Collaboration and the New Product Imperative
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By opening up product development and smoothing supply chain processes, Coke’s technology group is helping the company deal with a fickle consumer market Collaboration And The New Product Imperative By Mary Hayes Weier HE EXECUTIVE WING OF services to as many bottlers as it can. Coke hopes the Coca-Cola Co.’s Atlanta that fostering a standardized business platform headquarters proves ma- will streamline its supply chain, as well as hogany row still exists in smooth its sometimes strained relationships with this era of Aeron chairs those bottlers, some of them partly owned by and office Guitar Hero Coke, most independent franchises. contests. A step off the elevator sinks you into And Coke’s trying to cozy up to the kids through plush carpet, and Ming vases scattered across pe- its www.mycokerewards.com Web site, which has Triod furniture speak of Coke’s appreciation of tra- 40 offshoot sites worldwide geared toward spe- dition, and pride in its 122-year-old ownership of cific interests. The result is a social network built one of the world’s most valuable brands. around Coke’s loyalty program that pulls people While the stately atmosphere works as decor, in by tapping their tastes in sports, music, and en- it belies the mad scramble going on in the bever- tertainment. Oh, and beverages (see story, p. 30). age market, where fickle customers constantly Still, Coke has problems. A new CEO, Muhtar switch drinks, fad tastes soar and die, and com- Kent, took over earlier this month from Neville modity price spikes clobber producers. Coke sees Isdell, who was brought out of retirement in 2004 collaboration—among employees, with bottlers, as Coke struggled with declining profits and soda with consumers—as vital to remaking its busi- sales. Kent, former chief operating officer, worked ness to chase fragmented and fast-moving global closely with Isdell, who will remain as chairman. markets, and new business technology initiatives While Coke showed markedly improved financial play a make-or-break role. results the past few years—in May, it issued a For internal collaboration, Coke has imple- statement declaring “continued confidence” in its mented what it calls its Common Innovation financial outlook for the year—profits have been Framework, a system that combines project man- particularly tough in the United States, and the agement and business intelligence capabilities to company’s been hit by rising prices on raw goods, give operating units in 50 countries the ability to including fruit juices and sugar. Based largely on search for and reapply concepts used in develop- international business, Coke’s second-quarter fi- ing and marketing what is now an astonishing nancial report last week was mostly positive— 2,800 beverages produced by Coke. revenue up 17%—but described North America As for working with its extended family of bot- as “a difficult operating environment.” tlers, Coke this month began offering software Improved communication and collaboration, services—representing hundreds of business particularly between Coke and its bottlers, is vital processes, all based on SAP’s ERP software, de- to continuing the rebound, says Jack Russo, an r e g r e livered via Coke’s IBM-hosted data centers—to Edward Jones analyst. “Bottlers are so important B a c i r a select test group, with plans to extend those to what Coke does, and the two weren’t on the E Copyright 2008 United Business Media LLC. Important Note: This PDF is provided solely as a reader service. It is not intended for reproduction or public distribution. For article reprints, e-prints and permissions please contact: PARS International Corp., 102 West 38th Street, Sixth Floor, New York, NY 10018; (212) 221-9595 www.magreprints.com/quickquote.asp CIO Arès primes the innovation pipeline IN DEPTH / COLLABORATION same page,” he says. The rising costs of raw materials management application from CA called Clarity for only make that close collaboration more important. New Product Development. Coke uses it to develop new beverages, design equipment such as vending TECH WHIZ KID machines and fountain dispensers that it leases or In 2002, Coke executives saw in Jean-Michel Arès, a sells, and create packaging concepts for new and al- 38-year-old French Canadian with degrees in electri- ready established products.The software manages the cal engineering and an MBA, a combination of IT workflow of what’s commonly known as the stage-gate wunderkind and management wonk. They recruited process in product development, chronicling the him away from GE Power Systems, where he’d been stages in each development project and the “gate” named CIO at age 36, four years after joining the com- points at which decisions need to be made. Employees pany from a consulting