Lean Thinking at Starbucks

The WSJ wrote an article about the recent adoption of “lean thinking” at Starbucks.  Lean thinking is a philosophy popularized by Toyota’s famous Toyota Production System (TPS) that emphasizes rooting out waste in its many forms.  At Toyota, waste might be excess inventory.  At Starbucks, waste might be baristas taking too many steps to travel from the coffee beans to the espresso maker.  After reading the article, I’m not optimistic about the process of Starbucks trimming down.

Scott Heydon has the title Vice President of Lean Thinking at Starbucks, and two of his quotes set off alarm bells for me.  The first suggests that the impetus for the change is to free up the time and space for employees to deliver a better service experience.  The quote:

Mr Heydon says reducing waste will free up time for baristas – or “partners,” as the company calls them — to interact with customers and improve the Starbucks experience.

But Heydon follows quickly with this quote:

If Starbucks can reduce the time each employee spends making a drink, the company could make more drinks with the same number of workers or have fewer workers.

At first glance, this may not sound like an impending disaster.  After all, who doesn’t want better service and lower costs?  The danger lies in the ambivalent framing of the initiative, which is often good enough for the C Suite, but doesn’t fly on the front lines.  If the objective is to enhance the service experience, then a set of activities will reinforce that goal, and the definition of success will be fairly straightforward.  Alternatively, if the objective is to reduce costs, then a different set of activities will be required.  Eventually, these activities will be at odds with each other, and employees will get caught in the tension.

This is a well-worn path that can easily lower performance and increase employee cynicism.  The typical sequence of events is as follows: A manager sets out to make changes with the stated intention of improving the service experience.  Compelling rationale is used, invoking the experience as a driver of premium pricing.  Then, under the banner of improved service, the same manager starts talking about the efficiency gains of the changes.  You’re a barista with more time on your hands? Serve more customers!  Say good-bye to your colleagues!

This is dangerous for two reasons.  First, if your employees believe your commitment to service and then watch you measure productivity gains, you sacrifice focus and trust.  Not only do you breed confusion, but as clarity emerges, employee cynicism is not far behind.  Second, when senior executives begin to prioritize labor productivity over service, they often start to erode the competitive distinction that led to the premium pricing.  It’s one thing to purposefully pivot away from a premium position.  It’s another to creep away from it without making a clear strategic choice.

To be clear, I have seen companies achieve great success through cost-cutting initiatives.  But they were internally branded as cost-cutting initiatives, as a competitive rallying cry for employees and sometimes even customers.  Similarly, I have seen spectacular success when companies commit to enhancing their service experiences — again, internally branded commitments with the requisite decisions and activities in alignment.  I have even seen success with initiatives designed to improve both cost and service.  These typically work when a company is performing poorly compared to its peers and can make improvements on both dimensions, or when a company is in an innovative phase and looking for breakthrough ways to do things.

The problem is the disingenuous internal framing.  By far the most common approach is to try to dress up cost-cutting initiatives as service improvements, which breeds disappointment among employees, customers and owners.  And a tell-tale sign of this charade is shifts in messaging, particularly for multiple audiences.  Starbucks contradicted itself within minutes for the WSJ, which doesn’t make me optimistic that they’ll be an exception to the rule that these initiatives tend to cause more harm than good.

5 Responses to Lean Thinking at Starbucks

  1. Mark Graban says:

    I also have some concerns about the Starbucks efforts, as I blogged about here:

    http://www.leanblog.org/2009/08/defense-of-lean-and-of-lean-at.html

    The idea of not needing as many workers to make the same number of drinks… that is a business pressure reality.

    I think it’s all in how you communicate it. You can, like a number of organizations (including hospitals), say “nobody will lose their job due to process improvement.”

    No layoffs due to Lean. That’s an important committment to make.

    So what do you with your productivity improvements? Train and possibly promote employees to new roles — develop them. Maybe ask them to switch to another store if they are agreeable. Give them “coffee master” training. Do anything but lay them off.

    Then, take advantage of natural turnover (it must be high at Starbucks due to the nature of the job). Don’t backfill.

    As long as the remaining employees aren’t overburdened (you’ve taken waste out of the process), it’s not an unfair deal.

    But if Lean is just “get rid of people” without making the job easier for people, that’s a rotten deal. That’s what people are afraid of.

    Time will tell which path Starbucks is taking.

    It’s much easier to improve productivity when sales are growing. Then you can grow without hiring. That’s not the situation at Starbucks right now, which adds a challenge.

  2. Frances Frei says:

    Mark – your blog is really terrific – incredibly comprehensive coverage of lean concepts. I think we agree about the danger of using lean techniques “to get rid of people,” which makes it very difficult to get employees to participate. In our experience, that dynamic can be made worse by framing the message as service improvement for some groups and cost-cutting for others.

  3. noname says:

    The way Starbucks is going about this is all wrong. They are putting way to much pressure on Baristas on how to move and do a job. These workers are use to working a certain way and now Starbucks is teaching them how to work like “Robots.” “Take two steps foreword, take two steps back.” I think it stresses out employees because now it feels like they are being watched on how they’re doing the job. Who wants to be told on how many steps to walk on making a frappuccino?

  4. Ben Weeks says:

    I love when you said, “…when senior executives begin to prioritize labor productivity over service, they often start to erode the competitive distinction that led to the premium pricing. It’s one thing to purposefully pivot away from a premium position. It’s another to creep away from it without making a clear strategic choice.”

    So true. Starbucks also brought in automated machines much to the ire of some coffee fans. I’m not sure if they’re better or worse, but that move seems to fit into this model of labor productivity over service and quality.

    When starbucks started books about their branding success described how customers could get drinks in real mugs when (drinking in-store) instead of paper cups because the mug delivered a superior tactile experience. In my experience starbucks seems to moved to paper cups. Maybe it’s cheaper to not have to wash mugs constantly. All of this serves to strengthen the smaller independent coffee shops who remember the personal details.

  5. MCP UK says:

    I think it’s wrong when Heydon said “If Starbucks can reduce the time each employee spends making a drink, the company could make more drinks with the same number of workers or have fewer workers.”
    Because eventually if you want to increase performance and customer service, you will not achieve but sending a message to your employees that new machines might replace them and they will be out of a job when that happens!

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