On October 24th 1997 Doug Ivester took over as the 10th CEO and Chairman of Coca Cola, the world’s largest soft drink company, after the tenure of his predecessor Roberto Goizueta came to an abrupt end due to his sudden and unexpected death. In the 16 years as CEO of Coca Cola Yale-educated Goizueta earned himself a reputation of setting high objectives and achieving all of them. Growth in total annual sales from $5 billion in 1981 to $18.5 billion in 1997 and rises in net profits and company’s market capitalization of 700%, respectively 4000%, underline his more than successful leadership (Walter, Knopp & Reavis 2005). In 1997 analysts expected former company president Doug Ivester, 50, who received unanimous support from the company’s board in the election process for the new CEO, to continuously meet annual financial targets set in the Goizueta era. The company’s board was completely convinced of Ivester’s qualification for the leading position in as he had already proven himself within in various tasks and jobs over the past decades (Walter, Knopp & Reavis 2005). “Whenever he sets a target, he hits it” (Morris 1998) is a quote of board member Allen recorded at that time which describes the general perception of Ivester in 1997. Goizueta himself saw a “godsend” (Hays 2004, p.36) in Doug Ivester, an aggressive worker, but most of all a financial mastermind. They worked together closely for more than a decade, kept on posting spectacular gains and beat market expectations constantly. Also, Goizueta referred to Ivester as his “partner” (Walter, Knopp & Reavis, p.4), his predetermined successor, the one he carefully groomed to give him the experience and expertise in essential leadership skills (Morris & Sellars 2000). Nevertheless, only 26 month later in December 1999 Doug Ivester was pushed to resign from his job as the head of the company on account of outsized pressure from board directors who had lost confidence in his leadership. Under his tenure return on equity declined significantly from 57% in 1997 to 35% in 1999. (Morris & Sellars 2000) Thus, the question arises, why did such a successful and celebrated manager fail at the very highest corporate stage and why did his tenure turn out as management story full of leadership lessons? In this paper Ivester’s behaviour, actions, and traits are discussed in coherence to leadership literature and theories to evaluate his approach to leadership and to draw recommendations for the future selection of CEOs at Coca Cola. Leadership Evaluation of Douglas Ivester
Given Ivester’s financial background as an accountant at Ernst & Young who at first worked for Coca Cola as an external auditor and was subsequently hired by officials in 1979 to work for the company’s financial department (Walter, Knopp & Reavis 2005), his approach to business and work was about being direct and analytical (Hays 2004). Morris & Sellars (2000) mention his total focus on discipline within his work approach and his deep conviction of the fact that organizations that are highly disciplined entail most creativity. In accordance to Walter, Reavis & Knopp (2005) he was an introverted, even blunt leader who emphasized structure as a key issue in his leadership approach. Ivester compared business operations with chess games and imposed rigid control systems within the company. People referred to him as a brilliant and ambitious “adding-mashine” (Hays 2004, p.34) until he was elected the new CEO of Coca Cola in 1997. At this point in time, his biggest strengths arguably turned into his biggest weaknesses when his tasks changed from executing corporate strategy to setting corporate strategy, representing and leading a global multinational corporation. Ivester’s lack of flexibility and undersized cognitive ability became obvious in his inflexible acquisition strategy of Cadbury Schweppes despite rising European regulatory concerns in 1998 and his misinterpretation of the contamination scandal...
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