Moments of Pain & Glory: Bill Johnson, Coca -Cola

SSON Editor

Coca-Cola Enterprises Inc. won the award for Best Mature Captive Services Delivery at the 13th Annual North America Shared Services Week. Bill Johnson is the leader of the Global Finance Shared Services organization which is comprised of 1,400 employees and includes a captive delivery center in Tampa, Florida and outsourced services in Guatemala City, Guatemala, Chennai, India, Krakow, Poland and Hot Springs, Arkansas. Bill has worked in the Coca-Cola bottling system for 27 years in a variety of field based financial roles.

SSON: First of all, Bill, how long have you been leading global finance shared services at Coca-Cola?

Bill Johnson: I started leading the shared services organization in 2001 - I was the first employee - and it became a global operation this past October [2008]. When I began we were very decentralized: we had 27 F&A shops around the country, and at the time I was the CFO for the state of Florida, and they wanted to take someone who’d led one of the F&A shops to lead Shared Services, and I was asked to do that. We ended up in Florida by coincidence; we wanted to put the SSO in one of the existing markets where we had a presence. So that’s why we came to Florida, not because I was here.

When we started recruiting, obviously we recruited fairly heavily from the staff I already had here in Florida, and then built onto that, basically; we did a lift and shift in waves beginning with A/P, followed by payroll, GL, fixed assets over a period of years. We completed all that in 2007 and then embarked on a study - because we’re a global company (when I say that I mean all of North America and a large portion of Western Europe) - as to how to take a global strategy.

So we shifted gears in early 2007, and put together a business case for a global service delivery model - which was really moving towards more of a hybrid model, partially outsourced and partially captive - and when that business case was completed and we had signed an outsourcing deal in October of last year I was named Global VPO of Shared Services. Basically that’s how the center has scaled over the years and how my own role has scaled along with it.

SSON: Were there ever days when you just felt like throwing the towel in? There must have been times over the last eight years…

Bill Johnson: I never felt like throwing the towel in - but there was a significant amount of pushback and opposition, and a lot of malicious compliance. Our situation is that we have an executive mandate. Our CFOs - one at the time in 2001 who retired in 2004, and our new CFO right behind him - were both committed to the Shared Services concept; the one who started it knew it was the right thing to do, and supported it, while the next gentleman - who I report to now - was even more committed to developing and growing the concept. So we had a mandate, and people were advised - in a nice way! - to come on board with it, but we had a lot of malicious compliance.

People weren’t happy with the same kind of things you hear from everyone else: we’re changing the face of the company’s finance function. That was the frustration: people - and of course I try to put myself in their position - not understanding why we were doing this, or understanding it but not liking it. You know, people were losing control, losing power; there was quite a bit of turf involved, and people only remember - or think they remember - their own version of events, of how well they ran things when they ran it. But every time you move a function you’re going to break some china… Most of the disruption was caused by people from end to end on the process getting accustomed to their new role.

SSON: How easy is it to get buy-in at that point? How did you achieve it.

Bill Johnson: Some people fell in line right away when they understood what we were trying to do, and the implications to the company’s financial results and the stock price. Other people maybe had spent their whole careers being controller and wanting to run all these functions, and to them that was the job of a controller rather than being a business partner to the commercial side of the business, which is their new role… For some people it was easy and for others it took forever.

A lot of people said publicly that they were on board and then their actions spoke differently. At the beginning the resistance was a lot and then after about two years it really started to wear down. There are still people out there who can’t believe, or can’t accept, that it happened. And the point that I’ll tell them is it’s not about our company, or even our industry: the accounting profession as a whole is experiencing this transformation.

I’m involved on the advisory board of the University of South Florida - one of the largest accounting schools in the entire country, with the number-one pass-rate on the CPA exam actually - here in Tampa, and I speak with the students every year. Basically I’m telling them that the role of the corporate accountant, and the nature of that career, is different from when I came out of school three decades ago. It’s a change-management exercise: really getting people accustomed to the fact that not only is the company’s finance function changing in the way it conducts itself, but the accounting profession itself is undergoing a radical transformation, and getting people to open their eyes and adapt to that rather than complain about it.

