Global Leadership Dynamic & Evolving Region

Global Leadership Dynamic & Evolving Region

Global Leadership in a Dynamic and Evolving Region: Molinas @ The Coca-Cola Company (B, C)

Global Leadership Dynamic & Evolving Region: Molinas decided on a hybrid model after long discussions with her leadership team, other Coca- Cola constituencies and conducting cost-benefit analyses of centralizing versus decentralizing each department. She explained how centralization and decentralization would coexist:

HR is a global function,

so it has to be standardized and centralized. That was clear. I didn’t spend much time on that. But I spent a lot of time on technical and finance, because these two functions are highly involved with bottler relationships that are spread across a large region. We have so many factories. We have three factories in Uzbekistan alone, and there were two brand new factories opening in Tajikistan and Kazakhstan.

To avoid quality-related risks, she decided to centralize the technical department under Kestane who hired two new people to help manage the combined Central Asian and Turkish region.

“With finance, it was a question of setting strong governance,” Molinas said. She relied on Karim Yahi, whom she had appointed as the business unit’s finance director in April 2012 to come up with the department’s best strategy. Yahi was a Frenchman of Algerian origin whom Molinas worked with in 2003, spoke five languages and was married to a Turkish woman.

He recalled:

There was an assumption that big brother [Turkey] was going to manage the little one [Central Asia]. I had to focus on establishing a good relationship with the Central Asian team and pushed to keep what should be locally managed in the region and what needed to be centralized at the business unit level.

Yahi centralized the planning and reporting team. The local team was responsible for daily financial tasks such as pricing, launching a product promotion, and allocating advertising dollars. “I wanted to give a sense of territoriality and keep the day-to-day decisions closer to the market,” he explained. The Central Asian team fretted about reporting lines and not having their own resources in certain functions. “I had to demonstrate that by centralizing, you can actually create synergies and accelerate decision making.”

Molinas decided to keep the other areas—marketing, public affairs and communication, and commercial and customer services—decentralized, with Turkey and Central Asia managing theirProfessor Tsedal Neeley and Executive Director Esel Çekin (Middle East and North Africa Research Center) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

 

Copyright © 2017 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

417-069 Global Leadership in a Dynamic and Evolving Region: Molinas @ The Coca-Cola Company (B)

 

respective departments. Yet Turkey led the strategy and governance of the entire business unit. The decentralized structure would keep the business unit attuned to the field. “I didn’t want to have a central organization driving marketplace decisions,” Molinas explained.

The leadership team in Turkey defined the business planning process. These would include semiannual strategic review meetings with the general manager of the Central Asia region and monthly meetings with the respective regional managers to provide support and guidance. The marketing manager of Central Asia, Iskenderov, valued Turkey’s contributions, especially when it came to sharing best practices and providing strategic guidance: “For example, the output of one of our monthly meetings was applying Turkey’s Ramadan1 strategy to build our Nowruz2 program, which was brilliant.”

Despite the benefits of Turkey’s involvement, local employees continued to express concerns.

Sahin explained:

Even the fact that we were having meetings turned into a topic of discussion. They would ask, “Why are we having this meeting? Is it necessary?”

I had a big team on the Turkey side and we had strong connections with the global team. I really wanted to give the teams in Central Asia a hand. I would say, “Here’s what’s available to you, you can make use of this and that.” I wanted to have a monthly meeting so I suggested, “Shall we have an informal discussion about what you are doing?”

It didn’t work: people were missing meetings, claiming they didn’t have the time, and when they eventually found time, I would get comments like, “I didn’t prepare anything, we thought it was just an informal conversation.” These were all simply indirect ways of saying “No, you cannot get involved in my business. I won’t let you in.”

But it’s really more difficult for the associates than for the leaders. Suddenly, a person has not one, but two bosses. And when one of the bosses tries to be protective, it really squeezes the person in-between two people.

In May 2012, Tapaswee Chandele joined Molinas’s leadership team as the new HR director for the business unit. Chandele, born and raised in India, was another Coca-Cola veteran who worked with Molinas when she was the marketing director of the Eurasia region. Chandele worked to resolve the challenges and tensions that arose between Turkey and Central Asia.

