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SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Business Review. I'm Sarah Green. This week, we're featuring excerpts from an interview with Muhtar Kent, the CEO of Coca-Cola. He recently sat down with our editor-in-chief, Adi Ignatius. First, we asked him to tell us about his vision for the company after becoming CEO. MUHTAR KENT: One of the first things that I said to myself when I became CEO was we need a vision, a shared picture of success for 10 years down the road. And we called it, Vision 2020, a road map for winning together with our bottling partners, which called essentially for us to double the business in 10 years, i.e., do in 10 years what we've done in 125 years. Not something for the fainthearted but something clearly doable to become the best place to work to ensure that we created a shared wealth with all our stakeholders. And it required us to do things very differently to grow our core business and for us to continue to crack the code of growth. And we are in the seventh quarter now of that vision, so almost two years will be completed. And we got eight years to go. And we're on track. We're on track because our brands have got much stronger. The brand metrics over the last three years, we have not wasted this crisis. We created a transformation that we were able to generate over half a billion dollars of savings in unnecessary expenses and reallocate some of that funding to help fuel our brands for brand health. The metrics of our brands are much better, better than we've ever seen. We have long term investments with our bottling partners. And there's a great belief in the future, because we've been able to communicate to all concerned-- our people, our bottlers, our customers that this is a great business that still has tremendous amounts of growth. US business had not grown for the past six, seven years. And we were able to prove to ourselves that there's growth in this wonderful market in the United States. So first thing was to create a vision, start implementing that vision, and secondly, to start restoring growth to the United States. Those were the two big priorities for me. And both we were able to create that vision, start executing it. And last three quarters of last year, we generated organic growth in the United States. SARAH GREEN: But growth in the United States isn't something most major multinationals are pursuing. In fact, most multinationals now seem focused on growth in emerging markets. So we wanted to know, with more than 1,000 factories and over 200 markets around the world, why Coca-Cola still considers the US a growth market. MUHTAR KENT: Most people thought that we were trying to go to the moon with a glider when we talked about growth and the United States. They thought it was a oxymoron, growth in the US. This year that we're in, we invested $3.3 billion last year. This year, we'll probably invest more than $3.5 billion when it's done. And here are the reasons why. The US is a growing demographic. It's the only Western nation that has a growing demographic. This country is going to add at least 30 million people to its population in our vision time period, 10 years. Secondly, it's a diverse population. It's an enterprising, entrepreneurial population. Half of all skilled people that immigrate around the world come to the United States, half. So it's an influx of skilled people. It's an enterprising hat. More than 60% of the patents registered in the world are here, innovative population, diverse. And lastly, it's a giving nation, the biggest giving nation in the world. $300 billion dollars of giving takes place in the United States per annum. That's greater than the GDP of many big countries like Egypt and so forth. So all of that basically to me translates into an enterprising nation where you can grow your business with all the wealth that is still generated in the United States. So yes, we have our problems. But I still think this is a great nation where we can grow our business. SARAH GREEN: Of course, targeting different geographic markets isn't the only way to grow. Companies can always target an adjacent product category. With alcohol consumption on the rise, we ask Kent why Coca-Cola wasn't getting into the business of alcoholic beverages. MUHTAR KENT: Here's a simple reason. In the next 10 years in this vision period, demographics tell us any way you slice and dice it, there's going to be roughly between 800 to a billion people that come into the middle class in the world. You will have another 800 million people urbanized, the biggest urbanization the world has ever know. That means roughly a city the size of New York being created every couple of months in the world in the next 10 years. So new middle class on the go urban lifestyles translate into a significant demand for nonalcoholic ready to drink beverages. About 4% to 5% growth, just the industry will grow. And we're saying, look, this is such a beautiful business. Why would I want to lose focus? We believe in our business. Every morning when I get up, I look at myself in the mirror, and I say I'm very fortunate that I'm not selling refrigerators. I'm not selling real estate. And I'm not selling plane tickets. But I'm selling moments of pleasure at cents at a time billions of times a day. SARAH GREEN: All companies are under the gun on finding cleaner and greener ways to operate. But beverage companies are especially in the spotlight. They use a lot of water. And they deliver their products to plastic bottles. So we ask Kent how he reconciles the need to go green with a need to earn a profit. MUHTAR KENT: The beauty of some of these things is that they're actually very good for business too. When we say water neutrality, how do we achieve water neutrality for a company like Coca-Cola that uses currently 350 billion liters of water a year for its products for its business? How can you achieve that? Because