Knowledge Management at The Coca Cola Company - Case Study Example

Knowledge Management at The Coca Cola Company Student Name University Table of content Introduction………………………………………………………………………………………..3 Company Profile…………………………………………………………………………………..3 Problems Facing the Company……………………………………………………………………6 Methodology…………………………………………………………………….………………...8 Analysis………………………………………………………………………………………….11 Conclusion and Recommendation………………..……………………………………………...12 References……………………………………………………………………………………….14 Introduction Knowledge Management draws from a company’s existing resources whether it is in information systems management, organizational change management, and human resources management practices (Davenport and Prusack, 1997). This paper aims to synthesize The Coca Cola Company’s (TCCC) knowledge management successes and failures in the context of its consumer knowledge management strategy. Company Profile The Coca-Cola Company (TCCC), with a presence in over 200 countries and a 21 percent control of the soft drinks retail volumes is the world's leading producer of carbonated soft drinks. In addition to soft drinks, it also licenses its brand in various other industrial sectors, such as the apparel industry. TCCCs direct sales comprise of still beverages and sparkling beverages, as well as concentrate syrups that are sold to bottling partners and food outlets. The company operates a franchised distribution system with various bottlers around the world who hold an exclusive territory. The company is currently operating under its 2020 road map strategy. The mission includes; “to bring to the world a portfolio of quality beverage brands that anticipate and satisfy people desires and needs”, “to nurture a wining network of consumers and suppliers” and to nurture a highly effective, lean and fast moving organization”. Its core values are TCCCs core values include honesty, integrity, diversity, quality, respect, responsibility and accountability and accountability. (The Coca-Cola Company, 2016). TCCCs increased its global value share in the soft drinks market by 2 percent over 2015 culminating in a 4 percent increase in revenue.  (The Coca-Cola Company, 2016). Its stated objective is to double in size of revenue for the Coca-Cola system from 2010 to 2020 (Euromonitor International, 2013). It aims to achieve this by expanding its geographic spread and developing new products to align with consumer trends. The company has a strong geographic mix and its 2020 Growth Strategy is focused on increasing its investments in emerging markets around the world. Its sales are indeed growing much faster in markets outside of North America with untapped regions like the Middle East as considered the next major growth area (Euromonitor International, 2013).The strategy also holds to increase refranchising in developed markets of North America as well as in the newer market in China. TCCCs biggest competitor in the soft drinks market is PepsiCo but within the healthier drinks market, TCCC brands are often in direct competition with each other. Because TCCC was able to read and understand the health trends quicker than PepsiCo, it was able to build an early lead in the carbonated low calories soft drinks market and now has a dominant position in most core growth markets with Diet Coke and Coca-Cola Zero. In the Sports and energy sector, TCCC has formed a strategic partnership with former competitor Monster in a bid to grab a larger share of the market. With health trends shifting the market away from traditional soft drinks, TCCC has adapted by diversifying into bottle still and sparkling water, in addition to low calorie soft drinks (The Coca-Cola Company, 2016).. The Organizational Structure of Coca-Cola has in the past few years tended towards decentralization where subordinates are divided up by geographic location, and where possible are posted in that location. It adopts Role Culture in which where all members have a defined function that is organized in a hierarchical way, and therefore each country has its own marketing, human resource and finance directors, among other positions. Final decisions are made by the corporate executives led by the CEO based at the Atlanta headquarters. Global strategy is executed from Atlanta; they also set up the different production plants around the world. The regions deal with local strategy with an emphasis on local tastes and consumption patterns; this includes setting pricing, determining distribution and marketing. (Euromonitor International, 2013). The company also operates under a system of strategic partnerships and alliances with “a network of company-owned or controlled bottling and distribution operations as well as independently owned bottling partners, distributors, wholesalers and retailers” (Euromonitor International, 2014). In fact TCCC has the largest bottling network in the world (ibid). The United Arab Emirates (UAE) which falls under the TCCC Middle East and Africa subdivision is considered one of the more accessible markets within the region due to its more liberal cultural and economic set up. The company has been increasing investments by a planned 5 billion US dollars to the subdivision as part of its 2020 strategy (The Coca-Cola Company, 2011). It also holds a 45 percent stake in the Aujan Coca-Cola Beverages Company (ACCBC) which is a regional player with established beverage market shares in the gulf region (Euromonitor International, 2014). Under the franchising arrangement, ACCBC provides the required capital