Coke Exploits Collaboration Technology To Keep Brand Relevant

The executive wing of the Coca-Cola Co.'s Atlanta headquarters proves mahogany row still exists in this era of Aeron chairs and office Guitar Hero contests. A step off the elevator sinks you into plush carpet, and Ming vases scattered across period furniture speak of Coke's appreciation of tradition, and pride in its 122-year-old ownership of one of the world's most valuable brands.

While the stately atmosphere works as decor, it belies the mad scramble going on in the beverage market, where fickle customers constantly switch drinks, fad tastes soar and die, and commodity price spikes clobber producers. Coke sees collaboration--among employees, with bottlers, with consumers--as vital to remaking its business to chase fragmented and fast-moving global markets, and new business technology initiatives play a make-or-break role.

For internal collaboration, Coke has implemented what it calls its Common Innovation Framework, a system that combines project management and business intelligence capabilities to give operating units in 50 countries the ability to search for and reapply concepts used in developing and marketing what is now an astonishing 2,800 beverages produced by Coke.

As for working with its extended family of bottlers, Coke this month began offering software services--representing hundreds of business processes, all based on SAP's ERP software, delivered via Coke's IBM-hosted data centers--to a select test group, with plans to extend those services to as many bottlers as it can. Coke hopes that fostering a standardized business platform will streamline its supply chain, as well as smooth its sometimes strained relationships with those bottlers, some of them partly owned by Coke, most independent franchises.

And Coke's trying to cozy up to the kids through its www.mycokerewards.com Web site, which has 40 offshoot sites worldwide geared toward specific interests. The result is a social network built around Coke's loyalty program that pulls people in by tapping their tastes in sports, music, and entertainment. Oh, and beverages (see story, "Coke's Customer-Loyalty Web Site Scores Big With Consumers").

Still, Coke has problems. A new CEO, Muhtar Kent, took over earlier this month from Neville Isdell, who was brought out of retirement in 2004 as Coke struggled with declining profits and soda sales. Kent, former chief operating officer, worked closely with Isdell, who will remain as chairman. While Coke showed markedly improved financial results the past few years--in May, it issued a statement declaring "continued confidence" in its financial outlook for the year--profits have been particularly tough in the United States, and the company's been hit by rising prices on raw goods, including fruit juices and sugar. Based largely on international business, Coke's second-quarter financial report last week was mostly positive--revenue up 17%--but described North America as "a difficult operating environment."

Improved communication and collaboration, particularly between Coke and its bottlers, is vital to continuing the rebound, says Jack Russo, an Edward Jones analyst. "Bottlers are so important to what Coke does, and the two weren't on the same page," he says. The rising costs of raw materials only make that close collaboration more important.