water neutrality means you give back liter for liter what you use. That's the definition of water neutrality. You do that through three things, reducing the amount of water in your 1,000 factories. You do it through recycling the water that you give back to the cities that you don't need to put in your product that you've used. And thirdly, the two are not enough to get you to water neutrality. You have water harvesting projects for communities around the world. And you let someone else measure that for you, incredible NGO partner, which in our case is a worldwide life fund, to measure it for you. Now the great thing about this is that when you reduce water, your costs go down. So it's part of a great business philosophy. It's no longer anymore I want to say nice things, and I want to have a nice report. Similarly, plant bottle. No one ever thought you could make a PT bottle with the same characteristics for shelf life and other things that are costs from using partly plants. No one ever thought it was possible. And then part of our innovation generated a breakthrough. And by the way, for us, innovation is not only inside the four walls of the company. We have incubation projects many parts of the world because we think that the Coca-Cola company and the system is too big to have embryonic ideas flourish. So we have outside parts of the world innovation incubation projects. And this idea actually for the plant bottle came from India. It was an Indian breakthrough, part of our incubation there. And now we're able to use the waste of sugar cane more less, i.e., to create resin to blend with fossil fuel. And as petrol prices go up, the cost of virgin resin goes up. But now the blended plant bottle is actually going to give us a constant advantage. SARAH GREEN: But sustainability isn't the only challenge facing the beverage industry. There's that whole obesity epidemic. The soft drink industry has been getting hammered for producing what some people call liquid candy. So if Coca-Cola wants to be a good corporate citizen, why do they even make sugary drinks anymore? MUHTAR KENT: Well, the key in the world to have a better future is to collectively first define the problem. Collectively, I mean government business and civil society. We cannot as business solve these very big complex issues in the world like obesity, neither can a government on its own, and neither can an NGO on its own. But I call it the golden triangle of business, government, and civil society coming together closely can certainly have a better chance at creating solutions to complex problems. This is a complex problem. It is a problem where if you take all the innovation, all the work that we have done with our beverages, we've reduced the calories in our beverages significantly over the last 20 years. And at the same time in the last 20 years, obesity rates have gone up in this country, significantly. But at the same time, the number of steps that an adult in the United States, a young adult is taking has gone down from 3,000 to 1,000. So you're beginning to understand why this is such a complex problem. And what we're doing though is providing choice to the consumer-- products with no calories like the one you're drinking now, products with medium calories, products will full calories. For every single one of our main brands in the United States that we offer to the consumer, there is a non-caloric version merchandised effectively next to it. And I think that the only way that we're going to solve this problem is keep innovating non-nutritive natural sweeteners like Vitamin Water Zero which has stevia, which is a non-nutritive natural sweetener, but also ensure that we can be a very meaningful part of the solution, working closer with government, local, sub-national, as well as national, and with civil society. Choice is key. You cannot solve this problem by saying I'm not going to sell certain products, because they're many people that will still love to drink a full calorie beverage. And they have no connection to obesity because they exercise sufficiently. It's about knowledge. It's about the understanding of energy balance and a lack of understanding of energy balance that creates issues and problems. And therefore, we all have a responsibility to raise awareness of energy balance and raise awareness for the need for effective active lifestyle programs. SARAH GREEN: Finally, on the issue of leadership, we asked Kent how he had to shift gears after taking the top job. MUHTAR KENT: I would say not a huge shift, but one of the things that I've learned when I became CEO is you just have to be much more careful about the words you use, and how you use them, and when you use them. Because an organization sometimes just takes off and follows a word when you absolutely never intended that. So rounding off, speaking certainly not directive, but much in a more sort of general sense is something that I've learned from the first day on. Probably for the first two, three months, I wasn't aware because the language that you use as a CEO or head of international is not taken to be the sort of rule of the land, whereas sometimes the language you use as CEO, whether it's with a bottler, whether it's with town hall meetings, I learned is something that needs to be in a different context. And that's something that I learned the hard way. SARAH GREEN: That was Coca-Cola's CEO Muhtar Kent. For more, pick up the October issue of our magazine, get the enhanced edition on your iPad, or just visit hbr.org. We hope the conversations that take place on HBR.org will be energetic, constructive, and thought-provoking. To ensure the quality of the discussion, our moderating team will review all comments and may edit them for clarity, length, and relevance. Comments that are overly promotional, mean-spirited, or off-topic may be deleted per the moderators' judgment. All postings become the property of Harvard Business School Publishing