Business | Features
He kept his bottle
As Neville Isdell prepares to step down as the CEO of Coca-Cola, he says the toughest period came 18 months after he took over, when Wall Street and the media could see no measurable improvements in the company.
- By Jonathan Birchall, Financial Times
- Published: 23:44 June 15, 2008
Neville Isdell is an imposing figure; more than six feet tall and solidly built, he is often referred to in the media as a former rugby player, a reference to his sporting days at university in South Africa. But as he prepares to step down after four years as chief executive of Coca-Cola, it is a more nuanced biographical detail that he prefers to accentuate.
"My major was sociology; I'm a qualified social worker," he says. "I do think it is all about people."
When he took the helm in June 2004, many of the people at Coke were not very happy. Neither were the board nor the shareholders. Nor were the independent bottlers who mix and distribute Coke, Sprite and the group's other leading brands.
The world's biggest soft drink company seemed to have lost its way after the dramatic global expansion in the 1990s under Roberto Goizueta. Sales of sparkling drinks in the US were in decline and its marketing was uninspired. Its strategy was unclear: Coke had lost out to PepsiCo in a battle for Gatorade and had abandoned a botched attempt to launch its Dasani water brand in Europe. There was also a simmering war going on with its independent bottlers over price increases.
Isdell, a former senior bottling executive who turns 65 this month, was enticed out of retirement by a board that wanted a CEO who knew both sides of the Coke system - meaning both Coca-Cola and the bottlers.
He says he had a clear idea about what he wanted to achieve, and how he intended to go about it. "You don't want to come and do quick fixes. When I accepted I agreed with the board that I was going to set it up for the long term and I believe that I have," he says.
Within his first month, Isdell made two substantial changes, appointing a new head of human resources who would report directly to him - giving him close control over what he calls "the people equation" - and creating a new "bottling investment group" to repair the relationship between the two halves of the business.
His next move was to create a shared agreement among Coke's own people about what needed to be done. It was important, he says, to focus on the obvious question of what exactly Coca-Cola was, and what it was not, in spite of a clamour of calls from investors and analysts for action on everything from Coke's assertive board to its lack of non-carbonated beverages.
Before his arrival, he says, Coke had various strategic statements about its purpose. "But there was [no] coherence to them and . . . there were clearly mixed messages out there."
So in the summer of 2004, 150 of Coke's top managers were brought together for three days in Miami, for a series of discussions on a new "manifesto". In the break-out sessions, Isdell sat listening to people "pour out what they felt was wrong". "That is an important part of the rebuilding process ... And then you say, 'here's what you said is wrong with our business . . . so what are we going to do about it'? "
Isdell's people skills are integral to his management style. He is at pains to put people at their ease, a characteristic shown by his habit of waiting outside the interview room to greet his guests.
Background
He can also still deliver an authentic Northern Irish accent, although he left his birthplace for southern Africa at the age of 10.
After leaving university, Isdell joined Coke's local bottler in Zambia in 1966, and six years later became general manager of Coca-Cola Bottling of Johannesburg, the largest Coke bottler in Africa. Subsequently, he held positions in Australia, the Philippines and Germany, before moving to Europe and spearheading the expansion of Coke into new markets in India, the Middle East and eastern Europe and Russia in the 1990s.
By the time he retired for the first time in 2001, he was vice-chairman of Coca-Cola HBC, the company's leading European bottler. He was running his own Barbados-based investment company when he was called back by Coke.
Isdell's long history at the company strengthened his resolve to focus on core products. At one break-out session in Miami, managers echoed Wall Street analysts who were suggesting that Coke should try to emulate Pepsi's acquisition of the Frito-Lay snack company, which reduced its dependency on the historically declining fizzy drinks business.
"My reply was simply this: 'You're all telling me that we are not running our own business at all well. So why would we buy another business, and think we could run that any better than the people who are there? Unless, you're telling me that we need to get their management to come and run our business.'
"That closed down that debate. That's where you swing it, and they say, 'Got it, we're clear'."
The new manifesto, by his own admission, "is not earth shattering"; it says, for instance, that the company will "reinvigorate growth . . . by building a portfolio of branded beverages, anchored in our icon, Coca-Cola". But, he says, "it does reflect who and what we are".
Armed with $400 million in additional spending on marketing and innovation from the board, he helped select Weiden & Kennedy as Coke's new advertising agency - working with Mary Minnick, whom he had brought to Atlanta from Asia in May 2005 to head marketing and innovation.
Minnick's proven talents created one of the toughest decisions of the four years - who would become the next chief executive.
Isdell's preference was for Muhtar Kent, rather than Minnick. The two had worked together at the Amatil-Europe bottling subsidiary, building market share in eastern Europe in the 1990s.
Next in line
However, Kent had left Coke in 1998 after a sale of Amatil shares led to his investigation by Australian regulators for alleged insider trading. But Isdell was convinced of his former colleague's leadership potential and persuaded the board the younger man should return to Coke.
In 2006 Kent was appointed chief operating officer and the following year was named international president. Though Minnick subsequently left the company, Isdell says he would have loved her to stay.
As Isdell prepares to stand down, he says that the toughest period came 18 months after he took over, when Wall Street and the media could see no measurable improvements. Then, he said, he focused on keeping people on course, by preparing them for a difficult stage that he argues is part of every turnround effort.
"You know it's working. But most people don't believe it's working . . . That's when people tend to panic, and go back to short-termism. And then you have to stick with it . . . I talked
to everyone a lot about that, just to make sure I kept those people with me."
Under Isdell, the company has recorded steady international sales growth of more than 4 per cent over the past 12 quarters. And while sales in the US are being depressed by the slowdown in economic demand, he argues that the key carbonated drinks business is "on track" for better results, supported by initiatives such as new bottle design.
Isdell believes Kent is, like himself, a man with people skills, and describes the UK-educated son of a Turkish diplomat as "ambassadorial".
"He's one of the world's great best networkers, and that's what you need in the business that we're in. He's really excellent at that."
Campaign: Reputation-builder refused to be sidetracked by Olympic protest
Neville Isdell is an advocate of leading by listening. But he shows flashes of deep irritation when talking about the protesters who disrupted this year's Olympic torch relay, of which Coke is the leading international sponsor.
"I am really opposed to what the demonstrators have been doing. And I'm really opposed to the way they have treated the Chinese government as a result.
"It's the 3 to 4 per cent who try to influence the 96 per cent by utilising a symbol," he complains, comparing the protests to the 'Killer Coke' campaign by student and labour activists that has led to a number of US campus boycotts of Coke products.
Under Isdell, Coke has adopted a more engaged response to reputational issues.
Last year, Coke joined the Business Leaders Initiative on Human Rights, formed a partnership with the WWF on water conservation, and set a goal of "water neutrality" for its own manufacturing plants.
"If you do those things, the other 96 per cent looks at you in a positive way, they see you in a positive part of society. And the siren song of that 4 per cent doesn't get that resonance."
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