The Real Essence of Business

The Executives’ Club of Chicago
Chicago, Illinois
November 20, 1996

Remarks by
Roberto C. Goizueta

At The Coca-Cola Company, our publicly stated mission is to create value over time for the owners of our business. In fact, I would submit to you that in our political economic system, the mission of any business is to create value for its owners.

Usually, wherever I go, people are full of questions for me. Today, I am here to ask you one simple question: Why should company managements focus so strongly on creating economic value?

Why shouldn’t the mission of business be to produce something? Or why shouldn’t it be to serve our customers? Or why not philanthropy? Why is it not to make products of the highest quality? Or why not to create jobs?

So . . . why share-owner value?

This question has a three-part answer. First, increasing share-owner value over time is the job our economic system demands of management. Second, by increasing share-owner value, we are able to contribute to society in meaningful ways. And, third, it keeps management from acting shortsighted.

Let’s look at these answers one by one. First, creating value is a core principle on which our economic system is based; it is the job we owe to those who have entrusted us with their assets.

We live in a democratic capitalist society. Here, people create specific institutions to help meet specific needs. Governments are created to help meet civic needs. Philanthropies are created to help meet social needs. Churches are created to help meet spiritual needs.

And companies, such as the ones that you and I work for . . . are created to meet economic needs. One role of government, in turn, is to provide the necessary climate for business to carry out its function.

My job is to make The Coca-Cola Company grow profitably, which inherently stokes the economy . . . here and everywhere else in the world we do business.

While performing its role, business distributes the lifeblood that flows through our economic system, not only in the form of goods and services, but also in the form of taxes . . . salaries . . . philanthropy.

Society benefits from commerce, in fact, it thrives on it. And make no mistake, our companies, in turn, benefit from a healthy society. We benefit from educated employees, from a high quality of life in our cities, from roads and waterways . . . from all the services for which the government is the preferred provider. Still, business is the main driver of economic growth.

Thus, we cannot hold any administration in our nation’s capital solely responsible for the performance of the economy. That would be like holding me responsible for the performance of the United States Marines.

It is not my job.

My job is to make The Coca-Cola Company grow profitably, which inherently stokes the economy . . . here and everywhere else in the world we do business.

But we can and should hold government responsible for keeping the aisles clean for business, so that business can carry out its economic role while assuring that business acts without impairing the civic needs of the rest of society.

But unfortunately today, these roles of business and government have become blurred in the minds of many people, and the result is most discomforting. It is discomforting because when institutions try to broaden their scopes beyond their natural realms, they eventually run into trouble.

On the one hand, through increasing regulations, government impinges negatively on the ability of companies to effectively and efficiently meet economic needs to play the role for which companies were created.

And on the other hand, the demands, economic and otherwise, on those same companies are growing every day. Customers and consumers, employees and communities: We are asked to serve many masters, and in many different ways.

So, in the face of all these distracting and shifting currents and countercurrents, we must return to one simple but lasting truth: We work for our share-owners. That is literally what they have put us in business to do.

That may sound simplistic. But I believe that just as oftentimes the government tries to expand its role beyond the purpose for which it was created, we see companies that have forgotten the reason they exist to reward their owners with an appropriate return on their investment.

They forget because they may become complacent with success paying no mind to the fact that respect for the future is best displayed through a healthy insensitivity to the past.

Or they may wrap themselves in the company flag. They may, in the name of loyalty, prevent change from taking place, or they may assume their business must be all things to all stakeholders.

In the process, these companies totally miss their primary calling, which is to stick to the business of creating value.

I believe it would be wrong, even bordering on arrogant, for business to think it can be all things t