Cracking the Code: Strategies for Achieving Growth Targets Amidst Consumer Complexity With Francisco Crespo

Speaker A: Foreign. Hello, everyone, and welcome to Masters of Digital Transformation, a podcast from AIM10X dedicated to uncovering the stories behind the world's leading change agents and the most valuable learnings from our community of global innovators. I'm your host, Caleb Masters, and as always, we're here to provide you with actionable insights from today's greatest thought leaders to guide and accelerate your journeys. In today's episode, we are closing out our fourth season with an interview featuring Francisco Crespo, the former Chief Growth Officer at the Coca Cola Company, to talk about separating planning from the execution of the plan to achieve growth targets, especially as we think about the new year ahead. We'll start by talking with Francisco about his career journey to becoming the Chief Growth Officer at the Coca Cola Company and and what exactly that role entails. We'll also cover the importance of combining integrated planning with focused execution to achieve growth targets, before discussing why increasing consumer expectations are adding to the complexity of today's growth marketing efforts. And then we'll close out the conversation by talking about how to overcome the hurdles of optimizing your business through revenue growth management opportunities. But without further ado, let's get to know our final guest of the year, Francisco Crespo. Francisco is a strategic executive and board member with global experience in strategy, marketing, operations, innovation, digital transformation, and M, M and A. In his tenure at Coca Cola, Francisco has had a wide impact across the company and its bottling system, managing large Latin American P Ls. And as chief Growth Officer, Francisco was the architect of Coca Cola's discipline of growth, an action oriented framework that doubled the company's growth rate and tripled Coca Cola Trademark's growth rate. Francisco, welcome to Masters of Digital Transformation.

Speaker B: Thank you, Caleb. It's a pleasure to be here.

Speaker A: Well, Francisco, I, uh, mean, as we said here, it sounds like you've had quite the career. How did you find your way into the role of Chief Growth Officer at one of the world's biggest beverage companies in the world? And maybe you could even tell me a little bit about what that role even entails.

Speaker B: Sure. I think, uh, I was very lucky. So I started in marketing, right? So I started having to figure out how to attach values and emotions to a brand in a way that it creates a love relation with consumers. And that was the beginning of my career and I enjoyed it very, very much. But then I was, uh, lucky enough to be invited to be a butler. So I was the commercial director for Coca Cola FEMC in Buenos Aires. And I had to figure out how those beautiful PowerPoint charts with strategy actually get translated into stuff that people can execute in the 3, 4 minutes they have in every account. And how does that really happen after that? I was a general manager for 15 years. I was general manager in Chile, chief operating officer in Brazil. I was the president of South Latin America, president of Mexico, which basically got me into how do I get cross functional teams to work together in a way in which they are debating the right questions and they are making decisions and learning from that as they execute. Uh, and then finally, as you mentioned, I was invited to be the chief growth officer, which basically meant that we put corporate strategy, marketing, customer commercial leadership, innovation and digital transformation under the same roof. And we had to establish from a corporate level what was the agenda for the company to grow. And then it is very different because I had been an operator, you know, the person, the kind of people that make things happen. And I was now the person that should help people that make things happen with a clear map, a clear framework, common ways of speaking and thinking about problems, learning, sharing across all the world and accelerating the process, enabling them to be even more successful. It was a beautiful journey. I enjoyed it every second. And uh, now obviously, uh, as I retired, I'm off to uh, new um,

Speaker A: Ventures, a very exciting chapter where you can kind of pass on all of the knowledge and experience you have to today's business challenges. But before we get to that, Francisco, what would you say is perhaps the biggest challenge that you faced throughout your career?

