Design to Grow

How Coca-Cola Learned to Combine Scale and Agility (and How You Can Too)

David Butler, Linda Tischler

• Publisher: Simon & Schuster
• Year: 2015
• eBook ISBN: 9781451676273
• Topic: Business
• Subtopic: Business General
• Index: Business

Expert advice from Coca-Cola’s Vice President of Innovation and Entrepreneurship: Learn how the world’s largest beverage brand uses design to grow its business by combining the advantages of a large-scale company with the agility of a nimble startup.

Every company needs both scale and agility to win. From a fledging startup in Nepal, to a century-old multinational in New York, scale and agility are two qualities that are essential to every company’s success. Start-ups understand agility. They know just when to pivot to stay alive. But what they haven’t mastered yet is how to stabilize their business model so they can move to the next stage and become full-fledged companies. And well-established companies know scale. They are successful because they know how to leverage size with a high degree of effectiveness and efficiency. But what worries them most is staying competitive in a world of increasing uncertainty and change, complicated by upstarts searching for ways to disrupt the industry. So what is the key to creating the kind of scale and agility necessary to stay competitive in this day and age? The answer is design.

In Design to Grow, a Coca-Cola senior executive shares both the successes and failures of one of the world’s largest companies as it learns to use design to be both agile and big. In this rare and unprecedented behind-the-scenes look, David Butler and senior Fast Company editor, Linda Tischler, use plain language and easy-to-understand case studies to show how this works at Coca-Cola—and how other companies can use the same approach to grow their business. This book is a must-read for managers inside large corporations as well as entrepreneurs just getting started.

PART 1

Designing for Scale

The first week of November 2013 saw a flurry of unusually compelling stories in the business news. Tesla suffered another battery fire, prompting fears of a recall. The Feds nailed a hedge-fund titan with a fondness for insider trading. The stock market hit a new high. However, even amid such provocative headlines, two events stood out: the shuttering of a once-mighty retail empire, and the stratospheric stock market debut of a seven-year-old Internet darling.

Blockbuster, which made standing in line to rent a video the first stop in millions of movie lovers’ weekend plans, finally called it quits. A day later, Twitter, a favorite with celebrities, revolutionaries, and the occasional misguided politician, ended its first day with a market cap of $30B: more than Kellogg’s, Whole Foods, and half the firms in the S&P 500.

That was a rather extraordinary week, but it was also a great snapshot of today’s marketplace—both the risk and the opportunity that come with industry disruption. In today’s world of hyperconnectivity and exponential growth, every company is stepping back to evaluate where it’s vulnerable or how it can find an edge and revolutionize an industry.

It’s not enough to be big: At its peak, Blockbuster had about 9,000 retail stores across the United States. It had the scale but not the agility to remain relevant. And, while every founder dreams of creating the next Twitter or Instagram, 90 percent of companies won’t live to see year two. While they’re all designed to be agile, most of them struggle with scale.

---

Every company needs both scale and agility to win.

---

From a fledging startup in Nepal to a century-old multinational in New York, scale and agility are two things that are essential to every company’s success.

Scale and Agility

If you’re working for a startup, you get agility. Chances are, you’re iterating your product/market fit daily, and pivoting when necessary, just to stay alive. But the thing that keeps you up at night is scale—stabilizing your business model, so that you can move to the next stage and become a company. This requires more funding, more staff, more customers, more of everything.

If you’re working for an established company, you get scale: In fact, the reason you’re in the position you’re in is because you know how a company at scale operates. You’re successful because you know how to leverage scale with a high degree of effectiveness and efficiency. Perhaps you’d like to grow revenue or expand operations, but what you worry about is keeping up and staying competitive in a world of increasing uncertainty and change, complicated by the upstarts searching for ways to disrupt your industry.

If your company is public, you understand all of this in a different dimension. You live under the pressure of managing a global business every day, knowing that at the end of the quarter you and your peers will be ruthlessly judged by thousands of stakeholders. There are millions—and sometimes billions—of dollars at risk every quarter. Managing your scale is always a concern but what keeps you up at night is mainly agility—how to meet expectations this quarter but also create the speed and flexibility your company needs to drive innovation and create the culture you need to remain relevant to the next generation.

As vice president of Innovation and Entrepreneurship at The Coca-Cola Company, and former head of design, I’m often asked questions like, “How does Coca-Cola, a hundred-year-old brand, stay relevant?” And, “How does a giant company like Coca-Cola innovate? What’s your strategy?”

What if there were something that you—your startup, your team, your function, your division—could use to create the kind of scale and agility you need to win?

---

Design can create both scale and agility.

---

When it comes to design, most people want to know the basics: “How does Coca-Cola use design to stay competitive?” “How do you create the most value from design?” “How do you use design to innovate?” These are all good questions, since even the most analytical and execution-oriented business managers know that design can create value far beyond just making products look and feel better. For some companies, design can actually help them grow. But how?

Coca-Cola and Design

When you think of Coca-Cola and design, your mind probably goes immediately to the company’s most iconic brand—Coca-Cola—with its familiar color, distinctive logo, and iconic packaging. The combination of those elements, designed over a century ago, helped create one of the world’s most valuable brands, worth over $170 billion.

However, at Coca-Cola, design is about more than the traditional, and visible, elements. While logos and colors are important, it’s the stuff you can’t see, the stuff that’s invisible, that’s often doing the heavy lifting.

Coca-Cola designs things like products, advertising, packaging, and coolers, as well as the way those things connect to each other to drive growth. And that’s what makes the way Coca-Cola designs strategic.

---

When used strategically, design can help companies grow.

---

Most people don’t think about design this way, but things that are well designed are actually well connected and part of a system. For example, when Coca-Cola designs a new package, its goal is to actually solve business problems, not simply to pick colors, specify materials, or determine its shape and size.

