠疫情,这一次的“商业迁徙”被提速了。为了有效地推进变革,公司制定了“布局未来,强劲崛起”(Emerge Stronger)的策略,通过组织架构的变革来有效保障五大目标:
“For Coca Cola, what we need to think about is, when the global GDP level returns to the level of 2019, will our company as a whole be better than before? Do we have more consumers, higher market share and better system performance? Do we have closer interactions with stakeholders? Is the enterprise more interconnected? Can we become stronger when the global economy returns to pre epidemic levels? ” Mr. Zhan explained Coca Cola’s intention to accelerate change at the global consumer conference at Barclays.
layout in the future, a new strategy, a strong rise.

has a history of more than 130 years from this shore to the other shore, from now to the future. What kind of reform blueprint has Coca Cola Co., which can “learn from the past and know the present”?

the following two figures clearly outline the future direction of Coca Cola company.
Figure 1: growth journey to the next stage
Figure 2: accelerating strategy implementation
What substantial changes will be brought about by the five priorities planned by the Coca Cola company?
01. Optimize brand combination
Coca Cola currently has 400 brands, 50% of which account for 98% of its revenue. Among the remaining 50% brands, some have not made significant contribution to scale and growth for a long time, but they all occupy resources. The top management of
company is planning to reduce the brand. The outbreak of the new crown epidemic is a good opportunity to streamline the brand. The company has eliminated the bad performance of low sugar tap water and Zico coconut water, and also eliminated some zombie brands. In turn, some core brands and core SKUs were strengthened during the outbreak. This year, even at the peak of the epidemic, Coca Cola’s performance in the Chinese market is very impressive. The company focused on the soda category, which increased by 14% in the second quarter, of which Coca Cola Brand performed the best, and the sales of Zero sugar coke increased significantly. In addition, Coca Cola has continued to promote the strategy of “all kinds of drinks” in the Chinese market, and has made considerable progress in new product research and development, category expansion and channel development. In the second quarter of 2020 alone, more than 10 new products have been launched, including Costa ready to drink and capsule coffee products, innocent fresh fruit, etc.
Coca Cola China products
Zhan kunjie mentioned that among the 400 main brands currently owned, more than half of them are single national brands with almost no scale. These brands account for only 2% of total revenue, and the growth rate is lower than the average of the company. As part of the global portfolio update, the company will give priority to leading brands with the greatest growth potential and scale. At the same time, the company also focuses on cultivating and developing some small but promising brands, such as continuing to expand the scale of emerging brands such as TOPO Chico. CATH coetzer, head of global innovation and marketing operations at
Coca Cola, said, “reducing brands is to drive influence and growth, continue to follow consumers, and purposefully determine which brands are worth investing in.”
Coca Cola company divides the brand into three levels – “Explorer”, “Challenger” and “leader”, which are an organic combination. In the future, all brands will sprint to the position of “leader”. However, the company will cultivate some “explorers” brands with opportunities for the future market and form a brand echelon with growth. Whether it can become a real quality “leader” brand, explorer must pass the test of “Challenger” stage. The success standard of
“Explorer” is its rapid growth, which can quickly obtain the recognition of consumers and set off waves in a certain field. The standard of Challenger’s success is to gain enough market share and have the potential to become a “leader” over time. The brand that can become a “leader” not only has scale, but also has economy and profit. “Our goal is to build a wide range of ‘leader’ brands, and choosing the brand that is given priority ensures the best return for the same amount of time, money and effort,” said Zhan kunjie
02 implement the strategy of “innovation and justice” to improve the marketing effect
Innovation is crucial in the “all drinks” strategy. Zhan kunjie believes that the best way forward is to selectively invest in more powerful and large-scale goals, to try in a planned way, and to cultivate exploratory brands all the way to the direction of “challengers” and “leaders” in the market.
with the deepening of innovation, Coca Cola constantly improves the standard of innovation — recruiting new consumers, increasing consumption frequency or increasing profit margin.
globally, Coca Cola is seizing some sustainable opportunities, such as high potential investment opportunities for sugar reducing products in some regions, and double-digit retail market share of AHA flavored bubble water in the US market in the first 18 weeks. With consumers’ emphasis on health, safety and hygiene, innovative tracks have emerged in terms of functional and contactless solutions. Coca Cola will put its products, packaging and equipment at the heart of innovation. In the United States, contactless beverage devices have been launched. Consumers operate on their mobile phones and drink out in seconds without creating an account or downloading an app.
03 enhance revenue growth management capability (RGM) and execution capability
Coca Cola is deploying revenue growth management and execution capabilities to adapt to changing channel dynamics. Given macroeconomic pressures and the persistence of the epidemic, it is becoming increasingly important to make the drinks that consumers want affordable.
is offering a variety of budget products through market segmentation. There are various ways to manage revenue growth, either through more profitable channels or by providing high-end packaged products to create value.
revenue growth management is not only a price problem, it involves providing a series of solutions for consumers in all aspects of the value chain, so as to maintain and expand consumer groups. For example, the introduction of refillable products in Latin America, and the introduction of products larger and smaller than 500ml coke packaging in Japan. It also includes helping bottling partners build quick response capabilities, and helping grocery stores, small independent stores and various food service stores to resume business.
Coca Cola’s digital capability is aimed at establishing Omni channel sales, efficiency and data analysis. In the second quarter of this year alone, mycoke digital platform added 8000 terminals in the United States to provide contactless services to customers. Latin America is trying to build a digital home service platform for consumers. Orders are placed on the same day and can be reached the next day. Today, more than one million home users have gathered on the platform, and double-digit growth has been achieved.
04 enhance system collaboration and enhance supply chain efficiency
To achieve this, the connectivity of the global system and close cooperation in the supply chain become particularly important. The benefit of scale and systematization is that best practice opportunities that arise in different regions can be rapidly replicated in other regions, resulting in faster system wide growth.