Speaker B: I, uh, faced uh, several big challenges. You know, um, but when you spend 32 years in a place you see a lot. And uh, I remember the first time that I, uh, was uh, confronted to a paradigm shift in the business. And this was in Argentina in 1995 when uh, you know, I studied, I'm an industrial engineer, so I studied the economics and I understood. And the logic is when you drop prices, volume, growth, right? That's what they teach you in university. Well, we were dropping prices and we were still losing volume and share. And the reason was that there was a paradigm shift in our industry. Big boxes, ah, the uh, likes of Carrefour, Walmart, they were enabling private labels. Therefore new small brand producers were coming from a pure price play and we needed to find a different way to compete. And that's exactly what we did for those days. We ended up a group of us inventing, at least for the Coca Cola company, what now is called, uh, uh, revenue growth management and right execution daily. And we did that not because we were smart, we did that because we needed to find a different way of competing and we needed to find differentiation, segmentation, smarter ways of establishing our portfolio and packaging and pricing architecture in order to create value for our consumers and collect that value for our shareholders. But then later on in Mexico when I arrived, these were the days with the heavy burden of, uh, obesity and uh, uh, sugar tax. And I had to figure out how to reinvent the business model. How to reinvent, rather than going after volume and going after a share of the consumer stomach, how could we go after transactions and a share of consumer interaction and making the sizes smaller and uh, with less calories or no calories at all today, uh, more than two thirds of the Coca Cola company's portfolio is no calorie or low calorie. And that is a transformation that we initiated seven, eight years ago as we realized that we needed to act in a different way. So it is fascinating because when you spend quite some time and you're curious about what is really happening and you accept that maybe the answers that work today are not going to work tomorrow, you learn a lot and you realize that you need to change, uh, the definition of success a few times. You're still in the same business, but you just have to figure it out in a different way.

Speaker A: The demand you lay out there. There's two different examples are radically different demands from consumers or from a business perspective, how are you able to approach building out mechanisms of collaboration between the different functions for your growth operations? Because I imagine in both of those scenarios you just outlined there, those are very different challenges that required a great deal of collaboration across functions.

Speaker B: Yeah, yeah. I think that goes directly to the, the big question of integrated business planning. In my life, if I have to summarize the few things that I've learned, I very high on that list would be society has progressed by collaborating at scale. And that is a capability that the companies that do understand do it better than anybody. The second dimension is applying the scientific process is what really creates progress. So when you do those two things, large collaboration, applying the scientific process, that's where you get magic. Those are the companies, the institutions, the, the governments, the uh, societies that have succeeded. They do those two things in incredible ways. But we would have lawyers and scientific and regulatory affairs and all kind of people in the innovation meeting. Maybe the innovation people, the research and development people, the marketing people had a larger thing to say about it. But we would hear all the voices and we would make sure that we were making decisions. Because the only thing that moves organizations forward is making a decision. And acting on it. You go about it and you go with open eyes, learn about it and come back again with the team and learn what, what, what is new, what is better, and what can be improved. And that is something that requires culture, leadership, and, uh, for sure, a lot of people rowing in the same direction.

Speaker A: I think that's just outstanding, the fact that you're able to foster that sort of culture of collaboration to overcome these really unique business challenges. Because, again, as you've already said, there's not one success. You have to reinvent what success looks like in each different scenario. And on that note, what would you say is perhaps one of your proudest achievements that, uh, you've had in your career?

Speaker B: I could answer this question in different ways. On the packs and reshaping the business. It is existential. When they come out and the president of Mexico in national TV says, I'm putting one peso per liter because sugary drinks are creating obesity, the first thing you do is you go to the facts and you realize that the glass. Glass, including milk, juice, a lot of stuff, not only the glass of Coke, the glass of everything. Coke is just a part of it and not even the largest part of it. Your reaction is, this is not true. I have to confront this lie. But then you realize that this is the burden of leadership. You are, uh, a leadership company, and what is expected of you is to be a disproportionate part of the solution. And when you finally embrace that, and it takes time to embrace that, you change the way you think, um, and you start thinking, okay, I'm not going to try to show the facts to people that don't want to listen about them. I'm going to try to show them that we are really walking our way. And then you start putting all your innovation and your marketing towards nudging consumers into lower calorie. No Calorie products. You start making your packages smaller so the amount of calorie intake is smaller, and you start putting a big part of your ESG agenda behind projects that educate new kids in the proper habits. And then you start seeing a new universe of growth, a new universe of possibilities. And I think those rank in the top, for sure. But, um, one that is a selfish pride is as, uh, I went through different operations. We were lucky enough to have our name associated with at least five woodroof cups, which is like the best in the world for Coca Cola. I had the opportunity to do that when I was in Brazil. I was a part of the team that received that award I won it with the team twice in South Latin America as I was the president of that business unit, uh, and as I was leaving, the exact year that I was leaving to Mexico, they got a third one. And then in Mexico, as I was given the job to go and take the chief broad office, uh, Mexico was awarded that. And that also makes you feel like uh, part of something that is world class, part of a team that is doing things to the absolute best. Not just good, but the absolute best.

