ABI : How Coke Vanquished Pepsi



  • 5
  • November 15, 2013
  • David Lapin

Case Study Details

Summary:
ABI, Africa’s largest Coca-Cola bottler, facing recession and the aggressive entry of Pepsi into its market, prepared for radical downsizing and plant closures. Employee relations were at an all time low, and strikes had deteriorated into bloody violence. Lapin International (formerly SBE) crafted ABI’s Purpose, incorporating both strategic and inspirational foci. Lapin International built a Values-based culture to support the Purpose and by incorporating it into every aspect of the company’s management procedures and business strategies, Lapin International helped reverse the anticipated trend. Sales outgrew the competition, a number of acquisitions consolidated ABI’s market dominance, strikes became a thing of the past, and Pepsi withdrew from the market. ABI’s share price ascended beyond even the most optimistic expectations.

CEO Trent Odges envisioned an exciting future for his organization. With Pepsi re-entering the South African market as the drink for a new generation, retaining and growing market share was the number one strategic priority. He understood that to achieve growth in market share in the face of new and aggressive competition, ABI would need more than greater efficiency. He would need to cultivate an ethos of total honesty in a productive and strike-free environment. He envisaged a quality of relationship between union and management where both were aligned in the achievement of corporate intent.

This was a bold vision for an organization then plagued by low levels of productivity and recently shaken by a long and violent strike, which cost the company millions in lost revenue. But the CEO committed himself to the strategic imperative of crafting a corporate ethos capable of galvanizing the organization in a time of change.

He initiated three projects:

  1. "Channel Marketing," which radically altered the way the organization went to market.
  2. "Enterprise," which restructured the organization internally to support the new marketing initiative.
  3. "Values and Ethics," which provided the ethical foundation for strategic change.

He identified values and ethics as the core of his transformation initiative and the element that would permeate the entire process. He engaged Lapin International not only to design the organization's values and ethics but also to position them at center stage of the organization's strategic thinking. Lapin International's extensive research revealed an unintentional mechanistic environment that left employees feeling alienated. Employees despaired of changing management's attitude toward them and so vented their anger by forcing deadlocks in wage negotiations, which resulted in expensive annual strikes.

Mr. Odges recognized the need to involve employees at all levels in the redesign of the corporate ethos. He asked Lapin International to conduct workshops for more than 1,000 employees, including every senior manager and member of the Board. These workshops, consisting of three days each, were provocative and totally interactive demanding high levels of participation. It was the first time managers and employees had meaningful exchanges about their feelings towards the company, its strategies, and their own roles in it. No shallow conversations were allowed, only honest, forthright discussions around solutions that could be implemented quickly. The Lapin International Model cultivated a spirit of human dignity, which underpinned all future strategic initiatives in the organization including the way we go to market. The process unleashed potential in the most unexpected places and people" said Mr. Odges.

The Human Resource Director, Mr. Andre Parker, revised all policies, procedures, and practices and aligned them to the new business philosophy developed with Lapin International during the workshops. Lapin International then incorporated this into a Code of Ethics, which both described ABI's overarching business philosophy and promoted the ethical implications of the company's system of values.

The ABI Achievements
Almost immediately, ABI began reaping the benefits of a more harmonious industrial environment. Despite labor turbulence among many South African businesses, ABI did not lose a single day's production to national strike activity since it began its work with Lapin International. Management-Union relationships are on a solid footing. Wage negotiations are open and honest and deliver results in unprecedented time frames. The Union itself is proposing productivity-linked performance bonuses and increases. ABI has reduced its theft, improved its productivity, and increased its market share to the point of forcing Pepsi's withdrawal from the South African market. After full implementation of the entire change initiative, ABI stock had multiplied in value five times.


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