Coca-Cola exec: In Africa, “incremental” innovation just as important as disruptive change

Alexander Cummings talks microdistribution, water conservation, and investment at MIT Africa Innovate Conference

April 17, 2014

It’s a common practice for Coca-Cola executives to share recent commercials during presentations. As one of the most successful and recognizable brands in history, Coke ads are guaranteed crowd pleasers.

   Coca-Cola Chief Administrative Officer Alex CummingsCoca-Cola Chief Administrative Officer Alex Cummings

Alexander Cummings, executive vice president and chief administrative officer of The Coca-Cola Company and a native of Liberia, shared two commercials during his April 12 talk at the MIT Africa Innovate Conference, held at the MIT Media Lab. Both demonstrated a marked optimism about the region. In one, children sing “I love you, Africa!” while text proclaims there are a “billion reasons to believe in Africa.”

“While the world worries about the future…” the advertisement reads, “1 Billion Africans are sharing a Coke.”

Cummings, who served as president of the company’s Africa group until 2008, discussed Coke’s corporate investment on the continent—$10 billion invested in the African market over the past ten years, with $12 billion more planned for the next ten—and touted “incremental” innovations in distribution and other endeavors, calling them as important as disruptive innovations.

“We think about innovation very broadly,” Cummings said. “It can be transformational, or it can be incremental, and we need some of both. While we focus primarily on technology when we think about innovation, [Coca-Cola] thinks about it across our system: process innovation, product innovation, [packaging], equipment, innovation in marketing, advertising, [and] how we connect to our consumers.”

Coca-Cola has a staggering global impact: 17 products with sales of more than $1 billion a year; 10,450 servings of the company’s products consumed every second; operations in every country in the world except North Korea and Cuba; and bottling plants in nearly every country where their products are sold. Cummings said consumers can travel to some of the most remote places on earth and find Coca-Cola products for sale. In Africa, the company is the largest consumer product employer on the continent and bullish on the growth of the middle class and the African economy.

Cummings shared some examples of incremental innovations in Africa, including the development of EKOCENTER kiosks that provide safe drinking water, electricity and communications and, of course, Coke and other products for sale. The EKOCENTER program began in South Africa in 2013 and is expected to expand to 20 countries in Africa, Asia, Latin America, and North America, with 1,500 to 2,000 units operating by 2015.

In East Africa, development of microdistribution systems, often run by women, take Coke where traditional trucking is impractical. These small businesses bring products “the last mile” to remote villages by pickup truck, motorcycle, and bicycle, Cummings said. The program has since spread elsewhere in Africa and has been implemented in India and other regions.

“Everyone on the supply chain makes a buck, makes a living,” Cummings said. “Capitalism works … no matter how beneficial the product is, people won’t do it for free. [Microdistribution centers] have been very successful—an example of innovation that’s not disruptive, but an innovation, and an important one.”

Cummings said Coca-Cola is “maniacal” about water conservation in Africa and runs its own wastewater treatment facilities there. The company partners with non-governmental organizations and the likes of the Gates Foundation on projects ranging from water conservation and education to sharing distribution expertise to increasing access to medicine in developing countries.

During a question and answer session, conference attendees asked whether Coke can and should do more in Africa, considering the breadth of the company’s business on the continent.

“We can always do more of everything, including giving back,” Cummings said. “Of all geographies in the world, we do the most in Africa from a philanthropic perspective. The push to do more is welcome, and we’ll try to do the best we can, but we also make no apologies for being a for-profit company. We do subscribe to the point of view that we can ‘do well’ and ‘do good’ at the same time. We want to do both.”

Even the EKOCENTERs, he said, are for-profit and provide a margin for operators.

“Everything we do has to have a margin so we can reinvest,” he said. “We will give them a jumpstart, perhaps. We might give them a piece of equipment, we might give them a first consignment of product on favorable terms on credit, or we might donate it. We can’t just write checks, it doesn’t work. We very much believe in the for-profit model.”