One of Douglas Daft’s first tasks as Coca-Cola’s new CEO was to cut one-fifth of the workforce. The goal wasn’t just to slash costs. It was to decentralize the world’s largest soft drink maker. Almost half of the layoffs occurred at Coke’s Atlanta headquarters, where centralized decision making has hampered Coke’s ability to respond quickly and precisely to local needs.

Daft has plenty of experience with Coke’s centralized structure. The Australian-born executive spent most of his career working at Coke’s far flung operations. He has plenty of stories about how the company’s centralized structure hampered its competitiveness. One example is Coke’s recent launch of a new carbonated tea in north-east China, several months behind its rivals: "We had the formula, we had the flavor, we had done all the taste-testing," complains Daft, "but Atlanta kept saying ‘are you sure?’"

Coca-Cola’s centralized structure is mainly based on the assumption that Coke has global appeal. But Daft argues that Coke isn’t "it" in all cultures. He cites Japan – the company’s most profitable market – where two-thirds of Coke’s sales are in non-carbonated drinks. "People don't buy drinks globally," Daft explains. "You can’t pander to similarities between people: you have to find the differences."

To find those differences, Daft is moving the regional chieftains out of the company’s headquarters in Atlanta and closer to their local markets. These local managers, he claims, will have the authority to make decisions, as well as the accountability for any mistakes.

Sources: P. O’Kane, "Coca Cola's Canny Man," The Herald (Glasgow), June 18, 2000, p. 3; "Debunking Coke," The Economist, February 12, 2000; "World has Changed at Coca-Cola as 6,000 Lose Jobs," National Post, January 27, 2000, p. C10.