People and 150,000 Little Things

So how do you like your Starbucks coffee?

Is it a tall mocha with a croissant? Or what about a skinny cappa?

And why do you love going there?? Is it a special treat, the place to get away from your kids when you need a 20-minute break from parenthood? Maybe the place you go to because it smells like intelligence when you need a shot of creativity during your WFH day.?

Maybe it’s the atmosphere, the friendly banter with the barista, the great background music, or the mouth-watering menu.

Starbucks is a huge flashpoint for bloggers, particularly.? Many people hate Starbucks, and many people love Starbucks. Many other people seem to love and hate the company simultaneously. Some seem to love hating them.

In America, Starbucks has the problem that every other brand only wished it shared.? It’s too good.?? It makes lots of money. It turned employees formerly known as counter help into baristas. And it makes great coffee.

But some people don’t see it that way.? They hate it because it is too upscale, over-priced, and pretentious. Others hate the taste of the coffee, complaining that it is too strong, too weak, too “burnt.” Some call Starbucks’ loyalists, with their particular espresso demands, “coffee snobs,” while there are also extreme coffee connoisseurs who consider Starbucks coffee to be undrinkable swill.?

Maybe it’s the why-didn’t-I-think-of-that-first? theory.

Or maybe, it’s how they have applied the approach to efficiency and continuous improvement that rubs people up the wrong way. After all, it’s meant to be just a coffee shop, right?? But Starbucks don’t see it that way, they see themselves as a highly efficient system that sells coffee on the ground floor. On top of that they sell more and, in their view, deliver it better with a great customer experience.

Starbucks has gone through many stages of transformation over the years.? There is lots of news today about the success of their digital transformations.? Their 2015 mobile order and pay features that led the market, their Deep Brew Artificial Intelligence tools apps that offered customisable menu boards to customers across multiple channels, made recommendations based on the history of customers, and helped the company with maintenance of its espresso machines.

Now, their 24.7 million active reward card holders drive over half of their US operated sales, drive-thru and mobile ordering accounts for 70% of their transactions and they now have the 2nd largest mobile payment app in America. This digital transformation coupled with incredible data expertise has resulted in millions of daily customer interactions giving them insights that can guide every part of their business.? What a huge platform for continuous improvement.

So why have the bloggers of the world taken such an afront over the years to Starbucks??

Well in those early years, the period when they started to implement Lean Thinking from the Toyota Production System and Taiichi Ohno, Lean Thinkers weren’t that happy.? When the Wall Street Journal published an article into what Starbucks were doing, it was scathing: ‘Starbucks has a “Lean Team” that goes around the country with a stopwatch and a Mr. Potato Head toy to test store managers if they can put it together and rebox the toy in less than 45 seconds’ according to one report.? It all centered on whether Lean was simply making Baristas into robots!

But Starbucks needed the real, true benefit from Lean.? They had 10,000 stores, each of which prided itself on a unique customer experience. That set up alone meant a standardised one cap fits all approach just wouldn’t work like it does in MacDonalds.? Customers at Starbucks demanded more variety, and the Toyota system showed us that flow is possible even in complex product mix environments.?

Previously, Henry Ford had proven that, on an assembly line, the production system can be made hugely efficient which transformed how cars were made. Remember the term “any colour you want as long as its black”.? Toyota, however, then figured out (with great benefit for the customer) how to achieve flow production in these lower volume, high-variety environments and service areas, just like Starbucks.

But where the issue occurred is that these bloggers misunderstood the 2nd aspect of Lean that Toyota innovated.? That was the social dimension.? Toyota revolutionised the social dimension of work, respecting workers’ brains, not just their hands. So, with this innovation, factory workers became knowledge workers.

Starbucks couldn’t approach change on its massive, diverse level in a programmatic, straightforward, one cap fits all way — not and provide the kind of unique, customer-oriented service they wanted to deliver. So, they had to do it a different way. They had no choice but to do it the right way — by involving the people who do the work.

In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, the famed CEO, however, that wasn't enough—he wanted to reach the company's store managers (partners), recognising them as essential to the transformation process. The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be diving. Starbucks' fourth quarter profits were down 97% from the same time a year earlier; for the fiscal year, net earnings were down 53% to $316 million. Not surprisingly, the Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million.

Schultz stuck to his guns. He understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks.? But they didn’t stop there.? One of the most well-known outputs of Kaizen on which the Toyota Production System is based is the suggestion box.?

In 2008, Starbucks launched the open innovation platform "My Starbucks Idea". This platform encouraged customers and fans to share their ideas and suggestions for how to make the company’s beloved products even better. As it turns out, Starbucks partners and customers had a real thirst to share their ideas: over the first five years of operation, the platform received over 150,000 ideas, and the company put hundreds of them to use.

What made "My Starbucks Idea" unique?

"My Starbucks Idea" was a lot more than just a fancy suggestion box. To help encourage a community of fans, Starbucks enabled users to vote and comment on ideas they liked. There was also a public leaderboard showing the most dedicated fans, as well as those with the most popular ideas. Users could also see profiles for the Starbucks ‘Idea Partners’ - the company representatives tasked with managing and monitoring online discussion and working with customers on their suggestions. This helped put a human face on the company.

Taken together, Kaizen, the Toyota Production System and a forward-thinking CEO transformed Starbucks into the world’s largest coffeehouse chain. The transformation process continues to this day and the approach proved that this form of Lean transformation is possible for all service and retail industries. Indeed, many service industries — especially healthcare — are discovering the power of Lean.

So, what Starbucks did that the bloggers missed was 2 things.? They sweated the detail, and they involved the people.? Improvement comes not through doing one big thing but through doing a thousand things. Using Lean transformation to get people involved in developing the ideas and driving the change were the masterstrokes.

Love Starbucks or hate Starbucks? It depends how you look at it.