Open Innovation at Muhtar Kent’s Coca Cola

One of the advantages Launch Institute clients find is our passion for open innovation and our rich “Network of Innovators” from which we put companies in touch with each other. The Network allows companies to “converge” their capabilities, create even higher valued ideas. Muhtar Kent, next Coca Cola CEO, will need such convergence to grow Coke.

As Kent takes the helm at Coke, the company finds itself with 2% growth (expected to be flat this year), decreasing world-wide sugared carbonated beverage sales (much due to an increase in consumer health awareness), water sales slowed (in large part due to environmentalists opposition to plastic bottle packaging), and a slowing global economy. But as with all challenges there are tremendous opportunities for Coke (make lemon aide when given lemons, as some say), especially if they broaden their perspective and truly embrace open innovation for business growth.

Some points in case:

First of all, healthy carbonated alternatives to sugar saturated syrups are available. In fact, Coke is doing well with teas and vitamin drinks; the key will be to make sure these alternatives are healthy (not just positioned as healthy, as in Coke’s Glaceau Vitamin Water) and then exact higher margins in proportion to the health value of the product. In open innovation, it would be good to see Coke partnering with health organizations, clubs, and such to develop better products and actively position alternative drinks with buying communities.

We know that water will be the resource (after oil) to be in critical demand in the next century. To be so near sighted as to hyper focus on the topic of consumer convenience as the key “water design issue” is folly. The fact is potable and agricultural water where it is needed, when it is needed and how it is needed is a larger issue and must be considered by beverage companies. Technologies exist to extract potable and agricultural water but investment is needed to create the markets. Coke could certainly be in the mix, along with water infrastructure visionaries such as the Walt Disney Corporation, The Small Community Water Infrastructure Exchange http://www.scwie.org/ , and The World Bank.

Then there is the packaging issue; the image of containers in landfills for decades is not a good one. So Coca Cola should embrace this challenge as a business opportunity. They should investigate ‘reverse vending” technologies like Envirobank’s http://www.envirobank.com.au/ reverse vending machines that take in your bottles and cans and pay you for your refuse, or partner with the likes of Dow Chemical and Printpack http://www.printpack.com/ who are partnering of technologies to convert packaging waste to energy.

Coke has already partnered with one of Launch Institute’s clients, Eaton Corporation, to introduce hybrid delivery trucks into the US market http://www.csmonitor.com/2007/1130/p03s02-usec.html . Imagine Coke’s image and message if they took these delivery trucks to other parts of the world; Coke could be a trend leader in other parts of the globe, positioning itself in foreign markets as a friend of their environments.

The challenges for Mr. Kent are significant, but the opportunities that lay within are of equal significance. The key for Mr. Kent and Coke is to embrace Open Innovation, create a powerful “Network of Innovators”, and transform the current culture of Coke to not just talk about the changes needed, but to become the difference.