investments such as machinery, bottles and cases while TCCC supplies the patented drink concentrate. TCCC also provides managerial guidance on matters such as, marketing, finance and personnel training. The strength of this franchising model lies in the leveraging ACCBC local expertise and TCCC global scale knowledge. This Coca-Cola Company case study was aimed at examining issues concerning the integration of knowledge management in its customer relationship strategy. Problems Facing the Company Davenport and Prusak define knowledge as the “fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information” (1997). Customer Knowledge is a principal resource for TCCC, particularly in gaining competitive advantage against its major competitor. The company’s move towards a knowledge-based customer-centric response strategy began after what is now widely considered the “New Coke” debacle. Pepsi-Co had begun to challenge TCCC for the American market in the 1970s leading TCCC to respond in 1984 with a new extensively researched cola formula marketed as “New Coke”. It was met with fierce consumer resistance that forced the executives into a turn around that reintroduced the old coke marketed as “Classic Coke”. The company had failed to read the events as consumers had been developing a taste preference for Pepsi over a decade. Also, there were flaws in the research methods and how they made sense of what was collected. The management assumed that the question whether Pepsi had a better taste was equivalent to the question should coca cola change its formula. Their gathering of intelligence was meaningless because they drew the wrong conclusions from it. The company’s collection of performance indicators on Knowledge Management has also helped ensure long term top management support as well as resource allocation in this area (Mishra, 2009). The company’s customer-centric knowledge management program seeks to understand customers’ needs rather than just push the product, for instance they use social media to collect data on a customers entire range of behaviour and not just their beverage choices. This intended to establish a complete picture of the consumer and prepare a holistic experience accordingly (Hardaway, 2012). In fact their social media strategy is a company wide policy driven from the top that requires brand training for all employees who are engaging on those platforms as the company seeks to marry business objectives and consumer insights (Hardaway, 2012). Tacit knowledge can be difficult to tap because it resides in an individual's mind. The greater the interaction between the staff the more chance that the company can expose tacit knowledge residing in individuals’ mind. One 2001 study found that tacit knowledge constitutes 42 percent of corporate organizational knowledge (Hamza, 2008). Tacit knowledge forms a unique competitive advantage for a company because a competitor can only gain access to it by hiring those individuals. The flip side of this is that as long as the knowledge continues to be stored in the individuals mind, the company can only benefit from it while he remains an employee. This is why TCCCs staff turnover which was as high as 20 percent in 2010 is so problematic (The Coca-Cola Company, 2012). Furthermore, it can only be captured when it is found. Tacit knowledge management should therefore be part of an integrated approach to enhance organizational and managerial processes. TCCC currently employs primarily soft measures for tacit knowledge management such as work place collaboration and communication strategies. This paper argues that this is an insufficient strategy for managing this type of knowledge and that TCCC would be better served by institution a process of codification for this knowledge (Hamza, 2008). Methodology The main research question was whether TCCC is adequately managing its tacit knowledge. Customer knowledge (CK) was defined as understanding customers’ needs, wants, and aims when a business is aligning its processes, products, and services. Explicit knowledge was defined as unwritten and unspoken knowledge held in the individuals mind and derived from their experience, observation and personal insights. The distinction between tacit and explicit knowledge was that explicit knowledge represents the tangible elements of knowledge. The methodology applied semi-directive interviews with the first section quantitatively derived and the second qualitative. The first section was devoted to grading the general knowledge manage at TCCC, while the second focused on collecting impressions on tacit knowledge management specifically. The E-mail based interviews were conducted with two TCCC managers from the Africa and Middle East division covering the UAE. The structured questionnaire is presented below (Knowledge Management Online, 2009) In the unstructured section of the interviews, respondents were asked to give their impressions of the knowledge management within the company with a focus on the tacit aspects. There was a weak understanding of what tacit knowledge entailed but they were clear that Customer Relationship Management (CRM) needs are covered by a variety of software including Sales Cloud and ExactTarget. These tools are to allow TCCC insight into the behaviour of their customers using social media and can be used for promoting offers, competitions and getting feedback about products, thereby improving customer perceptions of products. It also helps collect customer opinions of the brand and allows TCCC