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From the archives: Don Keough's the real thing

From the archives: Don Keough's the real thing

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Editor's note: This story originally was published on Feb. 18, 1996.

***

Don Keough knows the question is coming. It always does. It has become so common in interviews that he even answers the question before it's asked:

"I was on vacation during the whole New Coke thing, "he says in wry deadpan. "I had nothing to do with it."

In fact, he had plenty to do with it. As president and chief operating officer of the Coca - Cola Co. from 1981 to 1993, he and Coke's chief executive officer, Roberto Goizueta, gave final OK during the spring of 1985 to dump the old formula in favor of the sweeter, Pepsi - like formula that, according to the best market research, was the taste of the future.

Angry letters poured in by the thousands.

What salvaged Coke from becoming the carbonated Edsel, though, was this same Donald Keough, friends and associates say. He and Goizueta met, agreed they had greatly underestimated Coke's meaning to Americans, swallowed their pride and decided Coke would come back as Classic Coke. Then Keough went on national television with his warm, ready smile, smooth delivery and a self - effacing Midwestern earthiness and took full responsibility for the mistake.

He heralded the sovereignty of the customer. He thanked the customer for reminding the employees of Coca - Cola that they are part of the most cherished and revered trademark in the world.

It was classic Keough, said friends of the Sioux City, Iowa, native. Sales climbed. Coke investors saw a 50 percent return on their stock that year.

"Looking back on it, it was one of the great experiences of my life. It's just one you're glad you don't have to go through again, "Keough said in a telephone interview from his office in New York. "You could paint a worse - case scenario that would make your blood run cold. "

It's his human touch - this uncanny skill and great desire to relate to anyone - that has made Keough a success in both business and life, said good friend and former Omaha mayor Bob Cunningham.

"He's this extremely intelligent guy with an unbelievable business sense, "Cunningham said. "But the main thing is: He has this great love and feeling for human beings. That's what makes him a great leader and family man and friend. "

Keough's old friend, Omaha billionaire investor Warren Buffett, agreed.

"He's totally in touch with other human beings, "Buffett said. "That has ma de him great in business, and in the aggregate, it has made him a great person. "

Keough is this year's recipient of the Nebraskalander Award, presented yearly by the Nebraskaland Foundation to a person who "has uniquely contributed to the distinguished legacy of Nebraska. "The Nebraskaland Foundatio n is a nonprofit organization of community leaders from throughout the state.

Keough has spent the last two decades leading and advising some of America's largest and most successful companies. During the 12 years he was president of Coca - Cola, the company's market value grew from $4 billion to $55 billion. Before that, he was president of Coca - Cola USA and later was responsible for the company's business in North and South America.

Now he is the board chairman for a prestigious New York investment firm, Allen & Co., a job he took after retiring from Coke because, he said, "it seemed like a new challenge "and "I'm not the retiring type. "

Keough also serves on the boards of the National Service Industries Inc., H.J. Heinz Co., the Washington Post Co., Home Depot and McDonald's Corp. He is the immediate past chairman of the board of trustees of the University of Notre Dame. He has received Notre Dame's highest honor, the Laetare Medal, and was named the 1993 Irish American of the Year by Irish America Magazine.

Whether he is a "Nebraskalander "is, perhaps, debatable. He has spent less than onefourth of his 69 years here.

But what a time it was, he said.

He learned be a leader, marketer and speaker at Creighton University. He met his wife here. Five of his six children were born in Omaha. He took part in the birth of television at WOW - TV. And he met many of his oldest friends here, some of whom, like Buffett and entertainer Johnny Carson, went on to find their own international success.

"Nebraska holds a very special place in our hearts, "he said, speaking also

for his wife, Mickie, an Omaha native. "You end up identifying yourself with a place and its people. That's who you are. And we're Midwesterners. "

Keough grew up on a farm near Sioux City, the son of a hard - working cattleman and a strong Irish - American mother who placed him in Catholic schools and pushed him to be his best.

Keough identifies most with his Irish half - his mother's side. Her heritage dominated the Keough household, he said. In church and school, friends and mentors also often were Irish - American.

"I never had to wander far to find an Irish friend, "he said.

