ATLANTA — “Innovation, in my simple language, is anything new that creates value,” said John Murphy, president and chief financial officer of the Coca-Cola Co. “And, so, I think when you take on that mindset, you have the opportunity to apply that kind of thinking into all aspects of the business.”

Mr. Murphy discussed the Atlanta-based beverage company’s approach to innovation during the Redburn Atlantic CEO Conference on Nov. 28, noting, “When it comes to the portfolio itself, it’s really important to be clear as to what it is you’re trying to accomplish. What is the role that you want that innovation to play?”

He offered as an example Coca-Cola Creations, a series of limited-edition takes on the namesake soft drink that tap into various concepts such as artificial intelligence and the metaverse.

“Coke Creations is not designed to be a massive volume add to the portfolio,” Mr. Murphy said. “It's designed to create new news, that's designed to attract and bring in new users into the Coke franchise. And we've seen a lot of good results from the various iterations we've had over the last couple of years.”

Mr. Murphy also shared insights on Coca-Cola’s expansion into the ready-to-drink alcohol segment through partnerships with companies including Brown Forman Corp., Pernod Ricard, Constellation Brands and Molson Coors to develop spiked spins on brands such as Sprite, Fresca, Coke and others.

“It’s still early days,” he said. “We're excited with the long-term opportunity that's ahead. But one of the things that certainly I've learned over the years is that it takes a long time to build scale positions in new categories. And you've got to bring a degree of what I call impatient patience to the process. And we're in those early stages at the moment and happy with some of the roots that we're planting.”

Successful innovation requires discipline, he said, acknowledging “it may sound a little bit paradoxical.”

“I think over the last number of years, we've elevated our own capabilities to drive much greater discipline around what gets into the pipeline in the first place and why,” Mr. Murphy said. “And then how do you take it through the pipeline and into the market. We have much more robust metrics to constantly evaluate the performance of the various innovations that we're driving. We look at our performance over multiple quarters now.

“We understand that … typically in innovation to have the probability of survival, it needs to be flourishing through the first few quarters. So, we have a very clear understanding of what's working well and what's not.”

He added, “You don’t get it right all the time. The failure rate in innovation is actually alarmingly high. And I think the name of the game for companies like ours is to have our batting average well ahead of the industry average… We’ve had some really good progress, and yet it’s a game that demands constant invention and reinvention, constant understanding of what’s happening in the marketplace.”

He recalled five years ago when Coca-Cola “had a view that kombucha was the next great category and made some investments … to try and get ahead of the curve.” Back then, the company acquired Australia-based kombucha maker Organic & Raw Trading Co. but ceased operations last year.  

 “… that trend did not take off the way we had expected,” Mr. Murphy said. “So, you don’t get it right all the time, but you can’t allow those failures to prevent you from continuing to try. And I think the spirit that we have across the enterprise, and indeed with our bottling partners, too, is to innovate intelligently with discipline. Be prepared to take risk, and know you're going to fail some of the time.”