What Really Happened to Coke

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Introduction and structure
Sometimes even the most brightest of minds fail. Doug Ivester, head of the Coca-Cola Company for only a little more than two years, resigned after an unofficial meeting with the two board members Warren Buffet and Herbert Alan. Fostered by former CEO Goizueta for over 10 years, he took over this position of one of the highest ranked global brands after Goizueta’s unforseeable death. As it turned out, Ivester could not generate the results he was expected to (Morris & Sellers 2000).

What happened along his short road as CEO? How and why could such a long time inducted person flop so badly? In a first step, this essay examines Ivester’s actions, taken into account different theoretical leadership approaches. Furthermore, it will reveal a lack in ‘people skills’ like emotional intelligence and communication. This given, there will be recommendations on how Coke can find a better match.

The approach to leadership by Doug Ivester
Coming from and affected by the accounting and finance sector where he worked his way up to the very top (Watkins, Knoop, & Reavis 2005), Ivester was often described as a ‘numbers’ person, “obesessed with controlling the tiniest details” (Morris, Sellers 2000, p.115). Statements like “The highly disciplined organizations are the most creative...We operate with a rigid control system.” (Morris & Sellers 2000, p.116) indicate his rational, objective and authority driven approach to leadership. Furthermore, he even demanded regular communication with his senior executives (Hays 2004), making them inferior and demotivated. Hence, interactions between Ivester and his followers only occurred when the latter failed to respond to Ivester (Hays 2004).

These behaviors are all signs of a transactual leader using the management by exception style (Judge & Piccolo 2004). Introduced by Burns (1978) and contrasting with transformational leadership, it “is based on a fairly straightforward exchange between the leader and the followers” (Johns & Saks 2008). This means there is no social interaction between leaders and followers, thus no relationships can be established. It stays formal and an important source of inspiration and motivation is diminished.

In times of crisis, which are an “ultimate measure of a CEO” (Morris & Sellers 2000, p.115), Doug Ivester exposed disastrous communication skills. He reacted too mechanically and too late in the Belgium crisis. In addition, he offended Coke’s bottlers, which are the basis of Coke’s success, by raising the price for concentrate and implying the development of vending machines (Watkins, Knoop, & Reavis 2005). This shows that in accordance to his thus far developed character traits, Ivester was “heavy on data and facts, light on such intangibles as emotions.” (Hays 2004, p.33).

Leading without emotions
Probably one of his biggest indulgences is his missing keen sense of how to deal with people and their emotions, resulting in insufficient communication like he displayed with Donald R. Keough (Morris & Sellers 2000). Goleman (1995) calls this emotional intelligence, an ability to manage people and their emotions, which is essential in today’s changing organizations. Amongst other competencies are the understanding of others, communication and political awareness, in order to read “a group’s emotional currents and power relationships” (Goleman 1998, p.27). In turn, these factors influence empathy and within that effective handling of relationships (Goleman 1998). Apparently this was not one of Ivester’s strengths, because he “lacked political skills” (Morris & Sellers 2000, p.116), as well as the inability to send convincing messages to an external audience as seen in the Belgium crisis (Morris & Sellers 2000). Another leadership competency under the focus of emotional intelligence is “Accurate self-assessment” (Goleman, Boyatzis & McKee 2002, p.253), meaning that leaders should “exhibit a gracefulness in learning where they...
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