Keough breaks often into stories as he recalls his past. He tells how he ended up in debate club during his freshman year in high school. He had considered tumbling, he said, but the sport, "which entailed a lot of jumping up and down on a stretched piece of canvas, "didn't impress his mother. Keough mimics his mother's Irish lilt: "She said, 'I - eee think yull be doin't a lot of debatin' instead.' "

He took debate and became very good, winning numerous oratorical competitions in high school. His debating skills helped earn him a scholarship to Creighton University, which he attended in 1946 after two years in a Navy medical unit. The next year, as a freshman, he won the 48th annual McShane Oratorical Contest at Creighton.

In the summer of 1947, Keough met Marilyn (Mickie) Mulhall, "a pretty Irish girl "who attended Duchesne Academy and later Creighton. Two years later, soon after Keough graduated from Creighton, they were married.

During that time, Keough became a student of the Rev. Roswell C. Williams, a pioneer of television who worked closely in the development of WOW - TV. In September 1949, the Keoughs' honeymoon in Chicago was interrupted by a call from a WOW manager: He wanted Keough to announce the Nebraska football games for the station's television broadcast.

The next week, he was in Memorial Stadium, calling the game for this strange new medium that most radio announcers of the time shunned. "The signal went from the stadium to the top of the Capitol, to Gretna, to WOW, then to that massive group of television sets at that time, "he said. "You could tell it was a pioneering effort because I helped haul the equipment up and down from the booth. "

He also was host of a talk show on WOW called "Coffee Counter. "Five days a

week, for 15 minutes of the noon hour, Keough stood behind a coffee counter and interviewed local citizens and "interesting folk who wandered into Omaha, "he said. "It could be something as exciting as the Camp Fire Girls annual regional meeting, or it could be Sugar Ray Robinson. "

Keough's show was followed by music from Mort Wells and his orchestra. Then came "Carson's Corner, "with host Johnny Carson, a young University of Nebraska graduate notorious for off - stage practical jokes and for exceeding his show's allotted time.

Cunningham, an up - and - coming Omaha politician at the time, appeared once on "Coffee Counter. "

"Don could have been another Johnny Carson if he had wanted, "Cunningham sa id.

Instead, Keough said, he was interested in the sponsorship and advertising side of television. He also was interested in a steady, good - paying job with regular hours.

That led him to a job as assistant advertising manager at Paxton and Gallagher, maker of Butter - Nut Coffee. It was a company "that was confronting the reality of television. If you were in television one or two years, you were an expert. "

Over the next two decades, Keough never left his company. His company kept leaving him.

Paxton and Gallagher was acquired by the Swanson brothers of Omaha and turned into Butter - Nut Foods Co.; Butter - Nut was acquired by Duncan Coffee Co. of Houston and became Duncan Foods Co. In 1964, Coke bought Duncan and operated it as a subsidiary until 1967, when Duncan and Minute Maid were merged to form Coca - Cola Co.'s Food Division.

Keough survived and thrived during each acquisition. "Mickie and I kept our bags packed at all times, "he said.

The Keoughs lived in a house near 55th and Harney Streets until 1962. They had five of their six children during that time. They watched their friend and neighbor Bob Cunningham climb in Omaha politics, and they watched another friend and neighbor, Warren Buffett, get rich.

Buffett approached Keough in 1960 about investing with him, saying: "Don, you've got a wonderful group of children. Have you given any thought to how you're going to get the kids through college? "

Keough didn't invest with Buffett, "sadly, "Keough said, but the two did de velop a lifelong friendship.

The Keoughs lived in Houston from 1962 until 1973, when Keough was asked to move to Atlanta to become executive vice president of Coca - Cola USA.

He was named president the next year, corporate vice president in charge of soft drinks in the Western Hemisphere in 1976, and vice president in charge of all operations in 1980. In 1981, he and Goizueta, a Cuban - born chemist, were elevated to a sort of dual leadership position. They were a pair of dynamic non - Southerners who, Keough said, were to lead the Atlanta - based company to greater things.

"We were kind of the new kids on the block, "Keough said.

One of their first big ventures was to buy Columbia Pictures in 1982 for $750 million. Coke sold Columbia to Sony in 1989 for $3.5 billion.

"We were glad to get into the movie business. We were glad to get out, "Keough said. "At that time, we wanted to give full attention to our soft - drink business. "

In the mid - 1980s, Keough read an article in New York magazine noting that Buffett was a "chronic guzzler of Pepsi - Cola, preferably laced with cherry syrup. "Keough, playfully incensed, sent Buffett some Cherry Coke, then in the testing phase. Buffett has since been a self - admitted Cherry Coke addict.

