Coca-Cola’s management was compelled to react, which is a situation they have never felt comfortable with. Coke has a leader mentality that does not seem quick-footed when the lead comes from more nimble competitors. The new move against PepsiCo was unveiled on February 21, 2001, when Coca-Cola and P&G jointly announced a marriage of reason between their mutual offspring. The two companies seek to develop their business by forming a new joint-venture that will manufacture and market Pringles chips and the two giants’ juice and fruit-flavored beverages. Profits from the new company would be split equally.

At first sight, Coca-Cola has a long list of good reasons to feel happy about the deal. If we do not take into account cost improvements due to the ever-elusive synergism, Coca-Cola should indeed be able to launch new product varieties based on the 1,300 or so of P&G’s patents in the snacks and beverage area. For instance, P&G has developed a way to add calcium to fruit juice, which may make the drink a useful ally to fight osteoporosis. P&G may also developed other supplements for Minute Maid, Hi-C, and other drinks, based on iron, iodine, Vitamin A, or glucosamine, which the company claims eases joint pain caused from aging. In addition, Pringles cans could potentially be distributed through Coke’s massive network of vending machines.

But a joint-venture can be a cumbersome vehicle to achieve those lucrative objectives. A far more practical approach would have been ad hoc licensing agreements directly between the two giants, without the added complexity of merging operations into a JV. In fact, PepsiCo is already doing just this by licensing Proctor’s technology to add calcium to fruit juice.

In spite of the enthusiasm in Atlanta and Cincinnati, the market immediately sanctioned Coca-Cola’s stock, which fell $3.55 to $54.92, following the announcement of the deal. Shares of P&G, however, rose by $1.09 to $76.80.

So, the situation is grave but not desperate. This time, Coke – the American icon – is not going to disappear suddenly, soccer-moms are not going to demonstrate in the streets, and bartenders are not going to pile up inventories of the classic beverage as in 1985.

Nonetheless, the news is revealing of a tangible malaise in which Coca-Cola seems to linger. With its branding magic and marketing touch, Coke surfed over waves of market trends for decades. With its brutally effective focus, it had confidently conquered about 60% of the market. It was the soda of winners. It was the soda of life.

A similar observation could be made of P&G. Tide, Pampers, Crest, and Pringles were all pioneering brands setting new standards in their category. Synthetic detergents, disposable diapers, cavity-fighting toothpaste, and designed chips were mass-market revolutions led by P&G’s ideas and creative thinking. Can Coke and Procter regain their edge in the market place by joint-venturing some of their operations?

To ask the question is to answer it. Indeed, lawyers, consultants, and bankers love such a strategic decision because it calls for a great deal of complex professional expertise. Management likes it, because it gives them a sense of victory when the morale gets low. However, John and Jane Doe, the consumers, could not care less. What they see and perceive is in the brand.

The malaise that transpires is that Coca-Cola has lost its legendary focus that made Coke and its curvaceous glass bottle so strong over its rival Pepsi. Colas are made of a blend of water, sugar, carbon dioxide, and additives. But Coke is so much more than a mere beverage. It is more than the sum of its ingredients. It is… Coke! Was that success an accident or can Coca-Cola find its marketing touch back to Minute Maid’s benefit?

What we want to hear from Coca-Cola’s management is new ideas, new dreams, and new emotions that we can share with our loved ones. G.I.’s drank Coke together while walking over the hills of Nazi Germany. Several generations have drooled their first sip of Coke while dancing on their mother’s lap. Future generations could do the same with Diet Coke, Minute Maid, new non-carbonated drinks and bottled water, to the delight of Coca-Cola’s shareholders. The recently announced alliance between Walt Disney and Minute Maid is an intriguing step toward bringing that magic back on the kitchen tables. Nicely executed, it can mutually enhance both brands. And all this has nothing to do with a heavy-duty joint-venture.

From a Southern cola producer, Coca-Cola has successfully become a worldwide specialist of soft drinks, from Coke to Minute Maid. Its core capability lies on satisfying thirst with panache. It is that je ne sais quoi that still makes us pay a premium for Coke over private-label colas. From an R&D-driven soap manufacturer that put some discipline into its marketing, P&G has become a portfolio of supermarket consumer brands. Its strength lies largely in its R&D aligned with internal consumer-focused processes, even though the Cincinnati-based company still struggles to give more power and more room back to its brand managers and frontline free-thinkers. In addition, both companies are conservative organizations with strong traditions and legacy. They have demonstrated that they can be tremendously successful on their own, but they may not enjoy being roommates, not to mention in bed with each other. Which is what a joint-venture is all about, and it requires a great level of flexibility and empowerment.

Notwithstanding the economic logic of the deal, a joint venture is never easy to manage, particularly when it is a 50/50 deal, sharing $4billion bits of operations brought by each parent. In such a case, dysfunction is the rule rather than the exception: Employees’ allegiance often goes to their parent company. Decisions are painfully slow to make. Disputes arise, and conflict resolution becomes a function as major as marketing, sales, or finance. This never a sound ground with which to grow great brands.

Great brands are built by dedicated visionaries. Whether they are called brand managers or brand stewards, those leaders nurture their brand like their own baby. In a typical brand management structure, it means that they have control over their own resources. With an eye on market research, those visionaries also bring their own passion and personality into their brand. It then develops a soul and a heart that consumers can perceive almost subliminally. Over time, brand equity grows to the point of attracting the attention of the financial community, and both consumers and shareholders reap handsome benefits.

However, when executives keep their eyes on their next assignment, when the pyramidal org-chart becomes a multidimensional matrix, when committees and co-leaders have their say, the brand message quickly becomes bland and diluted. From exciting, the message regresses to the least common denominator that is palatable to most, and pleases nobody.

If Coca-Cola believes that it can regain the initiative over PepsiCo through joint-venturing its troubled operations, it is wrong. It will only further distract the company from reinforcing its core capability worldwide. PepsiCo’s Tropicana orange juice has almost twice the market share of Minute Maid. With all the organizational issues to be expected, the new joint venture will have a difficult time sparking the brand equity of Minute Maid, Frutopia, and other fruit-drink brands better than Coca-Cola would have on its own. All this fizzy math only plays into PepsiCo’s game.