The starbucks experience


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Turning The Ordinary Into Extraordinary

After two years of access to the inner workings of the coffee-retailer behemoth, Joseph Michelli wrote The Starbucks Experience in an effort to explain the company’s runaway success. From its establishment in Seattle in 1971 as a single-location coffee shop, Starbucks now has more than 19000 non-franchised locations worldwide, annual sales of more than 15 US $ Billion million and has been rated as one of the best Fortune 100 companies to work for. Since 1992, its stock has grown a staggering 10000 percent.

How has Starbucks prospered based on the supposedly absurd idea of a $3 cup of coffee? By having a progressive corporate culture, says Michelli, and passing its values to all employees - "partners" as they are known in the company. Michelli says that by using the same principles, almost any company can become more successful.
Concentration on Basics

While part of Starbucks’ success is drawn from extensions of its core coffee business - retail sales, music, gift packs - the lion’s share comes from its Creation of Experience. This is true not only for customers but, perhaps more importantly, for Starbucks’ partners (employees). Going beyond things such as stock options and health insurance (provided even for part-timers), Starbucks "consistently spends more on training than it does on advertising," writes Michelli. Its program includes product information, how to create good customer relations, the basic principles of success and employee empowerment strategies.

This philosophy has helped keep Starbucks’ employee turnover rate 250 percent below the quick-service restaurant industry average. Partners are encouraged to have fun, get to know customers’ likes and dislikes and treat each other with respect. Management sticks to the same tenets. Michelli quotes Starbucks International President saying, "It’s impossible to ask our people to behave the same way if we’re not willing to go down that track ourselves." Michelli says that regardless of a company’s resources, all principals can treat employees in a way that will inspire them to creativity and passion.
This book offers a rare blend of boardroom strategies, employee motivation tips, community involvement, and customer satisfaction-for a full-bodied experience that really pays off. It's the perfect business model to give us a taste of success. A rich mix of ideas for businesses that want to learn how to apply the secret behind Starbucks' phenomenal Vision, Creativity, and Leadership within their company and in their field

I have captured the essence of this book in few slides for our learning and applying in our business context.

