Model management: The case of Coke's CEO

Serious humiliation, setback, or consensus-oriented business as usual? Market watchers were divided in their response to the announcement that Coca-Cola was abandoning its $16bn acquisition of Quaker Oats. A five-hour board meeting in New York was followed by the news the company would not be pursuing the stock-funded deal that CEO Douglas Daft had originally favoured.

Critics seeking enlightenment were not helped by a bald statement released by the company in Atlanta, saying the board: "Expressed its enthusiastic support for the current strategic course of the company under Doug Daft's leadership as the best means for enhancing shareowner value". In the UK, when soccer managers receive such a vote of confidence from their chairmen, it is usually a sign that their dismissal is imminent.

However, Mr Daft can probably relax - for the time being. He has established a good reputation in the last year after taking over from his ousted predecessor, Douglas Ivester. He has impressed the markets with his clear approach to the business, his openness (admitting the company had not reacted well to a contamination scare in Europe), and obvious self-confidence. His agility and willingness to become a genuine global CEO was emphasised by his recent statement that the global HQ of Coca-Cola was wherever Daft happened to be at the time.

But such leading from the front can create its own problems. And now Daft faces the embarrassment of having to explain why, before he had properly cleared the acquisition with the board, he had apparently already posed for publicity photos with a smiling Quaker Oats chairman.

Embarrassing, perhaps, but humiliating? Not really. Daft had already established a genuinely collegial style of management on the Coca-Cola board, as other board members confirm. He was clearly open to persuasion and prepared to admit that he had made a mistake. The fact that Daft has such dignitaries as Warren Buffett, the 'Sage of Omaha', and Sam Nunn, the former US senator, on his board makes this a sensible as well as an effective policy. Tyrants of the boardroom press on with a decision even when all around them are trying to explain why it might be misguided. Enlightened leaders listen, change their mind, and act.

In fact, far from being a humiliation, isn't the decision of the Coca-Cola board an example of precisely the sort of resolute corporate governance omniscient commentators usually call for? Directors and non-execs didn't hide behind their papers, or save their honest opinions for the press. They spoke out in time, and helped avoid a potentially costly mistake. The fact that the French Danone has also pulled out of a possible deal would tend to confirm how sensible Coca-Cola has been.

So enough of the 'CEO as superhero' coverage, which builds leaders up only to attack them at the first sign of difficulty. Forget jealous sniping at Buffett that suggests he is the real CEO. If model corporate governance is what you seek, Coke is it.

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