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A Biography of the Boss: Robert W. Woodruff (Part 3 - Woodruff's Early Coca-Cola Years)

SOURCE: Robert Winship Woodruff: A Biography of the Boss by Charles Elliott, 1979. Heritage Park: A Celebration of the Industrial Heritage of Columbus, Georgia by Dr. John S. Lupold, 1999.

 

The stormy relationship between Ernest Woodruff and his son, Robert, is well – known. Their characters and personalities were described in a biographical sketch prepared by an archivist in Emory University’s Special Collection: “A tireless, shrewd, and strong-willed man, Ernest Woodruff had an abiding belief in the value of hard work and thrift and a distaste for idle pleasures and ostentation. His son, Robert Winship, the eldest child, grew up seeking his father’s approval but rebelling against his strictures. Equally strong-willed, Robert Woodruff inherited his father’s unwavering loyalty to friends, a dislike of praise and public show, a firm sense of honor and integrity, and the instincts of a horse trader.” Robert was working for Atlantic Ice and Coal Company, his father’s company, when he decided to modernize the operation by replacing the mules and wagons with a fleet of trucks purchased from White Motor Company. Ernest was furious and railed against his extravagance. Ernest denied Robert a promised raise, so Robert quit his job and joined the White Motor Company as a salesman, a position that Ernest felt was beneath his son. By 1921, Robert was vice president and CEO of the motor company.



With the long-range mistakes, the general apathy throughout the company and an alarming decrease in the sale of syrup, the directors of The Coca-Cola Company were fully aware that new blood was needed. Because of his incredible record with White Motor Company and the regard for him in business and financial circles throughout the United States, Robert W. Woodruff was elected to the executive committee of the board of directors of Coca-Cola. W.C. Bradley, who was serving as chairman of the board of Coca-Cola and as chair of the small executive committee, played an important role in bringing Robert to the company and in mediating between father and son. Less than two months later he was offered the presidency of The Coca-Cola Company. He didn’t want it. He was making more money with White than he’d ever made in his life. Oher more established organizations had offered him fabulous jobs. His friend, Walter Teagle of Standard Oil, had told him that any day he wanted to come with Standard Oil he could name his own salary. Three of his friends, Tom Glenn, Charles Wickersham, and W.C. Bradley, all who had taken tremendous stock losses with The Coca-Cola Company, went to New York to persuade Robert to take over. They had a sound argument. The company in which young Woodruff owned more than 3,500 shares was about to go broke. It owed millions of dollars more than it could pay, and the situation was worsening. The company needed new blood, new ideas. Woodruff at last agreed to come down and talk with the other directors on the board.



Woodruff made an offer to the board. He would take the job for a salary of five percent commission on the annual increase in sales. He might have had it too, except that his father, who had manipulated men and organizations all his adult life, was smart enough to veto the idea. So, Woodruff took the job anyway at $36,000 a year, $50,000 less than he had been making with White Motor Company in salary and commissions. He always said that he had several reasons for taking this tremendous cut in salary. One was that during his entire life he had been drawn to people that needed him and he knew that his friends – and his father – were in trouble with the company. Another was that he would be back home again, living with people he had known all of his life. He felt too, that any time he wanted to leave Coca-Cola and go back with the White Motor Company, Walter White would welcome him. Another basic reason was that the revival of The Coca-Cola Company offered a tremendous challenge and Woodruff was never one to turn down any challenge. He put it more prosaically, “The only reason I took that job was to get back the money I had invested in Coca-Cola stock. I figured that if I ever brought the price of stock back to what I had paid for it, I’d sell and get even. Then I’d go back to selling cars and trucks.”



When Robert W. Woodruff stepped into his new job as president of The Coca-Cola Company, his 34th birthday was still more than seven months away. Although he was the unanimous choice of the board of directors, this enthusiasm and confidence in his ability had by no means seeped down through the ranks. In spite of his brilliant career of salesmanship and organization with White Motor Company and during his brief army career, skeptics in The Coca-Cola Company agreed among themselves that he was too young and too inexperienced to take on a job of this magnitude. Much resentment came from those who themselves had navigated the company into its stormy seas. Actually hostile were some who had maneuvered for the presidency and were bitter that the directors had moved them aside to choose a young upstart with no experience in the soft drink business to guide the destiny of a company now foundering in its own blunders. One of the most openly militant was Charles Howard Candler, who was holding the reins of The Coca-Cola Company when Woodruff took over in 1923. Sam Dobbs was also disgruntled because of changes. Robert Woodruff convinced Candler to stay on, at least temporarily, as head of the production department and Dobbs to continue as promotion and advertising manager. In retaining the services of these two men, Woodruff eliminated them as active opponents to the company’s welfare and progress. Their goodwill and friendship were far more valuable to him and to the company. He accomplished another purpose too, of helping to assure other employees he had inherited with his new job that no drastic changes would be made and there would be no wholesale firing of company personnel. This was one of his first actions to establish confidence in their jobs and in the company and to create an esprit de corps that later would be extended on a worldwide basis.



One of the things that disturbed him most was a survey which expressed the fact that not all servings of Coca-Cola were alike. The taste was different from one to another. Some of the fountains and bottlers were cheating a little on the amount of syrup or in other ways that impaired the quality of his drink. In some cases, the water wasn’t right, the fountains less than spotless, or the plants were unclean and the bottles half-washed. This might spell disaster in the long run. His basic business and personal philosophy had always been the production of a good, reliable product, a fair price, and complete honesty in all his dealings. He knew that one of his biggest and most important problems early in the game was quality control. He took steps to establish this both with the fountains and his bottlers. Since the largest volume of sales of Coca-Cola syrup was to the fountains, Woodruff set up a training school for his sales organization that called on the fountain trade.