So I never wanted to throw in the towel but there were times when I was significantly frustrated that I didn’t want to open my email, or would cringe whenever I did open an email or get ready to listen to a voicemail, because I’d be "ok, who’s going to be complaining about what next?" There was always some crisis, real or imagined - usually imagined - and it usually arose from somebody at the front end of the process not exercising their responsibility, and because we’re the last stop in the process it gets blamed on us. Usually it’s around payroll… Someone fails to enter time correctly, and an employee’s paycheck is wrong. But people forget the checks were also wrong when they owned the process - but they could run down the hall and issue a manual check, and keep it quiet…

SSON: Because you’ve gone through those changes, what advice would you give to people who are finding it a struggle - perhaps at the beginning of setting up a center, or looking at outsourcing?

Bill Johnson: Two big pieces of information. First would be to benchmark where you are, and do a tremendous amount of data mining and gather a lot of history around the metrics of the processes that you’re going to move: error rates, efficiency throughput - mostly error rates, defects etc. Get a tremendous amount of historical data, as far back as you can go - although obviously the more recent will be the more important - and then measure that same data as you move forward. Because information is king. You’re controlling things when you’ve got the information - because when people start throwing their arms up and saying "this isn’t working!" you can say "well, here are the facts!" I’ve never once seen a situation where things got worse in terms of execution after we moved.

People conveniently forget what happened when they had it - and typically your best hope is to do it roughly as well as they did it, when you first move it (you may have a few hiccoughs) and then pretty quickly you get to a situation where you’re doing it better than they did it. Once again, gather information at a very granular level, make sure it’s accurate, and make sure the people from whom you’re taking the work see it - publish it on the front end.

The second thing is, invest - no, over-invest - in change-management resources, in professional change-management people. Don’t take one of your staff, who used to be an accountant or a payroll person, and change them into a change person. Invest in a change resource: either hire one or two of them or invest with a consultant. If you’ve got the information and you know what the results look like, and then you’ve got the ability to reach out and touch all the stakeholders at the right frequency using the right media, and it’s consistent messaging - over-communicate, over-communicate - you’ll be fine. We didn’t invest that much in change-management at the front end, and so the first 24 months were the most stressful 24 months I’ve ever had in my career.

Keep in mind - and I don’t know how much you know about our industry - I’m in the bottling industry, and when I joined the company in 1981 there were 1300 independent Coke bottlers around the country. Each town had a Coke bottler and each bottler had an accounting shop. Since that time we’ve been on a constant path to consolidation, so I’ve spent my entire career closing and consolidating accounting shops. I hadn’t been a true shared services person because I didn’t adopt the constant measuring and benchmarking and customer services focus until 2001. But I have a tremendous amount of experience in consolidating shops and moving work. The difference is communication in change, and measurement and benchmarking. If you hold the information and you communicate it, you are in a position of strength. You need to control the message rather than letting it control you.

SSON: When you look back at this long journey, does it always feel like it’s worth the time, effort and energy?

Bill Johnson: Oh, absolutely - because you can see your results reflected in the company’s financial performance. You can see real tangible benefits. Every year, every six months, we’d be doing more work - we were continuing to acquire bottlers all the time - and we’d be doing it with fewer people. This was happening every month, and month-in, month-out, you could see the results and know the impact this was having on the company’s bottom line.

The point is that you’re reducing cost on a non-core function which the company can then turn around and reinvest back against the core function: the company’s brands. So I always felt that even though we were not connected any more with commercial decision support, we’re contributing overall by reducing the overall cost-base on a non-core function, and freeing up critical capital for investment elsewhere.

So yes: I get a tremendous sense of accomplishment out of it, because of the reduction in costs - and also for delivering some new tools: we brought workflow to the company for the first time; an automated T&E system where we got emails saying "this is great! I’m no longer running around with a bunch of receipts and filling out paper"; lots and lots of tools that we brought as a result of the shared services consolidation that have improved the quality of life for people on the front end of the process.

