Starbucks’s Strategy

Howard Shultz, the CEO of Starbucks, is questioning the chain’s currently strategy.  His memo to senior staff was leaked, posted on the web, and discussed in the Wall Street Journal (subscription required).  Shultz cites several decisions that the company made in recent years that had, he believes, the cumulative effect of weakening the Starbucks experience for customers.  Each decision made sense at the time, he said, but the totality was not apparent.

OK, this is the essence of the Trial and Error economy.  You are always testing the strategy and its implementation.  You’re never really sure that you have it right.  You try changes from the old way, and then you wonder if you should go back.

Here’s my suggestion to Howard: you have lots of shops.  Try a few with the "old style" set up, where the beans were ground in-store, filling the air with the wonderful aroma of coffee.  Try out espresso machines that don’t block the customer’s view of the barista’s work.  And watch their sales in comparison with other nearby stores.  Test, test, test.

Side note: my experience with Starbucks doesn’t match Shultz’s fears.  The Starbucks that would be my favorite is usually too busy mid morning for me to get a table, so I go to another shop every week or two.  If I time my visit for 5 or 10 minutes before the hour or half-hour (when people meet friends), I can usually get a place to sit.  These shops do not have room for more sit-in customers.  Their only hope is to build the afternoon crowd and the take-out crowd.  So I’m not sure what Shultz is worrying about.

Another side note: the folks who want good coffee drinks for take out in the West Coast are gravitating to Dutch Brothers drive throughs.  I know Starbucks has drive throughs, but perhaps they should add a second brand for the drive through experience, just as Gap has Old Navy and Ford has Lincoln-Mercury.