Woodruff set his sales staff up on a regional basis along much the same lines he had found successful at the White Motor Company. After the intensive training period, these salesmen which had graduated into “service men” were assigned to regional offices. Inspired by the new concept, and no doubt by the enthusiasm and forcefulness of the new president, they went back to their jobs calling on soda fountains. The emphasis placed on the quality of the drink sold over soda fountains and making the fountains more attractive for the customers paid off. Supported by an intensive advertising campaign, this added effort resulted in an almost instant increase in sales and mounting profits for both The Coca-Cola Company and soda fountain operators. With a clear conscience, Woodruff might have stopped at this point. He could have considered that his only obligation to the company was to see that adequate syrup was made and shipped to supply the demand and that the responsibility for creating that demand fell to the people who purchased the syrup and put it up for sale in a mixed drink. Who cared how this was done? Woodruff did. He knew that the man who would ultimately determine the success or failure of The Coca-Cola Company was the consumer who pushed a nickel across the counter for a glass or bottle of Coca-Cola. How many persons pulling that five-cent piece out of pocket and how often, to purchase a Coca-Cola, depended on both the attractiveness and availability of his drink.



Although the return from fountain service far surpassed that from the bottlers, Woodruff, with that intangible something that let him see beyond the hill, arranged a meeting and invited the largest and most successful bottlers. Neither he, nor the company, had any direct control over this group. Their only dependence on The Coca-Cola Company was the syrup that kept their business going and the national advertising program of the parent company. All but a handful of bottlers showed up for the meeting. Woodruff considered the soda fountain business attractive, but knew that the bottle was the surest, swiftest, and most convenient way to build the world empire he had envisioned for his drink. In keeping with his lifetime philosophy, “there is no limit to how far a man can go if he doesn’t care who gets the credit.” He put the burden on the shoulders of his bottlers. His question to them – “What can you and I do to make Coca-Cola available to anyone, anywhere in the world, whenever they want one, and be certain that it tastes just like the last Coca-Cola they drank?”



Little more than a year after that meeting, the bottle sales had skyrocketed. The company had enough money in the bank for a long-term operation and to pay off a $22 Million mortgage to Guaranty Trust Company in New York. With that pay-off, he was also able to bring the original formula back to Georgia – as it was being held as collateral by the bank. Even though Woodruff was denied an appropriation by the board of directors to expand the foreign market, he went ahead anyway with what money was available. Selling Coca-Cola outside the United States was nothing new. In 1898 Asa Candler reported to his board that Coca-Cola was being sold in some Canadian cities and Honolulu with plans to market the drink in Mexico. The initial shipment of the export bottle in 1927 went to Haiti, Liberia, the Gold Coast, and Puerto Rico. By 1932, The Coca-Cola Export Corporation was incorporated and assigned the job of handling the sale and promotion of all Coca-Cola outside the continental United States and Canada. Woodruff was its first president.



Coca-Cola weathered the Great Depression. In fact, it came through with flying colors. It grew and progressed. Robert never let up on advertising, promotion or expanding his operations as fast as conditions warranted. As he had pointed out, few might have enough money to buy a truck or a new car, but everyone had a nickel and Coca-Cola had become an American way of life. The Great Depression failed to affect the growing tide of Coke sold in bottles and at the fountain, and The Coca-Cola Company showed an increase in sales for every year. It was in 1933, however, that tax matters hit a climactic high with The Coca-Cola Company. This was brought about by a ruling of the US Supreme Court, which concluded that it was within the prerogative of a state to tax the real property of any corporation operating in the state and, in addition, to also impose an intangible tax on all properties and securities of that corporation, including the stock value of all wholly owned subsidiaries, wherever they were located anywhere on earth. Georgia’s Legislature was given the green light. Woodruff didn’t hesitate in his decision. In the last few weeks of 1933, The Coca-Cola Company moved out of Georgia. It re-established its corporate headquarters, with all of its worldwide properties and securities which would have been taxable under the new Georgia law, in Wilmington, Delaware. Many other national and international corporations were making the same move. Woodruff wouldn’t move back a large segment of his Coca-Cola operation to Georgia until 1946, when the state reduced its intangible tax laws.



The years 1923 to 1943 covered the peaks of prosperity in America and the depths of depression which were some of the most dramatic in the history of our country. During those years Woodruff found time for other activities beyond the boundaries of work and play. One of these interests included his re-association with Emory University. In 1935, he was elected to the board of trustees and the next year elected to the executive committee. In 1937, he set up Trebor Foundation, Inc. Trebor is Robert spelled backward. That same year, he announced plans for a Robert Winship Clinic at Emory. The following year, he persuaded his father and mother to set up the Emily and Ernest Woodruff Foundation for philanthropic purposes. Woodruff loaned his advice and support to many worthwhile endeavors. He served on business advisory councils, industrial committees, safety councils, and on the boards of many national and international companies. Even though it seemed that Woodruff’s time was fully occupied with affairs outside The Coca-Cola Company, those in his organization knew better. He continued to run the company with a velvet gauntlet, and through all this period Coca-Cola prospered and every connected with it prospered. Then World War II came along to offer Woodruff and The Coca-Cola Company one of their greatest challenges and, should they survive that, possibly their greatest opportunity. NEXT WEEK: The conclusion to the series - Robert Woodruff's later years at Coca-Cola.

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