All those things are important, but the new package must also connect to its supply-chain strategy, help the company meet its sustainability goals, work within the constraints of its bottling and distribution system, fit well with its retail customers’ business plans, and, of course, meet the needs of its consumers. When all these things connect, we’d say that the company is using design strategically to help it grow.

The Invisible Drives the Visible

I love systems and exploring the ways in which systems work. Most systems aren’t readily apparent: For example, you don’t think of your kid’s school bus, your local grocery store, or an app on your smart phone, as parts of big systems, but they are. Understanding how systems work can really change the way you see the world.

In 1995, my wife turned me on to a book by systems guru Peter Senge, The Fifth Discipline. I remember reading, “Systems thinking is a discipline for seeing wholes. It is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots.”

That book started me on a journey of learning everything I could about systems and their relationship to design. I became consumed with the interrelationship of things more than the design of individual pieces of the whole, as Senge would put it. I became fascinated with many different types of systems and their effects on the world—from systemic risk (economics) to chaos theory (science). I wanted to know everything about how systems work—especially big, complex systems.

In 2004, I joined The Coca-Cola Company. My mandate was to help the company focus on design: to develop a vision, strategy, and approach to ensure it was getting the most value out of design.

I was stoked; I saw the company itself as a giant system made up of hundreds of subsystems. I couldn’t wait to dig in.

It didn’t take long to see why the company wanted to concentrate on this area. The Coca-Cola Company owns some of the most valuable and well-known brands in the world, including Coca-Cola, Diet Coke, Sprite, and Fanta. However, at that time it didn’t have a consistent approach to the way it designed. This created many little disconnects across the way in which people experienced its brands, from packaging to communications to retail. It needed to get back to the level of quality, consistency, and leadership that the company’s brands were known for.

It also needed a way to adapt more quickly to a rapidly changing market. The nonalcoholic, ready-to-drink industry has consistently been one of the fastest growing consumer industries in the world. In order to keep pace with the market, Coca-Cola needed a way to use design to remain relevant, nimble, and adaptable to change. But it was clear that it didn’t yet have it.

All these little disconnects were starting to make the company’s brands feel old and outdated when compared with other fast-moving consumer brands like Apple and Nike. As a company, Coca-Cola was designing at massive scale, but a lot of the things weren’t connected to each other. That made it very difficult to drive the company’s growth strategy. The way Coca-Cola was designing was actually working against its own interests.

Sure, it needed to work on the things that were very visible—packaging, advertising, websites, trucks, and coolers. But it needed to focus on its approach—the way it designed as a company—first.

---

The way Coca-Cola had used design in the past wasn’t giving it the agility it needed to grow in a rapidly changing and connected world.

---

The company’s business had become very complex, yet its approach to design had been conceived for a much simpler organization. There’s nothing simple about a company with a network of more than 250 bottling companies, 80,000 suppliers, and 20 million retail customers. However, when you look at how the company evolved, it’s easy to see why it was hard to let go of an approach that had worked so well for so long.

For its first seventy years, The Coca-Cola Company had had one brand, one product, one package size, and, for the most part, one price. For more than seven decades, Coca-Cola sold for just five cents. The company’s growth strategy was to scale Coca-Cola to every country, city, town, and village—to put Coca-Cola “within arm’s reach of desire” of every person on the planet. Amazingly, that’s pretty much what happened.

Then, in 1982, the company took a risk and launched Diet Coke. That made its business more complicated. For the first time, there were two Cokes in its portfolio. Diet Coke quickly became a huge success, so any difficulties were more than made up for in sales.

In 2001, Coca-Cola upped the ante by making a big strategic decision, to become a total beverage company, meaning that it wanted to provide a much wider variety of options in line with changing attitudes and tastes. This changed everything, from its product portfolio to how the system (the term Coca-Cola uses to represent the company and its network of over 250 independent bottling companies) operates.

Coca-Cola’s CEO at the time told a British newspaper that the company’s goal was not only to develop the systems needed for success in a globalized economy, but to be equally sensitive as to how it operates locally. Internally, that strategy was distilled down to a pithy shorthand: “Think globally and act locally.” Each business unit ran its business independently, keeping the pedal to the metal on its global brands, but also leveraging the company’s international scale to create or acquire regional and local brands as well.

---

However, this shift in strategy begat something Coca-Cola hadn’t anticipated—enormous complexity.

---

The decision to go from being a one-brand company to a total-beverage company in a world of dramatic technological, social, and political change created a level of complexity that was unprecedented. This kind of monumental shift in business strategy also required a shift in the company’s approach to design.

Originally, its approach was to make everything as easy as possible to scale; Coca-Cola used design to simplify, standardize, and integrate its business, which made it much easier to drive its growth strategy. That’s essentially how The Coca-Cola Company grew from a little startup in 1886 to a company valued at over $120 billion in 2001.

However, it couldn’t use this same approach to design for a company that now had hundreds of brands, products, and packages; thousands of suppliers; and millions of distribution channels, ranging from big box superstores to guys with coolers standing underneath umbrellas in the street. The same design strategy would no longer work for a product portfolio that ranged from sparkling beverages to coffee drinks to dozens of juices.

Coca-Cola needed an approach that would help it to leverage its scale but also help create more flexibility and adaptability across its business.

By 2002, its business was really complicated. It was clear that there was a problem. In April of that same yea...

Table of contents

• Cover
• Dedication
• Epigraph
• Preface
• Part 1: Designing for Scale
• Part 2: Designing for Agility
• Epilogue: The Next Wave
• The Deep End
• The Designing on Purpose Manifesto
• Acknowledgments
• About the Authors
• Authors’ Note
• Notes
• Index
• Copyright