Starbucks Strategy: Trial and Error at the Beginning

Starbucks began with a willingness to experiment, according to Taylor Clark’s new book, Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture.  The book begins with a story from when the company had only eleven stores.  The Vancouver BC store was at capacity, and another location in the city was hard to find.  Howard Schultz saw a failing restaurant across the intersection from the Starbucks location and rented it–not to replace the existing store, but in addition to it.  So the bit about Starbucks opening a store across the street from another store dates back to the beginnings.

They weren’t sure it would work, but they tried it and monitored the results.  Actually, the monitoring did not require a sophisticated statistical analysis: both the old and the new store did a great business.

We learn from this story the value of the experiment.  It sounded stupid to me.  No amount of head office analysis would have justified the new location.  Some things you have to learn by doing.

What will you get if you try this approach?  A lot of failures.  Later in Clark’s book there are plenty of stories of early plans that needed adjustments.  I’m certainly not endorsing bet-the-company risks every day.  But the businesses that succeed best are continually testing the waters with new ideas, new products, and new markets.  Even if the new market is just across the street.

(Want to read that story?  Go to Amazon’s Starbucked page, click the "Search Inside" page, and search for "Experiment."  Look for the entry in Front Matter (where the introduction is).  It’s one of several items; what you’re looking for is the book’s Introduction.  That will give you the first few pages.  The first real chapter of the book is available on the publisher’s web site.)