Speaker A: Your track record for working with the most exceptional teams, that sounds like just uh, a real honor and uh, exciting once in a lifetime opportunity. You're talking about a couple of different things related to brand there. And I'm thinking a little more about Coca Cola as a brand. We're heading into the holidays. Obviously you have the big iconic Santa trucks riding into town, at least here in the United States that I see on, you know, on the Internet, on tv with Gen AI, uh, generative AI sort of taking off and dominating the conversation. What do you see as the future of brand building for major companies like Coca Cola?

Speaker B: It is very clear that once again we are in a substantial paradigm shift. On one hand, venture capital had brought a huge array and appetite to fund and help and support new fragmented ideas. So you have all these array of new brands offering new stuff, new functionalities. This is not about price. This is about functionality and innovation. And it is happening at a speed that you just cannot believe. Companies are learning that they need to do what I call dual transformation. They need to continue to make their business marginally better, slightly better every day. But they also need to put a few big bets on transformational changes. Something that can veer into a new universe of business for them, even at the expense of cannibalizing some of the good business they already have. But they just cannot do the ostrich and put the head in the ground. But that's not the only big change. The other change is consumers now have as much information as you want and they can study before making a decision. They can learn about your product, their options, where to buy it, what is the right price. And that is changing everything. And it's only going to change more because I think AI is going to empower consumers much faster than it's going to empower companies. And you're going to have AI empowering consumers at an incredible speed. They're going to get smarter and better at asking these questions and screening down what are the decisions going to be. That just calls for a different way of engaging consumers. You Know those days in which you just did an ad in the super bowl and you sent these massive trucks to deliver in supermarkets? Well, you will continue to do that, but that is going to be now a significantly smaller portion of success. Success is going to be now much more on how do you earn the right for consumers to trust and share their information with you, share their desires, share what they are looking for, what is important for them. And the only way to do that is to give something in exchange. And what you need to give in exchange is not money, because money doesn't solve every problem. You need to deliver more relevant and, uh, customized and personalized content, products, innovation experiences. The companies that are learning to do that faster are getting traction. The ones that are tied up in defending the past, they are suffering, they're struggling because the past is not the future. It is there to be slowly downsized. It will not disappear. This is a little bit like radio. You know, TV came, radio didn't disappear, but there was something new. Internet came, TV has not disappeared, but it was something new. The share of the pie significantly changes.

Speaker A: I think that's a great analogy, uh, between the tv, radio and the Internet. I think this is actually, uh, a good time to really start to shift gears into more the topic focus today, which is separating planning from the execution to achieve growth targets in this business environment that you've just so eloquently laid out for us. From your perspective, Francisco, how has the demand to combine integrated planning strategies, you mentioned those earlier. With focused execution become even more essential in the current business environment?

