Starbucks Case Study: More than just making coffee

One of the great social equalizers on the planet is the need for sleep. On the other side of that coin is the need to wake up and have enough energy to face the day. Around the world each year, more than 500 billion cups of coffee are served to people for any number of reasons. Perhaps they truly enjoy the taste of a delicious Arabica blend, or they have been drinking coffee as a part of their morning ritual for half a century, or maybe they simply need an extra jolt halfway through an unexpectedly tiring day. Others drink coffee in social settings, or as a treat after a large meal. There are dozens of reasons why people drink coffee, and while many people view coffee as a domestic product brewing in kitchen coffeepots, it also represents a massive industry that impacts tens of millions of people in terms of producers, distributors, vendors, and consumers.

For such a globally popular beverage (2/3 of the global population drinks coffee or cappuccino in some form), it makes sense that it represents such a desirable market for business development. However, as one of the most competitive and obvious markets to enter, a company would have to be truly special to be considered “dominant”. One thing is certain, that company would have to have an extremely solid foundation on which to build a globally recognized brand that continues to flourish and expand every single year.

Over the past 4 decades, Starbucks has grown to become the unrivalled leader of the global coffee industry. It is the largest coffeehouse company in the world and boasts over 23,000 locations in more than 60 countries. In terms of a strong foundation for a company, Starbucks may be one of the best examples of a well-rounded and perpetually successful business, which is why it deserves a closer look.

When it comes to having Vision, Starbucks took a little while to get off the ground. The three original owners of Starbucks had always dreamed of selling roasted coffee from high-quality beans, but they originally kept their business small, operating only 6 stores in Seattle after their first decade of business. However, a trend in coffee drinking was becoming clear in America. Normal coffee was on the way, but specialty coffee was seeing a surge in popularity. By the end of the 1980s, Starbucks had begun to offer specialty coffees from around the world in a variety of styles. A taste of Europe, Africa, South America, and even the Far East was possible, foreshadowing Starbucks ambitions for expansion upon which the company would soon embark. The 1990s saw Starbucks expand internationally, after having secured their base of operations in the United States with over 130 locations across the country. Japan, the United Kingdom, and Mexico became Starbucks friendly countries, and smaller businesses were quickly bought up and converted.

That was the great secret to Starbuck’s vision as a dominant force in the coffee industry. They didn’t want to compete for years or even decades with rival companies, offering price reductions, coupons, and catchy offers. They entered a market with such determination and ambition that they simply eliminated the competition, usually absorbing and converting their competitors into Starbucks cafes. They did this with countless small and large companies throughout the world. The slow competitive edging out of rivals takes a long time, particularly in new territories and communities that are “stuck in their ways”. Coffee is a function of routine, and as such, people often go to the same cafes every day or week; Starbucks understood that this would always stand in their way, so they simply replaced those locations, rather than popping up across the street to battle it out with their rivals. The most defining part of Starbucks’ vision was their unparalleled ambition and confidence. They had the capital and the infrastructure to take on huge new markets, and were willing to invest dangerously large parts of their capital base to buy out their top competitors, knowing that they would eventually see that investment returned tenfold. Starbucks set a goal of becoming the most recognized name and brand in the world for coffee, and they didn’t stop pushing until they achieved that prestigious rank.

Baristas, those lovely smiling faces who make and serve the coffee, are the face and talent of Starbucks. Obviously, the coffee growers and the other essential parts in the supply chain of coffee plant to coffee cup are important, but they aren’t necessarily going to impact the day-to-day loyalty and service of a coffee shop. Starbucks has placed a major focus of their attention on employee engagement and dedication, and the quality standard and reputation of “Starbucks baristas” makes putting that as a line on a resume a point of pride and value. In terms of Team Focus, Starbucks makes a major effort to keep their international coffee mogul feel out of the individual locations. Employees are trained to treat their specific shop as their own small business, while always being recognizable as a Starbucks. As a “$1 million small business”, the larger corporation is able to handle the big picture issues of the companies, while the smaller store managers are given the leeway and empowerment to finds solutions to their own problems.

To make the experience of working at Starbucks about more than just making coffee, many of the top or long-term employees are invited to go and visit the source coffee plantations, where they get the experience to rake their own coffee beans and literally have a hand in creating the product. Beyond that, the Starbuck’s Leadership Lab is one of the most renowned corporate training venues, often likened to a Starbucks theme park, and establishes loyalty and community to the thousands of employees that are trained there. Finally, when it comes to team focus, Starbucks prides itself on continuity. Their brand promise and company mission statement is more than just a clever slogan. It is something that is continually instilled in employees on the smaller level at every location. Managers become informal trainers, and veteran employees are quick to welcome new employees into the fold by sharing their own experiences and demonstrating that making coffee for Starbucks is like no other barista job in the world.

Many people enter a coffee shop and assume that it will be like many others: a glass case with breakfast pastries, a chalk-written menu on the wall, some comfortable seating, and some unremarkably eclectic art on the walls. Those people wouldn’t be wrong about the majority of the coffeehouses of the world, but Starbucks wants to stand out from the norm and remain relevant in a changing society by focusing its energy on their Culture and Environment. As the article earlier in the section already explained, Starbucks locations around the world are customizing everything from their menus to their seating arrangements according to local customs to fit in with their globalized presence. However, a new “modern modular” store concept is also being rolled out in various cities in the United States. Although only a half-dozen have been erected thus far, it seems to be the new direction Starbucks is heading. There is no seating area inside, and the tiny stores are actually portable, with drive-up and walk-up service. However, the outside is no longer the standard, glassed-in façade with the white and green logo prominently drawing in customers; the exterior looks more like a piece of art, or a brilliant new architectural installation in a community. The materials are often locally sourced, completely recyclable, and environmentally friendly.