05 organizational evolution, investing in new capabilities
Since the proposal of “all kinds of drinks” strategy, Coca Cola’s organizational structure is changing from a complex three-dimensional structure to an interconnected structure, enhancing flexibility and maximizing scale. The advantage of
Internet Organization is that data and resources flow in each node, everyone can create and share, and get through the internal and external cooperation of the organization. Although the company’s growth is accelerating after a series of challenges in the coming 10 quarters, the company’s growth is accelerating after a series of challenges. “We need to focus on Disruptive Innovation This is a great opportunity for us to speed up the management of our portfolio We believe that when we come out of this crisis, we will build a stronger brand. ”
service strategic objectives, advance to interconnected organizations The traditional pyramid like hierarchical organization is being disintegrated, which is derived from the intensive division of labor and large-scale mechanized production in the industrial age. The emergence of interconnected organizations or network organizations makes enterprises become a dynamic network composed of many knowledge nodes and feedback nodes, accelerating the response to the market.
in Internet organizations, the relationship between enterprises and users will not stop with sales. On the contrary, this is the beginning of a new round of optimization and upgrading. Organizations use rapid iterative ability to cope with personalized social economy and meet the precise demand of “one person, thousands of faces” in a specific time and space. The growth of enterprises in the future comes from the insight into the personalized needs of consumers.
the Internet Organization planned by Coca Cola has the following characteristics:
In order to achieve the above goals, how does Coca Cola adjust its organizational structure?
Specifically, the new organizational structure of Coca Cola company consists of operation Department, category department, functional department and platform service organization. The
operations division is a highly interconnected organization with a focus on regional and local execution. The original 17 business units will be reduced to nine new operation divisions. The newly established operation divisions are highly interconnected, more consistent in structure, avoid waste of resources and promote new products faster.
Coca Cola’s Greater China region has become one of the nine major operating divisions. Vamsi Mohan thatI is president of Greater China. Wendi has more than 20 years of experience in Coca Cola’s system, and has held many leadership positions in operation, market execution and integrated management. Before that, Wendi was the president of Coca Cola’s South Pacific business unit.
president of Coca Cola Greater China vamsi Mohan thatI
from the perspective of company structure, Coca Cola once had as many as 20 operating divisions with complete marketing teams. In this reorganization, the company takes the consumer cluster as the primary basis for the establishment of operation business department, and strengthens the strategy of “winning more consumers”. After the reduction, the number of global operation business units is reduced from 17 to 9. After the reorganization of
, Coca Cola company will implement a more modern marketing model, reach consumers and fully interact with consumers, so as to effectively improve the effectiveness of marketing. The
category division and the operations division work together to promote innovation, marketing efficiency and effectiveness. The categories include Coca Cola, flavored soda, bottled water, sports drinks, coffee and tea, nutritional drinks, juice, milk and vegetable drinks, and other new categories.
in the previous organizational structure, Coca Cola belongs to the category of soft drinks. After the reorganization, Coca Cola will become a separate category in the category department. In the original organizational structure, the team responsible for the soda category devoted almost all their time to the Coca Cola brand, ignoring Fanta and sprite. If these two brands are in other companies, they can be the main products. However, in Coca Cola, they can only rank second and third in resource allocation.
the world’s fastest fully automated can beverage production line
The restructured category department will be able to develop a clear strategy for each category. Coca Cola has a market share of over 50% in global Cola products and is in a leading position. Therefore, it will continue to promote the current strategy. For Fanta, Sprite or other categories, targeted matching strategies are needed. The establishment of new category departments will better facilitate the implementation of these strategies.
at the same time, Coca-Cola will promote the above changes from the company level, which can continue to innovate locally, and focus on the best practice of scale effect in the world. To achieve the balance between standardization and agility, both of them are contradictory and unified. Organizations need to constantly review and summarize and optimize the process. They can not only find opportunities for agile innovation to implement and promote, but also use the strategy of “innovation and justice” to expand the scale capacity of this innovation, strive for market share, and realize the economic value of scale. The innovation pursued by Coca Cola company is a subversive innovation that can bring value to consumers, and it can also create large-scale economic value for the company. The
function is committed to providing strategic, management and scale services for global projects, including finance, human resources, legal, marketing, public affairs, corporate communications and sustainable development, strategic partnerships, and technology and innovation.
platform service organization this newly established platform service organization tries to provide shared service mode for companies distributed all over the world. It extracts some transactions from various regional operation business units and standardizes them in the platform service organization, so as to create more value. The functions of the platform service organization include data management, consumer analysis, e-commerce and social / digital center, some of which are jointly created by Coca Cola and bottling partners. The new platform service organization can not only serve Coca Cola company, but also bring more value to the whole system of Coca Cola company. As a whole, the new organizational structure is designed to enable future growth. After restructuring, the four departments will be highly interconnected, making Coca Cola a more agile and efficient organization. Since its establishment in 1886,
Coca Cola company has been in the growth stage after more than 130 years of development, which has to be said that the company attaches importance to the gene of sustainable growth. “Everyone on this planet has the right to work with Coca Cola and re imagine the word” experience, “said James Sommerville, vice president of global design at
. It starts with packaging, products, and looks to further develop the story from history. ” “Coca Cola is a transformational company, and digitalization enables us to bring these experiences to the public on a large scale, which requires technology,” said Goldman, chief digital officer of
. In the end, we see the future as a company created with consumers. ”
from the beginning of human origin, virus and human coevolution, nature in the destruction at the same time is also creating. There is no doubt that after the crisis, the world will be different and the future will come faster than ever. The organization reengineering started in 2020 may be the starting point for Coca Cola in the next century.
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