September 21, 2010

What can Governments and NGOs Learn from Coca-Cola?

The purpose of the TEDxChange forum was to promote public awareness of and support for the Millennium Development Goals (MDGs), which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. The MDGs are to be achieved by a collaboration of all the world’s governments and nongovernmental organizations (NGOs). The September 20, 2010 forum included a few speakers and a performance by Bajah + The Dry Eye Crew, a hip-hop group originally from Sierra Leone that is known for speaking out against political and social injustices. Melinda Gates, co-chair of the Seattle, Washington-based Bill and Melinda Gates Foundation, was one of the speakers and there are certain aspects of her speech worth discussing on this blog.

Mrs. Gates spoke about the worldwide presence of Atlanta, Georgia-based Coca-Cola Company, even in most underdeveloped regions of the world. This is in stark comparison to the items underserved populations are lacking such as condoms, vaccinations for curable diseases, and educational materials for malaria prevention and prenatal care. "Coke is everywhere," said Mrs. Gates. “In fact, when I travel in the developing work, Coke feels ubiquitous." Moreover, "Coke's success makes you wonder how they are able to get to these far-flung places." If Coke is so successful in delivering their product worldwide, "then why can't governments and NGOs do the same thing?”

Mrs. Gates explained that if the international development community wishes to achieve the Millennium Development Goals prescribed by the United States by 2015, “we need to learn from the innovators and those innovators come from every single sector. I feel that if we can understand what makes Coke ubiquitous, we can apply those lessons to the public good. Coke’s success is relevant because if we can analyze and learn from it, then we can save lives.” Mrs. Gates continued to explain that there are three things the international development community can learn from Coca-Cola: “Real-time data and immediate feed it back into the product, tap into local entrepreneurial talent, and they do incredible marketing.”

Coca-Cola takes immediate data to measure progress. This is different to development organizations where evaluation comes at the very end of the project and by then, it is too late to use the data. Mrs. Gates uses bowling in the dark as an example of the flawed system governments and NGOs use, “You roll the ball, you hear some pins go down, it’s dark and you cannot see which pins go down until the lights come on, then you see your impact. Real-time data turns on the lights.”

In order to reach distant markets in developing nations, Coca-Cola recognized that it had to change its distribution model that worked so effectively in industrialized nations. Observing that some people in Africa were buying Coca-Cola products in bulk and reselling it in rural villages, the beverage company created 3,000 created micro-distribution centers in Africa since 1990, which now employs 15,000 entrepreneurs. In Tanzania and Uganda, micro-distribution centers represent 90 percent of Coka-Cola sales.

How can governments and NGOs learn from Coca-Cola? "Governments and NGOs need to tap into that local entrepreneurial spirit as well because locals know how to reach the very hard to serve places and they also know their neighbors and what motivates them to make changes," remarked Mrs. Gates. She cites Ethiopia’s new health extension program as an example where the Ethiopian government noticed that so many people resided long distances from medical centers that prevented them from seeking immediate medical care. In 2003, using a similar model used in the Indian state of Kerala, the Ethiopian government trained 35,000 health extension workers to deliver medical care directly to the people in rural areas. In five years, this program increased the number of workers from one per 30,000 to one worker for every 2,500 Ethiopians.

Mrs. Gates continued to explain that "health extension workers can help with so many things whether it is family planning, prenatal care, immunizations for the children, or advising the woman to get to the facility on-time for an on-time delivery. That is having real impact in a country like Ethiopia and it's why you see their child mortality numbers coming down 25 percent from 2000 to 2008. In Ethiopia, there are hundreds of thousands of children living because of the health extension program."

With respect to marketing, Coca-Cola's successful strategy lies in localizing their brand and advertising on a country or region basis. I have witnessed this during my travels. Whether it is in Uganda, Brazil or China, Coca-Cola creates advertisements using local people and in the local language, which gives the impression that the beverage company is locally-based. Everyone knows that Coca-Cola is a large American conglomerate, but their marketing strategy reflects a localized feel to the product. Governments and NGOs need to incorporate similar marketing strategies whether it is condom distribution to eradicate AIDS/HIV or promoting sanitary behavior like washing hands after defecating or linking toilets to courtship like a northern India state did to save lives caused by dysentery. Mrs. Gates said that if governments and NGOs “begin to understand what people want in health and development, then we can change communities and whole nations.”

You can watch the Mrs. Gates' speech in its entirety in the video below or through this web link:

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