Speaker B: As you bring the silos together, new questions emerge. How do you do the handshake? Right, because bringing the silos together doesn't mean chaos now. You just have access directly to the person that can help you, whether that is, uh, consumer insights or new formulations or digital knowledge or whatever it is, what is getting significantly more complex? And the companies that are figuring out they're getting traction, the ones that are struggling, are only creating horrible confusion for their employees. Whoever does the plan cannot be the one that executes. And that's easy because you have two questions. The first question is, is my plan good? And the second question is, is my execution good? If you have those two questions mixed together, you will never find an answer. And if you have, uh, the same team answering both questions, they will choose one day to answer one way or another. So at the end of the day, you need people that are planning, they are getting the best analytics, they are getting the input from the people that execute. Because after all the people that execute understand what happens out there. So you need to get their input, they need to feel a part of it. They need to feel that they were able to shape and put their digital prints in the plan. But you know, they, they're focused on, on making it happen. It's a different question, right? Uh, if I, if I say that the plan is to have a Coca Cola bottle for 50 cents, then I don't need the people that execute, I just need them to be, to tell me that it is a good plan, that that will make a huge difference. But after that they need to continue to execute. I need to go and find the people that understand cost, how can I get to that cost structure, the people that understand packaging, the people that understand freight, the people that understand a lot of the supply chain to help me answer the question, and then the consumer people to ensure that the way I'm doing it is reasonable for consumers. Now when you put that in the market, the next question is about execution. What is the coverage levels I want to, what is the share of visible inventory that I want? What is the price compliance that I achieve? And is this being executed in every way, the right way? So if by any chance I am getting, uh, 20% coverage and the objective of distribution was 80%, then I cannot say that the plan is bad. I can say the execution is not at the level we set. Now on the other side, If I'm executing 100% of what was asked for me and everything is there, distribution, 99% price compliance, 99% share of visible inventory, you know, I'm achieving everything that is execution and the plan is not moving, then the plan was not good. The premise of the plan is broken and I need to go and learn something. So that is the easy one. The ones that get a little bit more complicated is how do you connect in an integrated fashion and way platforms, because now you have to build capability platforms, right? It doesn't make any sense for every country to have their own digital, uh, factory or have their own analytics factory. There are things that you can scale up. Uh, but how do I ensure that the people, these nimble agile teams that are in the field are getting enough, uh, agility and fast response from these teams. And that's where I think companies need visibility. Because visibility is what helps bring everybody together. When you have visibility of what was asked at, uh, which point was asked, did it hit all the criteria for the question? When was it responded? How fast was it? Did it deliver on every criteria that was asked? These are the New metrics of connections for platforms and companies to start, uh, thinking about how to bring in together work rather than splitting work in pieces and then, you know, hoping that in the year end party, uh, everything is rosy for everybody.

Speaker A: Now that we've talked a little bit about the role of ibp, how exactly would you define revenue growth management?

Speaker B: Francisco I think revenue growth management is about ensuring that you have a healthy balance in how much value you create and how much of that value you collect. You create value through innovation, through branding, through making your brand clearer in consumer heads, through execution, through delivering better experiences for your consumers in the market. And that needs to be connected to how you collect value. And you collect value through share premium. So having more share than other brands, price premium, having a higher price than other companies, and positive cannibalization by shifting uh, pockets of demand places where they are receiving more value and happy to pay more for that value. If you don't create and collect in a balanced way, bad things happen, right? If you're just creating, creating, creating, you're not collecting, you're leaving money on the table and eventually you're not going to have enough funds to cycle because you need money to invest in innovation, in branding and in execution. But on the other hand, if you're milking the business, if you're just collecting, collecting, collecting beyond what you have created, then eventually consumers are going to get pissed off and they're just going to leave you very, very fast. What I normally have done is ensure that you understand not only cost structure or the demand curves, you know, what is the elasticity, cross elasticity between categories, but also that I understand, what am I trying to build? Revenue growth management cannot be just about numbers, it is about strategy. What are you trying to build? What is the key occasion where you're trying to bring more consumers to do more rituals and be willing to pay more? Those three things go together. You cannot just answer the third one, how do they pay more? Premiumization sometimes is used as a shortcut for revenue management. Yet this has to be a strategic answer. More and more through all these AI and analytics, uh, and the power of computing that we have. And obviously AI is simplifying because they then it can answer a lot of questions. There's a difference between data, which is just data and an insight, which is something actionable. Data is being transformed into insights and as you get the insight those need to be feedback into. How are you doing your packaging and pricing architecture? How are you doing your trade turns? How are you aligning the uh, different elements that need to participate in the experience that you're delivering. That takes me to the final point I want to make which is you have to accept this as fluid. This is not an equation. You do once and then you go to party. You have to be accepting that competitors are going to react, new categories are going to emerge, retailers are going to have new pressures on their side and new appetites on their side. And you need to be willing to have an architecture but then manage with some rules of engagement for the forces to go to a healthier place. And that requires understanding that this begins with strategy. It is executed through a lot of analytics around the uh, demand curves and elasticities. But then you have all the rules on how to manage the fluidness of it and you continue to learn and adjust uh, with the uh, strategic goal not of maximizing revenues today but, but of maximizing the value of your franchise in the future. In today's world everybody is learning. The question is not if you're learning, the question is if you are the best and fastest learner than any other competitor.