She explained,

“It was hard to have feedback accepted. It was a reflection of the differences in the way the business was measured— differences in the way collaboration was valued.” (See Exhibit 1 for Yahi and Chandele’s biographies.)

Molinas acknowledged that the hybrid model required compromise from everyone: the leadership team was “not all in complete alignment, but they did their best to accommodate the needs of the business unit.” She worried about the fallout that could emerge with the hybrid structure. Was keeping part of the organization decentralized going to be problematic? Would these tensions turn into major issues that she wouldn’t be able to overcome?

1 A religious holiday observed by Muslims that marks the end of a month-long fasting period.

2 A seven-day public holiday in the Central Asia region, celebrating the beginning of the Persian New Year and spring.

Exhibit 1 

Biographies of New Members in the Leadership Team

 

Name  

Biography

 

Picture

Year Joined Coca-Cola
 

 

Tapaswee Chandele

Human Resources Director

Chandele joined the Coca-Cola Company in India in 2001 as a management trainee and began her career with Hindustan Coca-Cola Beverages (BIG, India). She moved to the India & Southwest Asia Business Unit four years later. Chandele moved to Istanbul in early 2011 as the HR Strategic Business Partner for the Eurasia & Africa Group Office and Caucasus & Central Asia Region. In May 2012, she was appointed as the HR Director for Turkey, Caucasus and Central Asia Business Unit. She is a postgraduate in Biochemistry & Clinical Nutrition and has an MBA in Human Resources & Industrial Relations.  

 

 

 

 

2001

 

 

 

Karim Yahi

Finance Director

Karim Yahi has more than 20 years of international business experience in consumer goods, packaging, financial advisory and investment management in France, Germany, the U.S. and Turkey. He started his career with Coca-Cola in 2003, as the Turkey Finance Manager and has since assumed roles of increasing responsibility in Finance and Mergers & Acquisitions, where he successfully led global and local transactions in Europe, Asia, Eurasia, the Middle East and the U.S. He joined Turkey, Caucasus and Central Asia in Istanbul in 2012 as Finance Director at the time of the creation of the Business Unit.  

 

 

 

 

2003

 

Source: Compiled by the casewriters from Linkedin.

Global Leadership in a Dynamic and Evolving Region: Molinas @ The Coca-Cola Company (C)

“Beware of Chemicals in Bottled Water!”—Sabah Daily, May 20131

Protests Widen in Turkey; Riot Police Pull Back”—Wall Street Journal, June 20132

“Anti-American feelings run feverishly high!”—Al-Monitor, June 20133

“Emerging markets suffer the advent of the [FED] taper”—Financial Times, June 20134

Protests in Turkey continue despite Ramadan”—Deutsche Welle, July 20135

“Turkey’s Economy Suffers Blows from Inside and Out”—Wall Street Journal, September 20136

While Molinas worried about her organization and team’s set up, everything changed in an instant. Domestic and international events in mid-2013 had radically derailed her unit’s 17 consecutive months of record performance. (See Exhibit 1 for the Coca-Cola Company’s worldwide presence and volume growth in 2013.) Molinas was stunned:

Suddenly, there were external shocks coming from every direction.

The headwinds in health-related issues were rising.

The U.S. FED was tapering and capital flight from emerging markets was affecting countries like Turkey. The third-quarter GDP fell dramatically from the second quarter. Then we had this political upheaval fomenting a rise in anti-American sentiment . . . and Coca-Cola became a target.

Molinas felt that she was unable to respond fast enough. She explained, “The capital flight from emerging markets seriously affects Turkey, more so than Central Asian countries because they export oil and oil prices were at the highest.”

Molinas’s “street by street” approach became a disadvantage. The teams were trying to do too many things using their own local resources, which was insufficient to carry the business unit during the turmoil in Turkey. Central Asia accounted for a third of the unit’s revenues. Moreover, the leadership team in Turkey was tasked to allocate time for guidance to teams in Central Asia.

