It’s been 35 years since the Coca-Cola Company found its way into and then out of one of the most remarkable marketing gaffes in corporate history.
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Back in 1985, after 99 years of producing founder John Pemberton’s secret bestselling soft drink, the famed Atlanta-based beverage giant, locked in an escalating battle with rival Pepsi-Cola, announced “New Coke” – a reformulation of the legendary cola recipe.
At the time, Coca-Cola referred to the change as “the most significant soft drink marketing development in the company’s nearly 100-year history.”
Yet, just 79 days later, after a fierce backlash from its customers, including one woman who accused Don Keough, Coca-Cola’s C.O.O, of “playing around with my youth,” the company reversed course, reintroducing the original recipe as “Coca-Cola Classic.”
I thought of this incident earlier this year on the occasion of Warren Buffett’s 90th birthday.
The founder of Berkshire Hathaway, affectionately nicknamed the “Oracle of Omaha,” Buffett once lived across the street from the late Mr. Keough, a man he considered a great friend, whom “everybody loved.”
Following his retirement from Coca-Cola, Keough expanded upon a popular speech he used to give by writing a book titled, “The Ten Commandments for Business Failure,” a candid assessment of the lessons culled from a long and colorful corporate career.
Keough’s recollections were primarily focused on business, but the wisdom remains appropriate for everyday life, especially in these uneven times of the COVID-19 global pandemic. Let's look again at Keogh's "Ten Commandments" and what they can teach us.
1. Quit taking risks: Don Keough’s career began in television, broadcasting a show on WOW-TV adjacent to another rising Nebraskan, Johnny Carson. But Keough was drawn more to advertising and business and decide to leave and take a position with the Butter-Nut Coffee Company. He followed his passion. “Keep pushing the envelope,” he once said. “See if you can add or improve.”
2. Be inflexible: Coca-Cola became so enamored in its early days with their signature 6 and a half-ounce bottle that they let Pepsi capture market share with the release of their 12-ounce product. It wasn’t until the 1950s that they finally redesigned and enlarged the size of their bottle.
3. Isolate yourself: During World War II, British Prime Minister Winston Churchill assembled a team whose job it was to only bring him bad news.
Leadership is being aware of reality, however difficult it might be. Don’t surround yourself with people who will only tell you what they think you want to hear.
4. Assume infallibility: Some call it “C.E.O Disease” – the belief that you somehow know everything, that everybody else is the problem. Keough once remarked how infrequently you read in a shareholder report, “We really goofed last year.” Be big enough to admit your mistakes, big or small.
When the “New Coke” fiasco hit, Keough owned the decision and was quick to reverse course.
5. Play the game close to the foul line. You shouldn’t be figuring how much you can get away with – you should be concentrating on what the right thing to do is. “If you want to fail, go close to the line,” Keough said. “Because if you do, you’re going to cross the line. And you might go to jail.”
6. Don’t take time to think. It was the French mathematician and philosopher Blaise Pascal who once suggested, "All of humanity's problems stem from man's inability to sit quietly in a room alone.”
How often do people stop and thoughtfully ponder a situation? According to Don Keough, not enough.
7. Put all your faith in experts and outside consultants: Coca-Cola’s executives trusted the consultants who tested the New Coke formula on 190,000 individuals. But those same experts didn’t take into account the psychological and sociological draw its customers had on the brand’s history, especially in the South.
Trust your instincts, not just the experts.
8. Love your bureaucracy: Beware of too many layers in an organization. Keough, who sat on the board of Berkshire Hathaway, quoted Buffett’s warning: “It’s unbelievable how much bureaucracy can build up in businesses, particularly those in which you can pass almost all of your costs to the consumer.”
9. Send mixed messages: In a passage of self-disclosure, Keough recalled expecting a German Coca-Cola plant to capitalize on the fall of the Berlin Wall, but not providing him with enough budget to do it. A colleague confronted him and the executive agreed to double his allocation.
When communicating, remember the “three c’s” – be clear, concise and correct.
10. Be afraid of the future: Successful people don’t dream small. They dream big. “So you’re running a business or running a family or facing life, and you say we can’t do this … people who do that will fail,” Keough reflected.
“Be bold and mighty forces will come to your aid,” said Basil King, the Canadian clergyman.
Don Keough passed away in 2015 at the age of 88, leaving behind a memorable legacy not only in corporate America but also throughout numerous philanthropic and educational institutions.
Meanwhile, his old friend, Warren Buffett, continues on, not only embracing Keough’s commandments but also championing his belief that America’s best days are yet to come.