Keynote Speech by Muhtar Kent at Heidrick & Struggles

Muhtar Kent, President and Chief Operating Officer, The Coca-Cola Company
Istanbul, Turkey
June 17, 2008

As prepared for delivery

Thank you, for that kind introduction, and good evening, everyone.

For those of you who have traveled to Istanbul to be here -- and I'm assuming that's most of you -- let me also extend a warm welcome to my hometown!

I truly hope you're enjoying your stay here and that you have time to take in some of the colorful sights and sounds of our city.

Istanbul, as you know, has long been known as an important crossroads of trade and transportation.

Equally important, over the centuries it has also been a center of ideas and intellectual capital. In fact this very palace we're in tonight was built over 200 years ago as the summer retreat for Esma Sultan. She was the daughter of Sultan Abdulhamid and was recognized as one of the city's major intellectual figures.

This venue makes for a most appropriate backdrop for a thought leadership discussion, and I applaud my friends at Heidrick & Struggles for their choice for this conference.

I also thank them for the privilege of speaking here tonight.

Truth be told, I'm having a bit of deja-vu.

Less than a year ago, I gave a speech in this very same palace where I spoke to a group of university officials from Central and Eastern Europe.

The topic was similar, too.

They wanted to know what they could be doing as educators to better prepare their graduates for careers in 21st century global enterprises. They were looking for ways to help their graduates better compete in the international job market.

Tonight, I will come from a slightly different perspective. I was asked to share some insights on how we at The Coca-Cola Company are preparing to compete in the global race for talent.

I should tell you right from the start that I am not a human resources expert. For a deeper dive on the complexities of 21st century human resources, I defer to the good folks at Heidrick & Struggles.

That said, I do have a strong point of view about global talent development as it really is the lifeblood of The Coca-Cola Company and the broader Coca-Cola system which includes our company and our bottling partners.

As you probably know, about 70 percent of our business at Coca-Cola comes from outside the United States. Likewise, the vast majority of our 1 million employees system-wide reside in international markets.

Developing global talent... and people with global mindsets ... is critically essential to the success of our business.

In that spirit, I'd like to frame my observations in three areas.

First -- as business leaders, I think it's important to step back and look at the macro global forces surfacing today that our future leaders will need to navigate in order to be effective in the coming years.

The new responsibilities and demands facing them will be significant and far reaching.

If we better understand where the world is heading, I think we'll be in a better place to evaluate the kind of talent we need.

Second, we need to be absolutely clear in what we expect from our future leaders and align our talent acquisition, development and retention efforts accordingly.

And third, we need to be acutely aware of what the next generation expects from us. Winning the race for global talent increasingly will be about matching expectations. The social contract between employers and employees is growing greater than ever.

Let's start with the major forces that are surfacing around the world.

Tomorrow's leaders will need to be prepared to manage in an environment where several new long-term realities are emerging.

They include:

• Rising energy, commodity and food prices.
• Shifting economic power.
• Massive urbanization and middle class growth.

For our future leaders -- and everyone here -- the implications of these trends are profound.

The world is now paying about $5 billion more a day for crude oil than just five years ago.

Of course, oil booms and busts are not exactly uncommon. What is different now, however, is that we're seeing solid, gradual gains as opposed to sudden peaks and valleys.

Most experts believe oil is no longer spiking it's simply rising as demand increases and deposits become harder and costlier to access.

This is also producing some unintended and far-reaching consequences. The surge in production of bio-fuels like ethanol is partly responsible for rising food prices around the world.

So here we are with higher energy costs... and higher food costs.

Now... factor in the sustained increase in demand for food and energy that's being prompted by rising living standards in emerging nations like China, India and Russia. By 2015, some 700 million new consumers will be ascending to the middle class. Most of them will be found in emerging nations.

That's two markets the size of the United States added to the world economy in less than a decade!

All of this is fueling one of the largest transfers of wealth in history.

It's now estimated that oil-rich nations have a $4 trillion-dollar cache of petrodollar investments around the world. That figure could increase rapidly in the months ahead.

Oil-rich nations like Russia are joining other fast-developing nations like China and India in the race for global economic prominence.

I was in St. Petersburg just three weeks ago for a regional World Economic Forum and was told that every hour in Russia today another 5,000 people ascend to the middle class.

These new middle class consumers around the world will strive for the same things we want out of life and like us they will migrate to urban centers to seek similar lifestyles.

For the first-time in history, the majority of the world's population is now living in urban areas.

The urbanization trend is just beginning.

For the next decade, 65 million people annually will migrate to urban centers. That's roughly the equivalent of adding a city the size of Istanbul to our planet every 90 days.

Clearly, what you see here with these global shifts are significant challenges that face the next generation of leaders.

Cost pressures are here to stay. Company productivity efforts are no longer cyclical initiatives -- they are an ongoing reality for most businesses.

Infrastructure pressures are here to stay as cities grow. How do we get our people to work? Where do they live? Where should they work? How mobile are they? These burning questions will need to be answered.

Cultural challenges and complexities are here to stay as developing nations exert their growing influence.

Training and development challenges are here to stay as the business landscape continues to move at light speed.

The list goes on.

For all of us, these new realities are going require shifts in thinking... shifts in behavior... indeed, shifts in our world view.

How well our future leaders understand these new realities ... accept them... and prepare for them… will determine our success in the coming years.

This leads directly to the second point I wanted to touch on -- we need to be absolutely clear in what we expect from our future leaders so that we can align our talent acquisition, development and retention efforts accordingly.

At Coca-Cola today, we're looking for future leaders who possess a world view. We need people who can move seamlessly across borders and cultures and who feel as comfortable working in Mumbai as they do in Atlanta.

