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Losing the Starbucks Experience

March 23rd 2007 08:07
"Disruption theory says that products or services evolve incrementally to better meet the needs of the most demanding customers, but eventually overshoot the needs of most consumers."

Overdrive! It reminded me of a saying that even genius may have its limitations. The same principle applies in crafting our strategies and relentless attacks in the market. The newest case of overdrive now threatens Starbucks and the great coffee experience.

According to news articles, Starbucks Founder and CEO Howard Schultz has sent a memo to all board members expressing his apprehensions with regard to the future of heart-warming Starbucks Experience.

Cited from Starbucks Gossip

Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand...

...we overlooked the fact that we would remove much of the romance and theatre that was in play with the use of the La Marzocca machines. This specific decision became even more damaging when the height of the machines, which are now in thousands of stores, blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista.

...we desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience. While the current state of affairs for the most part is self induced, that has lead to competitors of all kinds, small and large coffee companies, fast food operators, and mom and pops, to position themselves in a way that creates awareness, trial and loyalty of people who previously have been Starbucks customers. This must be eradicated.

...Let's be smarter about how we are spending our time, money and resources. Let's get back to the core. Push for innovation and do the things necessary to once again differentiate Starbucks from all others.

A Latte of Lessons
The relentless quest for innovation and process improvements will definitely help maximize returns on investments and increase profit margins. However, the same strength will turn out to be our major weakness if we overextend our reach.

The potentially disastrous downside is a classic case of marketing myopia or shortsightedness. Perhaps the Starbucks team was very absorbed with maximizing profits and became overtly eager to please it customers with new products. Not that there is anything wrong with that. I believe every business takes these strategies one way or the other.

What they miserably failed to see is the diminishing emotional prowess of Starbucks coffee experience built for many years. In the words of Mr. Schultz, they lost the “romance and theatre”. They are no longer reacting to the growing needs of coffee aficionados, they have gone beyond to a point that they are invading other turfs and creating more competitors like McDonalds and Dunkin Donuts.

Moreover, they will lose authenticity, dampen their image, and eventually destroy the ambient social setting often referred as the “third place”.

Maybe it's high time for Starbucks board members and officers to take a step back, re-examine the big picture, and develop a long-term strategic plan to preserve its uniqueness. Hey, coffee might help!

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