ANALYSIS: Corporate Case Study - Coca-Cola swallows its pride andsets out new PR goals

PUBLIC AFFAIRS

PUBLIC AFFAIRS

Economic sustainability: Nehl Horton

Social sustainability: Carol Martel

Environmental sustainability: Dirk Vandebeek

International relations: Janet Howard.

Coca-Cola's PR staff, spread out over 200 countries, only got together for the first time last year. But it's a sign among many that the world is seeing a new Coke.

Since 1998, Coca-Cola has been beleaguered by bottler complaints, roughed-up by European regulators, laden by a discrimination lawsuit, "Speared

by Pepsi's hot celebrity ad campaigns, and suffered a product recall in three European countries. Industry critics called Coke slow on the uptake, and faulty in the execution of product innovation and marketing.

The resulting leadership turnover was a double-edged sword - good because confidence in the top guy had been lost and heads had to roll, and bad because corporate successions are usually cultivated over years, and the new guy was an untested public commodity. He was also the first non-American to assume the helm. And finally, that great arbiter of corporate health - the stock price - remains off its July 1998 high of $88.94 by 37%. In short, it has been communications hell for the world's most ubiquitous brand.

The bitterest of pills for Coke was the realization that its problems were largely self-inflicted. The company had become laissez-faire about relationship management and arrogant in its dealings with the press. A post-mortem on the failed acquisition of the Orangina brand reveals that Coke had blown the relationship with French regulators, and therefore blown the deal.

Complacency and hubris are easy infections to catch when the world population partakes of your product over 1 billion times every day. According to the company's annual report, "someone chooses a Coca-Cola ... nearly half a million times every minute of every day." And that's just Coke. That doesn't include the juices, waters, teas, coffees, and other beverages owned and distributed by the Coca-Cola Company. That statistic is also limited to consumer interactions.

Coca-Cola's reputation has to be managed in 200 countries across six continents, (seven if you count the scientists on Antarctica). Each geographic area has its locally owned and operated bottlers, regulatory controls, and distribution chains. The world media follows the company's every move.

There are also tens of thousands of stockholders and employees. "I would argue we have the most complex matrix of stakeholders than any other company in the world,

says Clyde Tuggle, VP and director of worldwide public affairs and communications.

Chairman and CEO Douglas Daft's recent lead-off statements to stakeholders defined Coke's business as "the business of building relationships.

In public documents, he describes his charter as the reinvention of that dynamic across the company's vast constituencies in order to rebuild lost trust. Tuggle is his point man on the deployment of that message.

An unlikely head of communications

Clyde Tuggle is a young Turk at Coca-Cola. Since his appointment last year, he has been something of a mystery. Having spent the last third of his career on the operations side of the company, he does not have the traditional resume of someone tasked to run the communications function of a multinational corporation. He doesn't have a pure marketing background, and he does not have experience dealing with daily chores of PR. But this is not a bad thing.

Tuggle joined the company in 1989, just out of Yale University. He worked in the corporate issues communications division editing pivotal internal publications like the annual report. He next served as executive assistant to the late, celebrated chairman and CEO Roberto Goizueta. In that capacity, Tuggle was privy to how personally involved the chairman was in crafting the company's core messages. Tuggle says this tradition dissolved with Goizueta's passing, and he cites it as one of the reasons the company's relationship management got so far off course. "The closer the (annual) report is held by the CEO of the company, the stronger the communications mandate,

says Tuggle. "I understand that dynamic because I lived it every day."

Tuggle says that after 18 months as Daft's executive assistant, he observed how, like Goizueta, Daft takes a personal interest in the details of Coke's reputation management.

Tuggle's appointment as communications chief shocked many company insiders.

After a few short months, the consensus is that Tuggle is the right man for this moment. He spent two years in Central Europe as the director of operations development and region manager for Austria. He bore witness to the European havoc, and managed the daily issues of bottlers, regulators, employees, and other key constituents. Understanding those issues is the foundation of crafting messages around the company's position on those matters. Since his return to the Atlanta headquarters, Tuggle is credited with forging relationships between corporate fiefdoms that never before existed.

Getting everyone together

It's stupefying to realize that August of 2001 was the first time that the communications chiefs of all the company's international business units and geographic divisions sat down at one table to talk strategy.

Tuggle was instrumental in the orchestration of this event.

Dubbed the corporate communications council, the group and its issues are one step away from the chairman via Tuggle. They meet by phone weekly, and in person every four to six weeks. They set the top-line strategy and messages that are deployed through the local channels managed by Council members. It is a clear indication that Daft's "think global, act local

has moved from euphemism to imperative.

By fully engaging the talent of Coke's global communications force, Tuggle has determined that the skeletal corporate staff is sufficient to handle the company's more centralized issues. He drafted former Vienna colleague Sonya Soutus to be the new corporate media gatekeeper and spokesperson.

Soutus is supported by three experienced staffers. Internal communications, public affairs, diversity council, agency relationships, and the company's 100-plus-year archives are similarly structured, and are also managed under Tuggle's mantle.

In a stark departure from the past, Tuggle has implemented new rules of engagement. "We are going to return all phone calls, within the hour if possible. We are going to provide reporters with facts, and when we have to say no, we're going to help people understand why,

says Tuggle.

"Our goal is to create a credible, professional communications organization.

He claims that Coke is now a "spin-free shop. I am dead serious about this because credibility comes from speaking the facts."

Transparency is also Tuggle's ideal, and he has sold the efficacy of openness to management. In the past two months, company critics at the Financial Times and Beverage Digest were given carte blanche access to company facilities and leadership. "If this openness continues, we could be looking at a whole new Coca-Cola,

says Beverage Digest editor John Sicher.

Tuggle says he is determined to "debunk the mythology that Coke is losing market share to Pepsi.

He says that in every corridor except the United States, Coke is the de facto leading marketer and model of innovation.

Considering that 76% of company revenues hail from outside domestic borders, the company used to dismiss pot shots by the American media. Tuggle has thrown down the gauntlet of transparency to publicly challenge those perceptions.

It sounds like the real thing.

COCA-COLA

VP and director of worldwide public affairs and comms: Clyde Tuggle

COMMUNICATIONS COUNCIL

Americas group: William Marks

Mexico and Central & South America: Rodrigo Calderon

Europe, Eurasia and Middle East group: Jonathan Chandler

Central Asia and Middle East group: Steve Leroy

Africa group: Robert Lindsay

Asia Pacific group: Tim Wilkerson

Investor relations: Larry Mark Shareowner affairs: Mark Preisinger Minute Maid Company: Dan Schafer

CORPORATE COMMUNICATIONS

Director and company spokesperson: Sonya Soutus Marketing comms: Ben Deutsch

Financial and interactive marketing: Kari Bjorhus

Media relations: Dwight Williams

Internal comms director: Cathy Worthy

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