gig at McKinsey & Co. access the Web-based application, which runs on an As the new Coke CIO, Arès spearheaded an effort to Oracle database, from their desktops. transform Coke’s three disconnected IT groups—one Now Coke is moving the application, dubbed the in North America and two in Latin America—into IT Common Innovation Framework, beyond its stage- organizations aligned with the company’s six strategic gate roots. Miriam McLemore, global IT director and business units around the world. New talent was hired, Coke’s team lead on the Innovation Framework, de- some staffers cut, and some support work outsourced scribes it as a global view into the product pipeline, to India. And he set about delivering tools aimed at let- which lets, for example, one business unit mine for ting creative people make new products faster. product ideas by searching beverage or brand con- About two years ago, Arès implemented a project cepts that worked well in other countries. The Inno- A Change Agenda At Coke’s Largest Bottler OCA-COLA ENTER- management, Live Meeting for Web con- do you mobilize those 30,000 people in the prises, Coke’s largest bot- ferencing, and Office Communications same direction you’re taking everything tling company, has faced Server Online for unified communications. else?” he asks. “That takes a lot of com- C seesawing fortunes in recent Up till now, CCE’s collaboration strat- munication and collaboration.” Mobile years, from a $1.1 billion loss in 2006 to egy has used nonintegrated tools. There workers will get video training, home in- a $711 million gain last year to lowered was an IBM-based extranet managed tranet access, and corporate collaboration profit forecasts for this year, forcing partially by a service provider, Lotus capabilities through mobile devices. changes across the business. In IT, one Notes for e-mail, a legacy intranet, and a Still, collaboration is only one reason for of the most visible is the company be- separate Web conferencing tool. “We CCE choosing Microsoft. The other piece coming Microsoft’s largest software-as-a- were missing the mark,” says John Key, is the services dimension, which CCE saw service customer to date, contracting for CCE’s senior manager for collaboration. as a way to accelerate deployment, cut en- 35,000 employees to get their e-mail and When the new system’s in place, exec- ergy costs, and free up IT staff for more other collaboration capabilities via a sub- utives will be able to broadcast live video strategic projects. “This is not a head- scription service. to all of the company’s knowledge work- count reduction,” Sezer says. “We love By later this year, most of the 35,000 ers. Employees will be able to schedule having these resources to do further sim- knowledge workers at Coca-Cola Enter- Live Meeting Web conferences through plification, further virtualization, and to work prises, known as CCE, will have moved Outlook, or take a chat session in the Of- on strategic IT initiatives.” Anthony Nuzzo, from IBM Lotus Notes to Microsoft Out- fice Communicator instant messaging CCE’s VP of global development and de- look with Exchange Online, the SaaS ver- tool and turn it into a phone call. A new ployment, sees a recruiting advantage, be- sion of Microsoft’s e-mail server. It’s the intranet based on SharePoint will include ing able to target talent who wouldn’t first piece of a larger move to Microsoft industry news, video and audio content, come if part of their days was spent on collaboration tools that CCE hopes will executive blogs, and employee polls. maintenance work. “Those people are go- bring the company the ease of manage- CIO Esat Sezer eventually wants to in- ing to be able to be innovative,” he says. ment and the consistent user experience of clude CCE’s mobile workers—30,000 em- an integrated suite. The switch to a hosted ployees stock 25,000 trucks and replenish IT SELF INTEREST model, which will take place over the next 600,000 vending machines a day, reaching CCE is 35% owned by the Coca-Cola year, also will include SharePoint Online a million distinct locations—in the com- Co., and Sezer and his counterpart at for ad hoc team collaboration and content pany’s collaboration plans as well. “How Coke, Jean-Michel Arès, talk regularly 28 July 21, 2008 informationweek.com vation Framework also helps Coke recognize dupli- States in 2005, it’s a low-calorie beverage without the cate product ideas, Arès says, so the company can bitter aftertaste typical of diet colas, and Coke’s most combine efforts. “Once you’ve aggregated that successful product launch in years. Coke wants it sold pipeline of innovation, the object is to assess and pri- in 100 countries (it’s up to 93), and it’s been using the oritize the best allocation of our resources in the or- Innovation Framework to let managers and personnel ganization,” he says.