SSON: What has been your best mistake in terms of learning?

Bill Johnson: Our biggest mistake?

SSON: No, your best mistake: the one that best taught you a different way of doing things or showed you a different path.

Bill Johnson: Probably - and this goes back to my initial comment - not investing enough up-front in gathering benchmark data. We just felt like we’d move it and lift it and shift it and everything would be fine. Not mining the data and getting the benchmark in the current state prior to move was a mistake: we did a little of it, but not enough. Everything else we did well: we documented the processes to be moved well, we did a decent job of ramp-up and knowledge transfer and knowledge capture and all the nuts and bolts of the project management we did well. I’d say not getting enough of the prior-state metrics to give us an idea of how our performance was, to be able to monitor.

SSON: And on the other side of the coin, if you had to implement the center and develop it again to the capacity that it is today, is there any step that you think you could skip next time round?

Bill Johnson: I can’t think of anything. I mean, we moved pretty fast - we moved A/P from 24 locations in 12 months, we moved our GL shops in 18 months - and I can’t think of anything we could have skipped. Like I said I would have put a little more focus on certain areas, spent a little more time in other areas, but I can’t think of anything I’d skip.

SSON: We’ve moved into troubled times economically over the last year: has this had a massive impact upon your center and has it made a difference to the way you operate?

Bill Johnson: I would say there’s been a tremendous amount of focus across all industries in terms of operating costs - especially costs that are non-core to the company’s products - and ours is no different. And this plays to our strengths: controlling costs is our mindset, it’s what we do. So I can’t think of anything that’s happened in the external environment that would impact how we go to market, other than that it’s reaffirmed the company’s commitment to what we’re doing in consolidation, transformation of processes, looking at where and how work is performed.

SSON: What do you think made the judges pick you guys out as being the best mature center?

Bill Johnson: I’m not really sure.

SSON: Oh come on - no need to be modest!

Bill Johnson: I probably put way to much detail into what I submitted to the competition - but I wanted to capture what we’d done. I felt like we’d been pretty good students of how to build one of these things. I get most of my benefit from attending conferences and small consortiums and staying connected with my external peers. I think one critical thing is that when you move into a shared services role, your peer-group is no longer internal to your company, and so it’s really critical to connect with people across industries, external to your company who are in similar roles, whether in the public or private sector.

I’ve connected with a lot of these people and everyone I’ve met, I’ve learned something from and taken away from. I’ve met people who are starting brand-new centers up that I’ve learned things from that have played a tremendous role in what we’ve done. I think it’s really been being a student of a relatively new, immature concept - shared services has only really been around seriously for the last decade, although it was around in a less mature way for maybe the decade prior to that - and learning from the pioneers, the GEs of the world, the Procter and Gambles of the world, a lot of fabulous companies that had been out there doing this; meeting with their leaders and learning from them; going to Shared Services Week, and taking our people there.

It’s not like you can take an MBA program at a school offering a specific major around shared services. Having been a student of what everybody else has done, we learned what makes a successful center; and then adopted those things - and then I included them in our submission, because I knew what great examples we had. I would think one thing that probably stood out is our formal governance structure that ties directly to the C-level, as I report to the CFO. There’s a formal committee, and we have a business case; we do value-management of our results back against that business case. There’s a lot of discipline, a lot of rigor around the strategic piece of it; and then we’ve adopted a lot of the tactics that everybody else uses. We’ve invested a lot in emerging technology, which I’m sure was very helpful. But we learned all that from other people.

SSON: And finally, Bill, what legacy would you like to leave behind from this role?

Bill Johnson: The legacy I’d like to leave is a sophisticated global delivery model that provides quality transactional services at a low cost, but whose focus is primarily upon the delivery of thought and knowledge-based services, and taking that same approach - basically setting the stage to continuously drive down cost but improve the level of service every year. Setting a plan in place that will allow us to improve service levels for the next decade, while reducing costs for the next decade.