With 20 million customer outlets around the world, we need people who can speak the language of sophisticated modern trade.

At the same time we're looking for people who are flexible enough to understand the pressures and local cultural nuances associated with being a sole proprietor of a small street-corner bodega or kiosk.

We need people who can work in teams and build meaningful and sustaining relationships.

Relationships are the essence of what our company was built on and no one was more masterful at forming lasting relationships than Robert Woodruff, one of our great founders.

Mr. Woodruff once said and I quote: "Success or failure in this job is essentially a matter of human relationships."

I've personally found that the best relationship builders are people who have open minds.

That's why we look for people with diverse backgrounds and points of view. We make a point to find young managers who want to be stretched -- who relish the challenge of working outside their comfort zones.

I recently met with a group of high-potential young managers from our company who are part of a global leadership development program we launched last year called Catalyst.

We pick managers from all over the world for special stretch assignments that benefit our business. We place them far outside their comfort zones and deep into interesting new roles.

They are put into cross-functional and cross-cultural teams and given challenging assignments. One team, for instance, was sent to a Southeast Asian nation to develop a 5-year market-entry plan. Another team was sent to Eurasia to work on a water profitability model. Another team was dispatched to Africa to work on a juice supply chain business model.

True innovation, we have found, comes from this beautiful fusion of cultures, ideas, beliefs and experiences.

That's why in Atlanta we have over 50 different nationalities represented at our corporate center alone.

If you look at my own senior management team, you'll see that I've got direct reports from Mexico, Lebanon, the UK, Liberia, Turkey, France, Colombia, Ireland and the U.S.

At times, Coca-Cola resembles the United Nations... and in fact we are in more markets than our represented by the UN today.

In reading some of your reports at Heidrick & Struggles, I sense more and more businesses will begin to resemble us in this regard in the coming years. In fact, CEOs in the US and Europe recently told an Economist survey that their senior management teams will become more international over the next three years.

We feel strongly that the next generation of leadership will need to be able to recognize and harness the power of diversity.

One of the most fulfilling diversity programs I am personally involved in is serving as the chair of our Company's Women's Leadership Council.

In this role, I work with senior women executives throughout our company to identify strategies to attract and develop more women into leadership positions.

The keen insights women bring to our business are profound, to say the least.

Today, women account for the majority of purchase decision makers for our beverages. Globally, women make up 70 percent of all grocery shoppers. As more and more women around the world gain economic power, we need to be there with the right shopper insights, the right mix of products, and the right marketing and merchandising strategies.

Women's leadership has never been more important.

I've talked a bit about the pressures coming down on the next generation of leaders and what we expect from them.

Now, I'll move to the third and final area I wanted to touch on tonight -- what the next generation of leaders expect from us.

There's no question that the next generation has their own expectations about what kinds of companies and brands they want to work for.

A survey commissioned last year by Sun Microsystems in the U.S. shows that almost three quarters of workers want their employers to be environmentally responsible.

The percentage is even higher in Europe.

Another survey of young global professionals in their 20s, sponsored by Yahoo. shows that the ideal employer reflects (quote) "a down-to-earth blend of idealism and pragmatism, of concern for self and others."

As a group, these young professionals share the belief that business should benefit both the individual and the broader society.

They want opportunities to stretch and grow quickly...

They want progressive benefit packages...

They place a huge premium on work-life balance...

And they want their work to be meaningful and productive to society.

Listen to what one 26-year-old finance professional had to say: "The companies that stand out the most are those that provide for their employees and communities just as much as they provide for their customers. Nothing is more rewarding than knowing that what you do for a living positively affects the lives of those within your community, the country, or even the world."

Those sentiments were echoed by thousands of young professionals who participated in this survey.

I know from talking to my own children, that they have much higher expectations of what they want out of an employer than I certainly did when I entered the workforce 30 years ago.

I also hear the same sentiments when we interview young job candidates and when I go speak on college campuses.

People want to work for companies that share their values.

Today, when we recruit new talent to The Coca-Cola Company, one of the first things we hand them is a packet of information about the numerous projects we are involved in around the world to help build sustainable communities.

They learn about a number of important initiatives, from the work we're doing to reduce our water and carbon footprints to recycling efforts to green coolers and lightweight packaging innovations.

We have seen through our own experiences -- time and again -- that our business in any market is only as healthy and sustainable as the community in which we operate.

Borrowing from my days of studying statistics in university- there is a clear one-to-one regression in terms of healthy sustainable businesses and healthy sustainable communities.

Consequently, we need future leaders who understand this balance ... and the good news for all of us is that there will be plenty to choose from in the Millennial generation.

Given the new realities of the world...

Given our expectations of what we want from the next generation of leaders...

Given what the next generation wants from us...

I believe the winners of the global talent race will be businesses and organizations that have strong brands and clear visions... who encourage innovation and continuous education... who accept risk and promote entrepreneurship... and who give back to the world as much as they take.

Mostly, I think it will be businesses and organizations that understand the world is changing and recognize the need for new talent and leadership that can help them make sense of the change.

I think this was probably best summed up by a high school teacher in Denver, Colorado, who a couple of years ago produced a video called "Shift Happens." I'm sure many of you have seen it. It's been viewed by millions of people around the world on You Tube.

It's full of startling statistics about the changing nature of our world and the competition ahead of us.

That same teacher produced an updated version of "Shift Happens"... and I'd like to close by showing you the first two minutes of that video.

Please take a look.

That really tells the story of a world in transition.

We need to be prepared for this world.

I'm grateful we have good partners like Heidrick & Struggles to lend their expertise... and I wish you all the best of success.

Thank you, everyone.