Coca-Cola Reveals its Startup Strategy — And How it Tracks Opportunities for Collaboration

By Meghan Hall |  December 8, 2022

Lots of big companies will acknowledge that lots of innovation is happening outside of their corporate campuses. But Coca-Cola is actually doing something about it.

Molun Zhang, R&D Senior Manager, Experimentation & External Technology Acquisition, Coca-Cola

Molun Zhang, Coca-Cola’s R&D Senior Manager for Experimentation & External Technology Acquisition, is one of the people responsible for making sure that the $39 billion beverage company knows what’s happening in the world of startups and emerging technologies — and has a strategy to tap into it.

As part of our recent research report, Successful Startup Engagement and Corporate Venture Capital, we spoke with Zhang about lightweight ways to begin collaborating with startups; a new accelerator focused on creating more sustainable supply chains; and how Atlanta-based Coca-Cola tracks its engagements with startups across the globe, to avoid duplication of effort. 

Coca-Cola’s strategy. We want to innovate, and we want to innovate with the best. We have a lot of great folks internally who are the best in the world when it comes to innovation in their field, but we do acknowledge that the best is not typically in house. The strategy, I would say, is to find the best solutions to our current problems with the best innovators, whether they’re inside the system or outside the system. 

Startups have what corporations don’t. To the outside world, we may look all peachy — we are large; we have the money; we’ve got the manufacturing; economies of scale; and so on. But we have to acknowledge that large companies are also disadvantaged when it comes to being fast and agile and nimble. We are very locked into our day-to-day thinking and our operational excellence and driving business value [and] stakeholder value. Sometimes, we’re so focused on that that we cannot be distracted by something completely different and novel. That’s why we like to work with startups. They see the world from a different angle than we can.

Partnering with the right startups. Sometimes, if we’re talking about needing a solution immediately, that needs to be a plug and play — we don’t have time to waste. So [in that case], the funding, the assets, the knowledge, the pool of customers, they may already have. 

For other companies, we look for where we are able to take on an earlier technology readiness level. …You want to help them succeed and achieve what they’re trying to achieve. I think at the end of the day, there’s the business aspect, but there is a human aspect to the interactions with startups. 

A mindset to work with startups. [A corporation] needs to have the headspace to work with startups. What I mean is, typically large corporations, we work with large suppliers and large solution providers. We are very pampered — there’s almost guaranteed success. But it’s about having a mindset that the answer can come from a startup. They need a different form of nurturing; they need a different form of patience. They operate at a different scale.

When push comes to shove, the gap between what [startups] say they can do and what they can physically do is always there. The question is, how big is that gap?

Tools to help keep an organization apprised. We have designed a tool, and we call it… the KO External Opportunity Tracker. What we do is we log onto this platform, which is available to the entire organization. [It tracks] every startup engagement — who did we sign an NDA with? Who did we sign an MSA with? Who do we have ongoing engagement with? What type of experiment and pilot [are] we running? When, where, how? This is really to avoid [conflicts]. For example, if I sign an NDA with a startup here [in the US], and someone in Japan does not know that we have something going on, how do we ensure that this information is retrievable across the globe, within the organization and different functions?

Staying aware in the ecosystem. When it comes to working with startups, it’s about being structured.

Be aware [of] where are the hubs? … Where can I find the best startups in this specific field? When you’re really plugged in, it helps you to tell the pseudoscience from the real science — because, unfortunately, we do have a lot of startups that are amazing at pitch decks, at raising funds. But when push comes to shove, the gap between what they say they can do and what they can physically do is always there. The question is, how big is that gap?

Advice for partnership newbies. I would say just try. Don’t even carve out a whole team to do it; just assign a few people and say, “Hey, 20 percent of your time, you’re going to focus on finding the solutions outside. You’ll get a small budget to test it out.” Startups are so flexible and easy to work with. Just test it out, and you’ll see that it will be a positive return on investment from your end. Build from there. There’s no need for the dramatic re-org or restructuring to know how to work with the external ecosystem. Your current pool of talent [is] capable of working with [startups]. You just have to shift their focus from internal to external. 

Shifting that focus. The biggest challenge [in shifting focus from internal to external] is you’re so focused about your processes and your limitations, and people know only what they know. If you’ve been in, let’s say, internal innovation, you’re too focused on, “It must fit this, and it must fit that, and I must have that volume and it must be at this cost.” So when you shift your focus to external, you have to shift your units of measurement. Cultivate a culture where failing with external innovation is not a big deal. It costs barely nothing to just try. 

Working with startups during a recession. There’s always money invested in startups. I feel like everybody’s pulling money out of the stock market to go into VC. I feel startups are very unlikely to have a recession when it comes to funding. 

Large corporations will probably have limitations when it comes to our budgets… but working with startups doesn’t have to be expensive, doesn’t have to deplete your budget. It’s about how can you design a smart experiments — that you can get enough results from — that can can create a conclusion with your startup. It costs us more money to invent something from scratch internally than work with a startup that already has something 80 percent [of the way] there. The question is, how can you invest in that 20 percent gap? 

It just makes sense to work with startups during a recession because they keep raising funds, so they can further advance, and we can benefit from companies that are 80 percent there. 

Cultivate a culture where failing with external innovation is not a big deal. It costs barely nothing to just try. 

Changes in the startup world over the past several years. I think startups have [an easier time raising] money than they used to. I think there is a trend, as well, that startups attract better talent today. It used to be not so cool or hipster to work for a startup. But nowadays… it has become something that’s pretty cool. There’s a huge competition to attract those bright minds, and with quality of talent, you have quality of startups.

Success. Coca-Cola is part of a large accelerator program; it’s called the 100+ Accelerator, between AB InBev, [Coca-Cola], Colgate, and Unilever. [It focuses on creating more sustainable supply chains.] …We were able to bring four large industry leaders under the same roof to agree on the same principles [and] to share. [On our own, we may] run the experiment, and if we fail, we will not share that we failed. Or if we succeed, we will hold on to the success for ourselves and see how we can exploit that. But now, it’s a completely different mindset — to open this up and share across industries. 

Most importantly, it creates a playground for startups to advance their technology… [and] for them to test it out and prove to the world that if this technology can work with Coke, AB InBev, Unilever, Colgate, or a combination of any of these four, it’s going to work in the industry for others.