Coca-Cola Honors Unsuccessful Projects

Learning from failure can lead to big wins, according to the beverage giant.

December 05, 2019

ATLANTA—Coca-Cola was invented in 1886 in Atlanta, Georgia. That year, sales of the drink totaled $50. In fiscal 2018, The Coca-Cola Company, with 700,000 employees and 500 beverage brands, reported $31.9 billion in sales, according to CNBC. When a company becomes that large, it can be difficult to keep the creativity and innovation that helped it grow, and that’s largely because with so much success, people begin to fear failure, according to James Quincey, CEO of Coca-Cola Co.

“Fear of failure is often the biggest hurdle for innovation in large organizations,” Quincey said in a recent Harvard Business Review Analytic Services report.

When people and businesses fear trying something new, Quincey calls it “the New Coke syndrome,” referring to the product Coca-Cola Co. rolled out in 1985. New Coke was a revamped formulation of the classic beverage, and consumers hated it so much it was only on the market for 79 days. But apparently, that’s not all bad.

“We must learn to celebrate failure” to prevent stasis, Quincey said. “The only true failures are situations in which we fail to learn. Learning is never a failure and makes our innovation muscle stronger and sharper.”

To that end, Coca-Cola Co.’s senior leadership “is very open about discussing personal experiences with failure,” said Quincey. The company even has an innovation award “that celebrates projects that fail,” he said.

Ali Akbar, the director of sparkling beverages for the Middle East and North Africa business unit, received the Celebrate Failure Award in 2017 for a failed effort to launch energy drink Sprite3G in Pakistan. Afterwards, Akbar and his team used what they learned to launch a more successful product in Pakistan, according to Coca-Cola Co.

Coca-Cola has not made public its 2018 innovation award winners because the lessons learned “are being applied in a proprietary manner at the moment,” said Max Davis, communications manager for the company, and management is still reviewing submissions for the 2019 innovation awards. Of course, failure must be managed, and when Coca-Cola products fail, they are discontinued quickly, a process Quincey calls killing the “zombies.”

“Killing zombies means getting rid of stuff that’s not working,” Quincey said. “We analyzed about 2,000 of our beverage-product launches over five years and found that 30% contributed only 1% in volume. In 2018, we killed more than 700 zombie products, which allows us to redeploy resources in areas where we see more growth opportunities.”

One major challenge is that consumer preferences are evolving rapidly. Soda consumption has declined in the U.S. as consumers focus on healthier options and reach for environmentally friendly products. Coca-Cola and other brands must be innovative to thrive. This year, the company introduced Coke Energy, “an energy drink that tastes more like Coca-Cola than a traditional energy drink,” according to brand director Janki Gambhir. The drink will launch in the U.S. in 2020. And to address a weaker performance with its water brands, the company has announced plans to sell Dasani in aluminum cans and bottles as opposed to just plastic bottles.

“Ultimately, we must stay curious about the consumer and put them at the center of everything we do,” said Quincey. “When innovation starts with the consumer, we see the best results. Almost 25% of our revenue is now from new or reformulated products, up from around 15% two years ago.”