Speaker A: You mentioned uh, the difference between data and insights and having an IBP plan and process uh, to sort of enable these discussions, uh, you also referenced AI. So I want to bring a couple of different things we've talked about today. Full circle here before we start to wrap up. When you think about the technology that's out there and the demand you're seeing from consumers, what sorts of functionalities have you seen in these next generation either IBP or RGM tools that can help businesses solve for these growth challenges that they're feeling?

Speaker B: The obvious one is human brains can manage a very limited amount of variables. When that is the limitation then you have to choose the variables that are at hand which are probably inward looking. But uh, now there is available not only the, the variables that you keep track of but variables outside from the environment. And if you have AI on your side you could expand the way that you are taking into consideration how these variables are affecting what is next, what is coming your way and what needs to happen to, for, for you to take advantage of it or shape. There's a company in which boredi serve that basically takes these uh, data from social media, weather huge amount of places and is uh, helping convenience stores figure out how to make their offers smarter. The AI is bringing this beautiful uh, ability to bring fresh ways of customizing and personalizing how information is managed and how it gets turned into insights and insights into action that brings better experiences to consumers. Companies need to accelerate the speed at which they bring the human factor for the brilliant human decisions. But they don't keep the human bias in. All the things that humans do with really a lousy average, you know, uh, sales forecasts, uh, analyzing specific store uplifts because you have a, uh, game or a festival today is easier for a AI system to spot than even to the manager of that store. Now a human can figure out if it fits the brand architecture, the brand purpose, if it is done with the right values. Human still has a huge thing to do, but doesn't need to be doing all these transactional things. These are transactional things analyzing just broad, large sets of data.

Speaker A: The future for revenue growth, management and opportunities are certainly there. Well, Francisco, we are about out of time, but before we wrap up, I just wanted to give you a couple of final words. There's a lot we talked about today, everything from increasing consumer demands to IBP and then ultimately bringing it all together through AI. For our listeners today who are making their plan for the new year or they're trying to figure out how to optimize the resources they already have, what parting words of wisdom or closing thoughts would you like to share today to sign off?

Speaker B: Oh, that's so hard. It is always good to stop and reflect at some, uh, point before you run into doing what you do every day the same way. I remember when I was, uh, you know, when I first got my president of Business unit job. I didn't discover that until some wise man told me, you need to block at least two blocks of two hours in your agenda because it's already crazy and too many hours and write it nothing and actually try to do nothing. You're not going to be able to, but probably you're going to go back and read that report you didn't have time to read or revisit that presentation. As you go to the new year, avoid the, the uh, momentum to, to drive you through another years that is exactly the same. Secure, uh, some space for you to reflect and think, uh, what can you do different to expand your impact.

Speaker A: Great advice, uh, especially as we start to wind down for the holiday season. Francisco Crespo, it's been such a pleasure speaking with you. Thank you so much for joining us.

Speaker B: My pleasure, Caleb. Thank you so very much.

Speaker A: And um, thank you listeners for tuning in to today's episode featuring Francisco Crespo and the former chief Growth officer at the Coca Cola Company. As I mentioned at the top of the show, this is the season four finale and also our final episode of 2023 this year we've had the privilege of speaking with seasoned and esteemed executives like Francisco Today, but also Rhonda Vitieri, Gregory Pulser and Vinit Khanna, among many others, as well as aim 10x community members like Tracy Allen and industry influencers like Peter Bolstorf and Ryu Palmaru. We'll be back in 2024, but in the meantime you can catch up on any episode you missed for the unique insights we discussed by following Masters of Digital Transformation on your preferred podcast app. And hey, if you've learned anything this year at all or you've enjoyed the show, please make sure to leave us a rating and review on Apple Podcasts or Spotify to help us get discovered by more listeners just like you. And for more AIM10X activities or learning opportunities, make sure to follow 09 Solutions on LinkedIn. As we close out this year of Masters of Digital Transformation, I'd like to leave you with this thought from best selling author Andy Andrew as he's speaking about why it's important to finish strong. No matter who you are or what you do, embrace the challenge to first start with the goal to finish strong. Thank you so much for joining us in season four. We'll catch you again in the new year. Have a happy holiday season. Mhm.