to customise the experience it offers to customers. They also added that a notable element of the company’s CRM knowledge management is the self-service dispenser introduced in 2010 to replace the traditional soda fountain. It allowed customers a choice of up to 100 flavors and crucially it relays information on usage and service issues back to TCCC allowing it and vender owners to create knowledge on customer demand and preference (Dalkir, 2011) Tacit knowledge held by staff was extracted through one-on-one contact and through computer-supported collaborative work (CSCW) technologies. Uncodified tacit knowledge was mostly distributed informally through meetings, group work and mentorship. CK built on micro information, which is information about individuals and macro information about the customer base as a whole. Respondents also indicated that TCCC conducts annual reviews where lessons learned and selected best practices are reviewed and distributed to participants. They however stated that the initiative needed improving. On whether the initiative was producing its intended benefits they replied that they were uncertain; this implies a failure of the company to communicate when knowledge is utilized in top management decisions and has the potential to undermine the culture of knowledge that is so essential to effective knowledge management. When asked to identify the biggest impediments to managing the tacit aspect of knowledge, respondents stated that although the communication strategy requires face-to-face meetings between local division managers, this was ineffective in dissemination of tacit knowledge within the branch especially when the interpersonal relationship between the managers was poor. They also said that the CSCW facilities like intranet and email were under used by staff. They also said that the company’s tall hierarchy which requires some knowledge to travel back to the Atlanta head quarters for it to have impact was problematic. Finally, they said that the sharing of tacit knowledge across divisions and departments is weak and there are a few islands of knowledge that are inaccessible to the rest of the company. Analysis From the forgoing it is apparent that TCCC uses a mixture of codification and personalization approaches in its tacit knowledge management. The personalisation strategy however prevails over the codification strategy. This strategy’s emphasis lies in connecting knowledge workers through networks and while useful for resolving one-off issues that have arisen, they are ill suited for disseminating knowledge widely. Tacit knowledge at TCCC is captured by encouraging discussion in a collaborative workspace over CSCW solutions such as intranets and group email. By capturing these interactions, TCCC then creates knowledge from the dialogue. The following diagram illustrates the coming together of variously held tacit knowledge within TCCC Figure 1 (Hamza, 2008) Although tacit knowledge can be distributed informally through meetings, group work and mentorship, ensuring wide benefit requires it be formally accessible to all employees. This entails instituting a codification process. TCCC already has a continuous process of knowledge identification, collection and adaptation in place but it needs to extend this to cover tacit knowledge more effectively. The decision to codify knowledge can be gauged by whether the knowledge is reusable, meaning it provides solutions that do not need to be customised to the situation. Conclusions and Recommendations In conclusion, the main challenge in knowledge management for TCCC was management of tacit knowledge. The challenge was brought about by a weak company culture of knowledge, an ill suited organisational structure, an overemphasis on explicit knowledge and the loss of knowledge from staff defection. This makes it difficult for the company to utilize its implicit strength; that of having developed extensive knowledge in each part of the business over its over one hundred years of existence. TCCC can take action by reviewing its tall hierarchy in the awareness that knowledge would flow more freely in the company if its structure was flat. It can also begin to incorporate job rotation into their strategy. This involves transferring individuals within the same department, to other departments or even regions outside of UAE. Doing so will enhance informal knowledge sharing, as these individuals move the knowledge held in their brains to different parts of the company. On the same issue of informal knowledge sharing, TCCC can also link to experts in the UAE beverage consumer sector as consultants or independent contractors. TCCC should endeavour to launch a culture of knowledge across the company which will help better integrate knowledge management into business processes, right from the beginning. Tacit knowledge management should a continuous process involving collection, knowledge review, dissemination and adaptation. The diagram below illustrates this process. Figure 2: Tacit Knowledge Management Framework (Hamza, 2008) References Mishra, J.K. (2009). Knowledge Management: Complexity, Learning & Sustainable Innovation. Global India Pubns. Maybury, M. T., Morey, D., & Thuraisingham, B. M. (2002). Knowledge management: Classic and contemporary works. Cambridge, Mass. [u.a.: MIT Press. De, S. U. (2014). Knowledge management practice in organizations: The view from inside. Dalkir, K. (2011). Knowledge management in theory and practice. 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