For all you hardcore business folks who admire Starbucks the business and Starbucks the brand, you should spend some time reading this Time Magazine article as well as reading/listing to this report from Marketplace Radio.
The article from Time is one of the most honest and informative pieces I’ve read on Starbucks. It sheds light on two important issues Starbucks deals with as it continues to grow — automation and complexity creep.
As the article states, Starbucks seeks to strike a balance between automation and atmosphere. Automation brings forth greater efficiency which allows customers to get served faster but automation can also detract from the in-store atmosphere.
And the complexity creep issue is similar to feature creep where companies keep plugging in new things but never unplug old things resulting in confusion with customers and employees. New beverages, new sandwiches, and new media offerings have been creeping into Starbucks stores and making a Starbucks Barista’s job exponentially more complicated than it was 10 years ago. The complexity Starbucks employees face on a daily basis ultimately impacts the experience customers have.
The Marketplace Radio report is fascinating. It’s a sit-down talk with Howard Schultz on a range of topics from Starbucks struggles in the mid-80s to Howard’s philosophy on creating trust with employees. The audio report is good but the full transcript of the interview is much better. Inside the transcript is a goldmine of aspirational business strategy for the smallest of the small businesses to the biggest of the big businesses. Sample some of this …
HOWARD SCHULTZ: “… we have created a relationship with our people who we call partners that's based on trust and confidence and providing them with the benefits that we think a responsible company needs to provide. And in doing so, we've lowered attrition significantly versus the retail industry in America.
We've created more productive people and created an environment where Starbucks in many places domestically and around the world is the employer of choice and we are able to attract and retain fantastic people because of the culture of the company, which is defined by these benefits.
So my argument is simple, it's which investment do you want to make? An investment in your people or do you want to make an investment in the hidden costs of turnover and retraining your people?”
HOWARD SCHULTZ: ”You know I've been quoted many times by saying that we're not in the business of serving — we're not in the coffee business, serving people, we're in the people business serving coffee and if you believe that then you have to imprint a level of understanding and behavior about how we do things and it begins with attracting people who have like-minded values.
People who want to serve the customers. People who want to be part of an environment in which this is a different kind of company and it needs to be nurtured and embraced and everything we do is based on trust and if we don't trust one another and we don't exceed the expectations of the customer we're not going to survive.
And so we hire over 300 new people every day and we open six new stores a day and so we've been doing this a long time and I think when I — and I speak at business schools all the time — and when people ask me what's the secret to Starbucks success, well, there's no secret.
But I will say one thing and that is in building a new business or trying to sustain your own business is that the HR function, the human resources function for me personally above IT, manufacturing, coffee procurement, above it all, is the HR function, it has to have a seat at the table. It has to be part of the strategy. And without that, I think you find yourself in a situation where people become the last thing you invest in and before you know if you've lost the soul of the business.”
Those are just a few worthy nuggets from the full transcript of the interview with Howard Schultz.
You can also stream this little ditty I did today where I created video slides of written words to match Howard's verbal words.
John,
Thank you for sharing. I am proud and thankful for having worked at Starbucks and with Howard Schultz. Through that relationship I learned much about business.
Posted by: Lewis Green | December 18, 2006 at 10:58 AM