Can the Starbucks experience scale?
by Brandon Schauer
Earlier this week a memo between the Chairman and the CEO of Starbucks titled “The Commoditization of the Starbucks Experience” was supposedly leaked out. Here’s a synopsis of some of our thoughts on the memo’s contents:
Ryan says:
I know the memo is allegedly confirmed, but I’m calling bulls*** on this one.
It’s just a too-tidy deconstruction of every problem Starbucks has had in maintaining it’s experience in the last 5 years. It reads more like a paean to the small, folksy store experience that only ever existed in the minds of the people who designed it.
If it is true, and written by the chairman to the CEO, then it’s a remarkable gift to every single one of Starbucks’ competitors. Differentiation based on even one of the points Schultz raises could be a nice way to increase store visits and overall consumer ratings for a Tully’s or even Dunkin Donuts.
That said, every point in there is true.
Andy says:
I agree about the points raised. They are spoken well by someone with a clear insight to the daily operations and vibe of a Starbuck’s store.
I wonder if they can undo some of the things they’ve done “for the better.” It seems inevitable that to grow as fast and efficiently as they did, some of these practices had to happen. But it also seems that it may be too expensive to turn the ship at this point.
Brandon says:
The described progression of choices (no matter who wrote it) is reminiscent of the issues we heard at the MX Conference about how over-reliance on bucket testing and other decision-making tools can lead to a short-term ROI wins but long-term lapses in focus. By making many smaller, logical decisions you may end up painting yourself into a corner, unsure how you got there.
But, hey, I shouldn’t get the last word…
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February 28th, 2007 at 3:19 pm
As I mentioned to Peter, who first showed me the memo, it blames growth for quality decline, but then only cites reasons that have nothing to do with growth. All those optimizations and changes Howard Schultz mentioned could just have easily been done by a single local store. They’re all factors the store has control over. They could switch back to their old short slow espresso machines, and they could start grinding coffee in the store again. That’s not a scaling problem and they ought to know it.
An example of a scaling problem is that the people running each store don’t know enough about making coffee, and aren’t fanatic enough to learn — because there aren’t enough people like that to staff 13,000 stores. The comments on starbucksgossip.com were pretty quick to hit on that problem, but the memo wasn’t.
My vote is that the memo is authentic. Starbucks at least confirmed it to Reuters (on MSN, AOL, WSJ) but more importantly, have you ever heard a CEO talk? CEOs talk like that. A couple of grammatical errors, a lot of cheerleading around solvable problems, and some good old fashioned misdirection.
March 1st, 2007 at 2:50 pm
@Travis: You bring up some great points. I think the problems cited in the memo are more surface issues that are impacted by the underlying scaling issues, such as the shortage of coffee-fanatic workers that you mention.
But while automatic espresso machines and new-construction stores aren’t immediate tied to the scaling issue, they are very much the result of sacrifices made due to other decisions made in scaling the business. I think one lesson is to be clear about what the scarcity/point-of-tension is when scaling. It’s not manual espresso machines, it’s coffee-fanatic workers. It’s not a lack of old-construction buildings, its the capability to quickly source, purchase/lease, and customize existing structures.
March 4th, 2007 at 6:45 am
Starbucks: Ripe for disruption, or already disrupted?
I suspect most people have heard by now of the kerfuffle about an internal memo, leaked through a popular Starbucks fan blogsite and ultimately covered by BusinessWeek, The Wall Street Journal, Forbes, CNN, etc., which was penned by the founder
March 4th, 2007 at 5:43 pm
[...] We wrote about it last week, and today the Los Angeles Times offers a thoughtful opinion on “Starbucks’ ‘venti’ problem”. [...]