Jun 16, 2009 (04:06 AM EDT)
Global CIO: Six Lessons CIOs Must Learn From Coke's Dazzling Innovation

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Juicing its entire demand-to-supply chain from factory to consumer, Coca-Cola is rolling out a dazzling new product that's hard to define but nevertheless does all of the following: It lets the company test more new products more quickly with more accuracy, it lets restaurants manage inventory more effectively at lower cost, and it lets consumers select from 100 different drink choices.

As my colleague Mary Hayes Weier described recently in a superb analysis, Coca-Cola's new Freestyle dispenser should also give Coke the ability to sell more product, provide greater value to its middlemen restaurants, and discover breakthrough products more quickly; give restaurants a drink dispenser that's not only massively more flexible than its current lineup but also hip and jammed with intelligence; and give consumers the freedom to experiment with a huge range of potential drink combinations.

I've called it a "dispenser" but that's like calling Tiger Woods "a golfer": while true, it barely begins to tell the story. Hayes Weier got at the essence of their capabilities when she referred to them as "Coke's front-line robotic army for business intelligence." But they're also much more than that, with implications for everything in the end-to-end spectrum from the Coke product development teams to new-flavor kitchens to bottlers and distributors and restaurants to the intensely valued throats, hearts, and minds of consumers.

In addition to being BI robots, Coke's new ultrahigh-tech Freestyle dispensers are also new-product labs, customer-experience workshops, wireless repositories, data warehouse gateways, merchandising machines, inventory managers, and, perhaps above all else, truly transformative devices that shift more and more choice, options, and freedom from the seller to the buyer.

And that is precisely why CIOs from all industries need to sit down with their C-level peers and use Freestyle as a case study for how their companies can imagine fresh new approaches and processes that give customers more choices while simultaneously driving more actionable, customer-based knowledge back to headquarters. Here are six indispensable lessons from Coca-Cola's stunning piece of breakthrough thinking that CIOs of all stripes need to dig into immediately:

1. Until Freestyle, Coke -- like all other soft-drink companies -- plodded along with the same-old, same-old mechanical dispensers that trapped the company into a stifling box defined by the physical limitations of the machine itself. It didn't matter how many great ideas Coke had upstream, or how many breakthrough combinations its product teams believed customers would probably like: Drink choice was limited by how many 5-gallon bags of syrup could be loaded into the machines.

LESSON 1: Across your demand chain, where are the chokepoints that are regarded as immutable obstacles to greater success? What do you need to do to turn the immutable into the flexible? How do you rethink your accepted approaches, delivery mechanisms, assumptions, and no-other-way-possible processes? Do you believe it's part of your job as CIO to be concerned with such questions?

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2. While Freestyle was born of close collaboration between Coke's R&D engineering team and its IT organization, the dirty little secret is that the Freestyle project marked the first time those two internal teams had ever worked together closely on a project. When you consider that the Coca-Cola company has been around for about a century, that is a shocking revelation. I've been around about a century myself, and it verges on the unbelievable that in these turbulent times, a company that's as successful and market-driven as Coca-Cola would never have locked the leaders of those two teams in a room and said, "You're all real smart, and whatever the reasons are that have prevented you from working together closely in the past, those days are over. Working together, you two can come up with and achieve things that neither of you could accomplish individually. Now get after it."

LESSON 2: How would you rate your collaborative performance with key internal colleagues like R&D or engineering or marketing or customer service? More important, how would your CEO rate that performance? You know that staying rooted in your comfortable silos and sticking with standard practices will *never* give you and your colleagues the collective oomph to conceive and execute true innovation, so be a leader and start making new connections that lead to new insights, new experiments, and new opportunities.