The Culture Case Study of Starbucks

The Culture Case Study of Starbucks

After a Howards Schultz themed reading spree that included “Onward”, “Pour Your Heart Into It”, and “The Starbucks Experience” I felt inspired to create an ongoing case study of Starbucks.

One interesting thing about the culture of Starbucks is that they originally succeeded thanks to an amazing culture, than sadly went off the path, as many of us Starbucks junkies have experienced over the last couple of years.

I had a chat about the culture of Starbucks with a former Starbucks employee. She summarized the decline of the once strong Starbucks culture through one, all to common, example. She said “All the pieces for a great culture were present. We all were told exactly how to live the company values. However, management failed to live by example, so quickly each employee started to deviate from the desired culture and create sub-cultures based on each branch managers behaviors.”

I should point out that this former employee worked at Starbucks during the time without Howard Schultz at the helm, and Howard admits and addresses their cultural misalignment in “Onward”.

I recommend reading “Pour Your Heart Into It” and “Onward” back to back to truly get an understand of Howard and the vision for Starbucks.

 

A Summary of “The Starbucks Experience”

Starbucks has become a top global brand by adhering to the following five key principles

  1. “Make it your own” – Customize the experience.
  2. “Everything matters” – Focus on every aspect of the job. Never ever lose your focus on your customer’s experience and point of view.
  3. “Surprise and delight” – Do the unexpected to make buying a cup of coffee enjoyable.
  4. “Embrace resistance” – Learn from your mistakes.
  5. “Leave your mark” – Do your job so that your customers remember you.

The Partner Ethos

Two aspects of Starbucks’ corporate culture are central to its success:

  1. Employees are partners – Starbucks calls its employees “partners” and encourages them to become involved in the company, and to contribute ideas about building the business and improving the product.
  2. Leaders transmit the culture – Managers are responsible for relaying Starbucks’ culture directly to employees.

Partners receive extensive training in the company’s products and service standards, including how to greet customers and shape their stores’ atmosphere. Starbucks spends more on worker training than on advertising – and the expense pays off in terms of employee retention and customer satisfaction.
Principle One: “Make It Your Own”

Starbucks founder Howard Schultz is often quoted as saying that he is not in a coffee business, but in a people business that serves coffee. Starbucks distributes a company pamphlet called the Green Apron Book, which emphasizes these five principles:

 

  1. Be welcoming” – One barista said she keeps note cards on her customers including information about the drinks they like, their families and even the names of their pets.
  2. “Be genuine” – Partners must be active listeners and good observers. Noticing that a new customer looked as though she was about to cry, a barista offered her a toffee nut latte, “Because who doesn’t like that?” The next day she received a thank you note and flowers from the customer, who said the barista’s kindness was literally a lifesaver.
  3. “Be considerate” – On the corporate level, this means instituting environmentally friendly policies such as using wind energy, reducing carbon dioxide emissions and contributing to clean water projects globally. Partners join community projects, such as tree planting.
  4. “Be knowledgeable” – Partners learn about coffee through tastings, internal publications and classes. The store gives each one a pound of coffee every week to ensure that they use the product they sell. Some partners become “Coffee Masters” by completing a three-month program of special training and testing.
  5. Be involved” – When the staff at one store realized that they had many deaf customers, they decided to take lessons in American Sign Language. At other stores, employees have suggested redesigns that improve the work flow.

Principle Two: “Everything Matters”

Retail businesses rise or fall on the details. Therefore, Starbucks focuses on every aspect of its business, including image, employee concerns, product quality, customer experiences and the company’s reputation.

In 1991, Starbucks created an in-house architecture group to design its stores. This unit oversees lighting, furniture, fixtures, artwork, music, aromas, colors, the menu boards and the shapes of the counters. The company has different designs to suit different locations, depending on traffic patterns and other requirements: Some are sleek and modern, while others match the local architecture. Starbucks uses store design to build its brand. One enthusiastic customer claims, “Starbucks could very well operate without even selling coffee. They could charge an entrance fee and offer nothing else but a room and mellow Bob Marley music softly playing in the background, and people would still come.”

