Lean Thinking at Starbucks

August 5, 2009

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.


Yep, it’s THAT Anne Morriss (i.e. Starbucks Cup #76)

March 11, 2009

Starbucks started to dispense free advice on the side of its coffee cups a number of years ago, in a campaign they titled “The Way I See It.” Anne’s words found their way onto cup #76, and enough people have asked me about it that I’m reprinting it here. I’m biased, but I remain grateful for the way she sees it:

The irony of commitment is that it’s deeply liberating – in work, in play, in love. The act frees you from the tyranny of your internal critic, from the fear that likes to dress itself up and parade around as rational hesitation. To commit is to remove your head as the barrier to your life.


Unsolicited Advice for Starbucks

February 2, 2009

Starbucks’ early success was the result of a lot of very smart, new thinking, including creating a market for higher-end coffee drinks and tapping into consumers’ need for a “third place” outside of work and home.  For many years it thrived as it competed on its innovative business model, a relatively focused positioning. Starbucks delivered a specific experience to a specific set of customers (think Southwest not United).

For all its breakthrough thinking, its status as a public company meant that it still had to tame the growth beast.  And then it came to an inflection point that most focused competitors reach, how to continue to grow after the first wave of saturation.   It’s here where I think Starbucks stumbled.  The company had two choices for growth — continue to expand its focused service offering at the risk of diluting the Starbucks brand or creating a new brand that would allow Starbucks Inc. to grow and learn outside of the constraints of its original offering.

The company chose the former – all too many focused competitors do – and has suffered the consequences.  In doing so, it’s made a classic mistake, essentially trading off quality for growth.  But this is a false tradeoff that can be overcome  in creative ways that do not require abusing the brand.  Yum Brands is a good example. Yum is a collection of five quick-serve restaurants.  The overall Yum organization has ambitious growth expectations, but it doesn’t rely on any one brand to get there.  Yum reveals that it’s possible to have a multi-focused organization. For the sake of my tall skim, extra hot, no foam latte with an extra shot, I hope Starbucks gets this message soon.