In the late 1980s, Buffett invested more than a billion dollars of Berkshire - Hathaway money in Coca - Cola. Part of the reason was his trust in Keough's leadership, Buffett said. But most of it was the universal strength of the Coca - Cola trademark, he said, something Buffett began to fully realize during the New Coke episode.

"Don being there certainly was a plus, "Buffett said. "But it was the Coke name. If Don was in the streetcar business, I wouldn't have invested with him. "

Also, Buffett knew about Coke's concerted push into foreign markets.

Keough's greatest legacy at Coke, and what helped most in building its stock, might have been the company's drive in the late 1980s into huge foreign markets such as India, China and old Eastern bloc nations. The logic: America accounted for only a fraction of the world's population. There were billions of potential Coke drinkers in the world.

Coke transformed its bottling system in the United States and around the world to, as Keough said, "make sure it was ready to serve an ever - growing customer base. "

Then Keough and Goizueta expanded the customer base. During his tenure, Coca - Cola added more than two billion people as potential customers. By 1995, Coca - Cola was outselling Pepsi by more than one billion cases a year in America alone, according to Beverage Digest.

"We kind of sped up the march in the 1980s, "he said. "It was a time when t here were enormous opportunities worldwide. "

Keough traveled to more than 130 countries. In many of those countries, he broke ground on new bottling plants.

During his travels, Keough built his reputation as one of the great employee motivators in American business. He was the company's global ambassador, one colleague said, the guy who had slapped the back of nearly every bottler in nearly every pocket of Coca - Cola's global empire.

He was the guy who could inspire employees to near missionary zeal with his speeches. He was the guy who remembered faces, names and families in such a genuine manner that workers on the bottling line felt he was a friend.

"His empathy with the customer, his gut understanding of the customer, his appreciation of the bottler and the leadership he provided to the operating units of our business made it possible for the company to go through its most successful decade, "CEO and chairman Goizueta said from his office in Atlanta.

People skills, however, only go so far. Keough also is a master marketer on a global scale, Goizueta and others said.

It's not hard to sell Coke in places like China, Keough said, once you realize human beings "are pretty much the same everywhere. "

"You go into a Chinese village and you see boys and girls holding hands and people getting engaged, "he said. "They get married, they have children and grandparents dote over their grandchildren like everywhere else.

"Coke becomes part of the country. It adapts to the political, social and economic environment in which it finds itself. "

Keough retired from Coca - Cola April 15, 1993. The next day, he became chairman of the board of Allen & Co. in New York.

"It's a job in which I get to meet a lot of young entrepreneurs from around the world, "he said. "It's a lot of people betting on the future. It keeps me young. "

The Keoughs spend about one - third of the year in New York. The rest of their year is spent in Atlanta, where Keough runs a small investment firm with son Michael. He's up at 5:30 every morning, he said, reading three newspapers before he goes to work. He's asleep by 10 p.m.

The Keoughs have taken several trips to Ireland. On one trip, they took their six children and spouses, and their 12 grandchildren.

Last year, Keough took dozens of American business leaders on a four - day trip to Ireland. The group included Buffett, Microsoft Chairman Bill Gates, Tom Murphy and Dan Burke of Capital Cities/ABC, Lawrence Tisch of CBS and Katherine and Don Graham of the Washington Post. Some business was discussed. But mostly, Keough said, it was a chance to show off Ireland - its people, its landscape, its culture and its tax advantages.

As Irish America Magazine said in 1995, Keough has become "the most powerful voice for Ireland in corporate America. "

Throughout his climb in business, Keough kept family and church first, his friends and colleagues said.

He kept his values during the tumult of big business by making only those decisions he could defend to his wife, children and mother.

"You do everything as though your mother or wife was going to read it. I think it's perfectly possible, and more probable than not, to run a global business with integrity. "

He also said it's possible to maintain a strong family life while running a major corporation. You just need to cut out some of the extras in life - like golf.

He has been "a hack "all his life, he said, but he now finds time to fit in

a few games of golf. Like a game last year with Buffett in Sun Valley, Idaho. The two are both "awful hacks, "Buffett said. "But we team up to wage psychological warfare on our opponents. "

That day, it wasn't working, Buffett said, so he asked Keough to step up his game. Keough did, Buffett said, with a hole - in - one.

Luck of the Irish?

"Just blind luck, "Keough said.

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