The team

was still dealing with the frustrations from people in the region. Molinas needed her leadership team to focus on protecting the business in Turkey from the country’s shaken economy and political climate. TheProfessor Tsedal Neeley and Executive Director Esel Çekin (Middle East and North Africa Research Center) prepared this case.

It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

Copyright © 2017

President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

business-unit level to balance out the year-end’s performance. The hybrid structure that had worked well to cultivate the various local markets under her umbrella during good times was now ineffective.

Molinas began to worry about the lack of diversity and emerging market experience within her predominantly Turkish and female leadership team. Molinas opined:

The anti-American

sentiments resonated with a large portion of the population in Turkey. Yet my leadership team had a uniform background and “similar mindsets.” They were great analysts, great marketers, great people. But the thing is, I needed people who came from that environment [who might resonate with or understand the sources of anti- American sentiment] or at least who had similar experiences elsewhere to understand the dynamics beyond the obvious and start planning in advance for them.

How would Molinas gain valuable and varied perspectives that could help her counteract the growing crises for her unit and plan for the future? Would she change the composition of her leadership team? How would changing her leadership team impact the hybrid structure that had such promise?

( 417-070 ) ( Global Leadership in a Dynamic and Evolving Region: Molinas @ The Coca-Cola Company (C) ) ( hybrid structure along, with its decentralized and centralized features, prevented Molinas from developing a comprehensive plan that could possibly entail cutting headcount and costs at the )

 

 

2013 Worldwide Unit Case Volume Geographic Mix

 

North America 21%
Latin America 29%
Europe 14%
Eurasia & Africa 15%
Pacific 21%

 

Volume Growth

All

Beverages

Sparkling Still

Beverages Beverages

 

(Unit Case Volume) 2013 vs. 2012 5-Year Compound 2013 vs. 2012 2013 vs. 2012
  Growth Annual Growth Growth Growth
Eurasia & Africa 7% 7% 6% 13%
Europe -1% 0% -1% -5%
Latin America 1% 5% 0% 8%
North America 0% 1% -2% 5%
Pacific 3% 6% 3% 4%
Worldwide 2% 4% 1% 5%

Source: The Coca-Cola Company, 2013 Annual Review (Atlanta: The Coca-Cola Company, 2013), http://www.coca- colacompany.com/annual-review/2013/operating_groups.html, accessed March 2017, and company documents.

Endnotes

1 “Ambalajli Sularda Ozon ve BPA maddesine dikkat,” Sabah Daily, June 11, 2013, http://www.sabah.com.tr/ ekonomi/2013/05/11/ambalajli-sularda-ozon-ve-bpa-maddesine-dikkat, accessed December 2016.

2 Emre Peker and Ayla Albayrak, “Protests Widen in Turkey; Riot Police Pull Back,” The Wall Street Journal, June 1, 2013, http://www.wsj.com/articles/SB10001424127887324412604578518480404254700, accessed December 2016.

3 Amberin Zaman, “Foreign Journalists Called Conspirators in Turkish Protests,” AL Monitor, June 26, 2016, http://www.al- monitor.com/pulse/originals/2013/06/foreign-journalists-targeted-in-turkey.htm, accessed December 2016.

4 Robin Wigglesworth, Amy Kazmin, and James Crabtree, “Emerging Markets Suffer the Advent of the Taper, Financial Times,

June 20, 2013, https://www.ft.com/content/26da5d40-d97b-11e2-98fa-00144feab7de, accessed December 2016.

5 Senada Sokollu, “Protests in Turkey Continue Despite Ramadan,” Deutsche Welle, July 10, 2013, http://www.dw.com/en/protests-in-turkey-continue-despite-ramadan/a-16943978, accessed December 2016.

Joe Parkinson and Emre Peker, “Turkey’s Once-Golden Economy Buffeted From All Sides,” The Wall Street Journal, September 6, 2013, http://www.wsj.com/articles/SB10001424127887324886704579052871861015240,