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The originator of the 'Rule of Three' as a market evolution concept and Charles H. Kellstadt professor of marketing at the Goizueta Business School, Emory University, has been conducting brand workshops in India. But being an Emory professor, the one question he cannot escape is what he makes of The Coca-Cola Company's succession quandary. Q. What does Doug Daft's impending departure from The Coca-Cola Company signify, given that the company is known for long-tenure CEOships? A. Since the death of Roberto Goizueta, the succession planning at The Coca-Cola Company has been very different. Doug Ivester came and went. Doug Daft came, and now he has decided to step down. There's a new leadership they're searching for right now. It's just that the new realities, versus the old realities, are so different that people have a shock. I don't think it's as unusual as people think... for two reasons. The CEO's life expectancy is very short nowadays. In fact, 4-5 years as a chief is considered extended stay. We have underestimated the change that has been taking place. And traditional companies where the change was very slow, when they accelerate change, people think something's wrong with the company. At IBM, the change used to be slow, till they got Lou Gerstner from the outside, and now they will have several CEOs. The press and investors have to get used to the idea that the CEO's is not a lifelong job. It's a finite term. Very much like what happens at universities, where we have a finite term for the deans---it's not a tenured thing at all. Most presidents of universities never make a second term for five years. Most deans never make a second term for five years. They decide not to do it, or the universities say 'we do not want to continue'. The world is getting more complex in succession planning, especially CEOs in America because of the whole Sarbanes-Oxley Act and the new governance approach. Now we have to have a formal management committee and a governance committee. I'm on the board of several public companies there, and we have to go through that process. The governance committee is required to do a formal search---rather than a behind-the-doors informal arrangement---for succession. At universities, for example, we never ever ever have a president selected without a search. The search includes internal candidates and external candidates. Q. So is there a succession crisis at The Coca-Cola Company? A. For a company that wasn't used to predictable succession, when there's no predictability, obviously there's a lot of anxiety. Because the management in a US corporation depends heavily on who the CEO is and what his or her values are. If an outsider comes in, obviously a lot of insiders would be gone, kind of a thing, you know? If from inside, and one faction wins, the other faction has to retire. So the uncertainty of succession planning will create anxiety. It's part of life---we have to live with it. At Coca-Cola, they have to go through the process---they have no choice. Unfortunately, I believe the casualty here would be the reverse of what the company thinks. If I were Steve Heyer, I would say 'goodbye' first---before they decide who they would have as a CEO. Why would I hang around? Q. Is that where it's headed? A. That's what I would advise him to do. Q. You'd actually advise him to quit? A. Absolutely right. Q... to allow them a free hand in choosing the next CEO... A. Exactly. Q.... which may well be him... or may not be... A. May not be the case. Q. What do you think they're looking for...the attributes? A. I think there comes a time in every company's history... and I think Coca-Cola is the next one, it's very predictable; I've seen that at Kodak, I've seen that at IBM, I've seen that at AT&T, I've seen that at Eli Lilly, I can give you about 40-50 companies names where what Coca-Cola is going through, they've already gone through. Namely, the time they know has come to get somebody from outside. The internal management is locked into its own paradigm, and therefore cannot think different... and the world may have moved on. Q. But wasn't Heyer seen as a man from the outside to begin with? A. He was hired as a man from the outside---but not as a CEO. I'm talking about a CEO brought from the outside. Now, companies that have traditionally had an internal succession---P&G has internal succession, Coca-Cola has had internal succession--- generally cannot do an outside CEO succession unless there's a crisis. In a crisis environment----if you're not performing well, you're losing market share, you're not growing as well as you were---everybody understands you need a change. And that's when it's easier to bring somebody from outside. At Coca-Cola, it's a transition---they don't know. They're doing okay. So there'll be two schools of thought. One would say, 'Don't fix it if it aint broke' and the other, 'It's the best of times to break it'. Q. Do you believe that a company like The Coca-Cola Company ought to have a marketing man at the top? A. Er... you know, I have a very radical view on that. The greater the brand equity and greater the marketing strength, the more should you have a technology person on top. The greater the technology strength, the more should you bring a marketing man. Just like your right hand, and you really need to balance your left hand. Coca-Cola has stopped innovating. With carbonation as a platform, they have come out with Cherry Coke, Vanilla Coke... all kinds of varieties---they're coming up with half-calorie now. They're doing nothing but maintaining the same technology. They haven't come up with anything radically different---as a beverage. For example, could you have a beverage in a pill? Radical thought, right? Could you have a beverage which has no carbonation but is otherwise as refreshing as whatever it is? Coca-Cola needs that stuff. It has for its non-carbonation business, its juices business, a joint venture with Procter & Gamble, which is a technology company. It had the marketing community merge with the technology community--- but unfortunately, the joint venture failed. So I think Coca-Cola does understand that what they do need at the top is a... chemist. A food scientist---who can revitalize the company far more than a marketing man.
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