Lactose Intolerant or New Era of Corporate Responsibility?

Starbucks chairman warns of "the commoditization of the Starbucks experience"

Starbucks chairman Howard Schultz wrote this to CEO Jim Donald earlier this month. The memo's authenticity has been confirmed by Starbucks.

From: Howard Schultz
Sent: Wednesday, February 14, 2007 10:39 AM Pacific Standard Time
To: Jim Donald
Cc: Anne Saunders; Dave Pace; Dorothy Kim; Gerry Lopez; Jim Alling; Ken Lombard; Martin Coles; Michael Casey; Michelle Gass; Paula Boggs; Sandra Taylor

Subject: The Commoditization of the Starbucks Experience

As you prepare for the FY 08 strategic planning process, I want to share some of my thoughts with you.

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.

Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces. For example, when we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency. At the same time, 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. This, coupled with the need for fresh roasted coffee in every North America city and every international market, moved us toward the decision and the need for flavor locked packaging. Again, the right decision at the right time, and once again I believe we overlooked the cause and the affect of flavor lock in our stores. We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma -- perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage? Then we moved to store design. Clearly we have had to streamline store design to gain efficiencies of scale and to make sure we had the ROI on sales to investment ratios that would satisfy the financial side of our business. However, one of the results has been stores that no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store. Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee. In fact, I am not sure people today even know we are roasting coffee. You certainly can't get the message from being in our stores. The merchandise, more art than science, is far removed from being the merchant that I believe we can be and certainly at a minimum should support the foundation of our coffee heritage. Some stores don't have coffee grinders, French presses from Bodum, or even coffee filters.

Now that I have provided you with a list of some of the underlying issues that I believe we need to solve, let me say at the outset that we have all been part of these decisions. I take full responsibility myself, but 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.

I have said for 20 years that our success is not an entitlement and now it's proving to be a reality. 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. We source and buy the highest quality coffee. We have built the most trusted brand in coffee in the world, and we have an enormous responsibility to both the people who have come before us and the 150,000 partners and their families who are relying on our stewardship.

Finally, I would like to acknowledge all that you do for Starbucks. Without your passion and commitment, we would not be where we are today.



My turn!

  1. OMG, don't you want to just run to this guy, give him a big hug and say "Howard, it's going to be okay"
  2. Add this to the list of "Thing you don't see every day"
  3. First thought - Oh, it's not you, it's me
  4. Second thought - Wow! Wish my boss would send me something like this

When I first saw this in the Sunday paper, I thought to myself, more corporate evolution. Maybe he woke up in the middle of the night, from some bad dream that had him standing in line, waiting for coffee, and got to the front counter, only to find the barista unable to make eye contact because they are too focused on the cashier monitor. Or, maybe as he was driving up the 405 he had some near-death experience. Either way, whatever he's drinking bartender, pour me one too!

In terms of what makes a good Starbucks, it's not always the's the people behind the counter. It's the fact that I can go in after having a really crappy day at work and know that they are in this with me too! It's that green apron that is really a sign of solidarity with those of us stuck in business casual, longing for the days that we let slip away, sip by sip of that wonderful strong black/brown drink.

There's an atmosphere, one that many of us value. You know you value it too, or you wouldn't have a nice balance of cushy living room seating and kitchen round tables.

I can't tell you how it warmed my heart, and I'm finally not being sarcastic. Can Starbucks continue the trend of elite corporate responsibility - offering living wages, progressive management training, health care - leading the way to minimizing Starbucks' footprint on the planet? Fair trade coffee, organic milk...can this be the norm and not for an extra 50 cents? Get rid of leaching plastic lids, in exchange for reusable mugs?

If we are a dedicated consumer following, why not be the cult leader by offering mugs that incorporate our starbucks cards?

Hey, I drink the koolaid, it's called a double-short soy latte. Mr. had me at hello.

So, what's next? I'll use my mug, if you use organic milk at the same price as regular milk. I'll continue to go to Tully's when I can, because it's not so large that the roast have lost their meanings, but you could win me back...have your fair trade coffee become your house roast.

I was thinking about this the whole way back from my 3 p.m. coffee run. Why should you listen to me?

I think you hit it right on the head...the coffee sold it's soul to the devil, in return for lines out the door, dueling cross street rival stores (yes, two Starbucks kitty corner from each other), all in an attempt to capture market share and secure the profit. I say, screw the profit, gimme my coffee, and for Gods sake, pull that sweet shot like's there's none other.

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