Gone Flat

When new Coca-Cola Co. chief executive E. Neville Isdell took a tour or Coke's operations in India, China, and 14 other key markets this summer he saw that Coca-Cola was a troubled company. The spectacle of Coke's struggles has become almost painful to watch: the battles with its own bottlers; the aged, overbearing board; the failed CEOs and failed attempts to recruit a successor; the dearth of new products; the lackluster marketing. The Coca-Cola organization is stuck in a mind-set formed during its heyday in the 1980s and 1990s. Of all the problems that can beset a corporation, a dysfunctional culture has to be one of the toughest to fix. After generating average annual earnings growth of 18% between 1990 and 1997, Coke's net income in recent years has grown an average of just 4%. Its portfolio of beverages and its faster-growing snack foods give Pepsi enormous clout with retailers. Isdell is downplaying the notion of a big, audacious fix for Coke's troubles.