Starbucks Experiment

Posted in New by Harsha on April 7, 2007

John Moore, author of Tribal Knowledge: Business Wisdom Brewed from the Grounds of Starbucks Corporate and an ex-Starbucks ‘partner’ (as employees are known) has written a pretty good ChangeThis manifesto. In it, he has included a number of comments from what he calls the "Starbucks Board of Customers" (Interesting idea, no?). You can download the manifesto at the end of this post.

John’s shares four good ideas to help Starbucks make the change:

  • Redefine success
  • Go private
  • Worry less about customer traffic and more about the coffee
  • It’s not about the brand, it’s about the coffee

Redefining success for Starbucks would mean cutting away from the Wall Streety expectations. By the way, aren’t performance, ever-increasing profits and share-price directly related to customers loving the product and brand and repeatedly purchasing (and in large quantities)? Unless you’re a monopoly, you’re going to have to dish out "great service", "listening to your (eeks!) customers" and all those other softer things. That segways into his idea of going private. WS is not about brands, products or people. It’s only about the $.

Traffic isn’t ‘buck’s problem. They harnessed it incorrectly. Someone in Corporate thunk up stuffing stores with merchandise sold at inflated prices. I’ll give you the argument that the aim was to increase revenue and keep people coming back. However, now this strategy has flopped.

This is affirmation that the unit of analysis as used in BOS is dead-on. When ‘bucks made the strategic move to automate coffee-making and start selling stuff in stores, they diluted the brand. If they hadn’t done that, then the argument is that they’d have become yet another coffee shop.

In the manifesto, look at some comments made by the "Board of Customers":

  • "It’s Not About The People, It’s About The Product"
  • Starbucks is Not About Coffee
  • It’s About the Coffee
  • Hire People with Passion for Coffee and the Starbucks Culture
  • Baristas are the Key
  • Get Back to Coffee and Give Me Free Wi-Fi
  • Decide if Starbucks is Indeed a Coffee House
  • Stop Focusing on Efficiency. Focus on Customer Interactions
  • Eliminate “Fake” Starbucks Locations (???)

Maybe after all, people have no clue about what works and what doesn’t.

I don’t think the ‘bucks problem is about the bucks! (sorry!). It is a numbers problem exacerbated by a lack of proper branding. They tried too hard to get-and-keep people in their stores. But we do that already!

The trick is how to sell me stuff yet keep my focus on the coffee – I don’t think you can do without the other. McD’s closed in by offering coffee but does that really matter? Maybe they can ask Paco Underhill of Envirosell? With 13,000 stores I think it is hard to maintain a McDonald-esque standardization. But hey, what do I know? Any thoughts?

Download 33.01.WhatStarbucks.pdf

– Harsha Raghavan 


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