As the years have gone by, Starbucks has evolved from an easily recognizable delivery point of a standardized product to a place where people work, meet, and play in a comfortable environment. However, this third evolutionary step has only become possible once their name had become associated with coffee drinking. They have the loyal customer base, but now they want to provide an even more important and irreplaceable service for the community, a destination or connection point between art, recreation, community, and the past. Each of these “modern modular” constructions will specifically reflect the local communities or cityscapes where they are placed, not only on the inside, but the outside as well. The cookie-cutter facades of Starbucks are disappearing, being replaced by recognizable points of pride in local communities that are environmentally friendly and beloved for more than just their coffee beans.

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5 Principles of Action Planning

Bryan Radtke, Vice President of Business Innovations at Rockfish, dedicated an entire blog to describing the five principles he’s been applying in making the most of every action planning and which can, in my opinion, improve anyone’s strategy for success:

1. Ensure your work plan enhances the work of those around you: This seems like a pretty obvious one, but sometimes Mr. Obvious is absent from our everyday thinking. When you develop your work plan, first list all the work you would like to do or you think you should do. On the second pass, put an X next to the work that directly affects your management’s priorities or your direct reports work plan. Chances are there are several items without Xs. Everything you do should enable or enhance the work of those connected to you. If not, drop it. (more…)

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Improve Your Strategic Planning Skills

Strategy and Strategic Planning is probably the most significant thing all history’s winners, today’s leaderships and successful people have in common. When it comes to saving, whether it’s time, money or even lives, nothing beats a good strategy. The best way to improve the quality of your life and business is to learn to develop good strategies. If you are ready to make that step, this book will be of great help throughout the process.

It offers a realistic guide to taking an inspirational outlook and making it work in your daily life but also in your most ambitious business venture. The approach used is one that goes straight for the core of the inefficiency, making you realize what causes a lack of progress and teaches how to think in a way that helps you always find the best move or plan of action to overcome all the challenges you encounter.

Order What is Your Strategy now.

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How to Improve Your Problem Solving Skills

Many people’s jobs consist in solving unexpected problems with maximum swiftness. This is why developing good problem solving skills should be at the top of everyone’s self-improvement to-do lists. Solving problems can be a matter of thinking out of the box, but most often is a matter of taking a step by step approach that delivers results.

Here are the stages of an efficient problem solving process:

1.  Identifying the problem you’re confronting. This is the diagnostics stage of the problem solving process, and it’s a vital stage. You understand there is a problem, but you need to correctly identify it. Because you can’t cure something if you don’t know what it is. Often enough, a problem mostly manifests itself through various symptoms, and handling only the symptoms will probably lead to these ‘false problems’ reoccurring in the future.

2. Understanding the bigger picture. After you’ve correctly identified the issue, you need to take some time and observe. Check any documents that might give you an idea about how to solve the problem. The importance of this phase is directly proportional with the difficulty of the problem.

3. Making a decision. Think of ways in which to solve the problem. If your entire team was assigned to solve the problem involve everyone in the solution finding process, as each member brings a unique perspective regarding the issue. After compiling a list of potential solutions to the problem, it is time to choose the best one. Of course, there are various factors you need to take into account when thinking of the best solution to a problem, and you’re often going to find that you have to prioritize when making a decision.

4. Implementing the solution. You need to keep an eye on the results of your solution. If something seems amiss, make sure you’ve correctly identified the problem.

5. Monitor progress. You need to measure the efficiency of your solution. A great idea is to request feedback from people who are implementing it, or from those working directly with them. It often pays to keep notes of problems and of the solutions found. You never know when you’re going to deal with something similar in the future, and your past experiences may just well help you save a lot of time.

 

 

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Allowing physical space for innovation helps companies be innovative

Allowing physical space for innovation helps companies be innovative. Innovation occurs inside the mind, but there are certain environmental factors that can greatly help stimulate innovation. That means that there are certain ways to design an office in order to maximize innovation. For example, the Leipzig BMW factory has an open floor plan intended to maximize social interaction and thus creative stimulation. By insuring that employees come into contact with employees that they wouldn’t necessarily see in a more traditional office layout, BMW’s floor plan helps to enhance the flow of creative ideas.

Some companies have invested in more major physical redesigns to foster innovation and creativity. For instance, Grip Limited, an advertising firm in Toronto, wanted to expand the types of clients it was attracting. The company had survived primarily by doing beer marketing, but those at the top of company worried that Grip was becoming type cast as a company that only did beer commercials. Grip leaders felt that in order to successfully attract and retain a wider range of marketing clients, they needed to increase the creative output at their office. So they redesigned the office itself. Grip added in a slide, a fire pole, and a hot tub-like conversation pit. The new white walls double as projection screens and contoured window seats are scattered throughout for impromptu conversations. Although those sorts of changes seem whimsical and perhaps pointless, there is significant value to adding elements that encourage both physical activity and conversation, as both of these things are tied to creativity and innovation. In the case of Grip, the changes certainly seem to have worked. After its building redesign, Grip picked up GlaxoSmithKline, Honda, and Acura as clients.

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