Cleanliness is a large part of the customer experience, and all Starbucks stores post cleanliness checklists and follow certain cleaning routines. At least one worker must come out from behind the counter every 10 minutes to check the environment, a requirement that one barista said she particularly liked: “It gives us a chance…to make sure everything is clean and orderly, and we become more involved with our customers.”

Clean restrooms are particularly important to Starbucks; said one customer from New York City, where public restrooms are rare: “Trust me, no matter what the music, the flavor of the day or the wireless availability, Starbucks’ success is all thanks to the free and clean toilets.”

Starbucks pays attention to packaging. When the company noticed that customers often asked for double cups so they could carry their coffee without burning their fingers, it spent two years developing an environmentally friendly cup sleeve out of recycled paper. The company also introduced a takeout cup that uses recycled materials.

Furthermore, Starbucks discovered a way to package coffee so it still tastes fresh for up to six weeks. This both reduced waste and enabled the company to ship its coffee around the world.
Principle Three: “Surprise and Delight”

People love surprises. When the Rueckheim brothers introduced Cracker Jack candy- covered popcorn at the World’s Columbian Exposition in Chicago in the late 1800s, the snack was reasonably popular. But sales skyrocketed when they advertised that every box held a secret prize. Psychologists note that predictability provides security and safety, but the unexpected reduces boredom. People in today’s culture have developed an appetite for the exceptional and the spectacular. Many companies try to avoid surprising their customers, but Starbucks uses surprises to build customer and employee loyalty.

For example, the company shipped its ice cream to 6,000 locations by Federal Express to celebrate National Ice Cream Month. Since Starbucks ice cream is sold only in supermarkets, being able to get it for free at Starbucks stores was a novel treat. Starbucks has given away books by poets who live in coffee-producing areas. In some places, Starbucks stores post signs noting which products are kosher, while in others it displays the work of local artists – depending on what the community responds to and needs.


Principle Four: “Embrace Resistance”

You can’t please everyone. Starbucks copes with criticism and problems by addressing mistakes and working to prevent them from happening again. It takes responsibility for lapses in quality control and makes changes when necessary. The company worked closely with some of its critics to develop coffee-buying guidelines that call for good working conditions for farmers and that minimize pollution. Because it buys so much coffee, Starbucks has become a global force and must concern itself with conditions in the developing countries that produce coffee.

Because they are on the front lines, Starbucks store managers are the first to hear most criticism. For example, the first Starbucks store in Beijing, China, was the target of significant public opposition. Within a few months, government officials wanted to revoke its lease. After a series of meetings, the manager altered the store configuration to allow more people to sit down to drink their coffee, rather than ordering drinks to go. (In the U.S. 80% of Starbucks customers order drinks for take-out.) To emphasize its community involvement, the company donated $5 million to a Chinese educational fund.
Principle Five: “Leave Your Mark”

To carry out its stated principles of social responsibility and community involvement, Starbucks requires managers to have transparent dealings with vendors, open communication with partners and high standards for product providers. Corporate policies mandate environmentalism, volunteerism, and philanthropy. The company’s mission statement says it will be an innovative change agent and that it will develop flexible solutions to problems. It acknowledges the importance of meeting its fiscal responsibilities and treating its employees well.

As a socially responsible company, Starbucks uses a triple bottom line: Its annual report measures social and environmental impact as well as financial results. The senior vice president of corporate social responsibility works with the board and the company’s foundation to find ways to contribute to the communities where its stores are located.

Meanwhile, Starbucks’ philanthropic activities contribute to its low turnover rate. Studies have found that employee morale is three times higher in companies that have a high level of community involvement. Employees who work together on charitable projects build team spirit, and deepen their connections to their communities, to each other and to Starbucks.