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The starbucks experience

  1. 1. Some Impressionistic takes from the book of Joseph A. Michelli, Ph.D. “The Starbucks Experience “ by Ramki ramaddster&
  2. 2. Joseph A. Michelli, Ph.D., is an internationally soughtafter speaker, author, and organizational consultant who transfers his knowledge of exceptional business practices in ways that develop joyful and productive workplaces with a focus on the total customer experience. His insights encourage leaders and frontline workers to grow and invest passionately in all aspects of their lives. Your Products, and Your People releases in September 2013. Joseph is a Wall Street Journal, USA Today, Publishers Weekly, Nielson Bookscan and New York Times #1 bestselling author of books like The Zappos Experience: 5 Principles to Inspire Engage and WOW, Prescription for Excellence: Leadership Lessons for Creating a World-Class Customer Experience from UCLA Health System, The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary, The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company, and When Fish Fly: Lessons for Creating a Vital and Energized Workplace which was co-authored with the owner of the "World Famous" Pike Place Fish Market in Seattle.
  3. 3. Prelude The Starbucks Experience discusses the unique blend of “homebrewed” ingenuity and people-driven philosophies that are behind Starbucks’ success. Author Dr. Joseph Michelli gained access to Starbucks personnel and resources and discovered that the company’s success is driven by those who work there – the “partners” – and the special experience they create for each and every customer. Dr. Michelli makes use of real-life insider stories, eye opening anecdotes, and step-by-step strategies to condense Starbucks’ working philosophies into five key principles in order to enable readers to learn from the best – and be the best. Happy Reading …
  4. 4. The Big Idea  Everyone is familiar with the Starbucks story. The eponymous American coffee chain has been part of people’s lives for years now. Among other things, the company has been recognized as one of the world’s most admired companies by Fortune magazine. And this has been reflected in the value placed in the company by its shareholders: since 1992, its stock has risen by an astounding 5,000 percent.  The genius of the company’s success lies in its proven ability to create personalized customer experiences, secure customer loyalty, stimulate business growth, generate profits, and energize employees – all at the same time.
  5. 5. Starbucks: Beginning  In 1971, Jerry Baldwin, Zev Siegel, and Gordon Bowker opened the first store in Seattle.  Inspired and mentored by Alfred Peet.  First store opened in Pikes Place, a touristy area in Seattle.  Customers were encouraged to learn how to grind the beans and make their own freshly brewed coffee at home.  The store did not offer fresh-brewed coffee sold by the cup like today, they sold beans and coffee makers.  The store was an immediate success, with sales exceeding expectations.
  6. 6. Howard Schultz  Business man from New York visited Starbucks in 1981.  Pursued a job at Starbucks, and finally after much deliberations he was offered a job in September of 1982.  Schultz had a vision for Starbucks:  Wanted to expand the company  Visited Italy and loved the concept of the Italian Bar  Starbucks owner did not have the same vision for Starbucks  Schultz left Starbucks to open Il Giornale, a coffee bar based on what he saw in Italy.  In 1987, Schultz bought Starbucks and turned the company operations around.  By October 1987, Starbucks expanded outside the pacific northwest into Chicago.
  7. 7.  In 1993, the company went public.  Schultz wanted Starbucks to be a great place to work so he did everything in his power to do that.  Great pay  Great benefit plan  Stock Purchase Plan for employees  Today 19,000 stores in 62 countries  Revenue – US $ 15 Billion , Operating Margin of US $ 2.4 Billion
  8. 8. 1. Make It Your Own
  9. 9. Principle 1: Make It Your Own  Leaders want their employees to be fully engaged in the challenges of work they do . It is not the motion that counts and it is the action which brings results.  Leaders must find ways to get its stakeholders /partners to fully engage their passions and talents every day, while ensuring that individual stakeholders’/partners’ differences are blended into a good uniform experience for its customers.  It can admittedly be very awkward to find a balance between these two vital – yet sometimes divergent – leadership responsibilities. Through its principle of Make It Your Own, however, Starbucks has managed to create a model that encourages partners at all levels to pour their creative energy and dedication into their jobs and inspire customers in legendary ways.  This structure is known as the “Five Ways of Being” and is encapsulated in a pamphlet known as the Green Apron Book:
  10. 10. Make It Your Own “This is the true joy of life, the being used up for a purpose recognized by yourself as a mighty one; being a force of nature instead of a feverish, selfish little clot of ailments and grievances, complaining that the world will not devote itself to making you happy.” - George Bernard Shaw
  11. 11. Ideas to “Sip” On Reflect & Share
  12. 12. Make It Your Own-The 5 ways of being Way #1 : Be Welcoming  At Starbucks, “Being Welcoming” is a key way to get the customer’s visit off to a positive start, and is also the foundation for producing a warm & comfortable environment. It lets partners connect with customers.  “Being welcoming”, at its essence, is defined as “offering everyone a sense of belonging”. Partners should do all they can to create a place where people feel that they are a priority and where their day can be brightened, at least for a moment.  Welcoming people by name & remembering them from visit to visit is a small thing, but it counts very much. People fear just being another member of the herd; they want to have their uniqueness recognized. Offer Everyone Sense of Belonging
  13. 13. Welcome people by name: “Remember that a person’s name is to that person the sweetest and most important sound in the language. In fact a person’s name may be his or her most valuable possession” Dale Carnegie
  14. 14. Make It Your Own-The 5 ways of being WAY #2: Be Genuine At Starbucks, being genuine means to “Connect, Discover, and Respond”. Focusing on these three elements in each and every customer every interaction forms a quality relationship: 1) Connect. Legendary service comes from a desire & effort to exceed what the customer expects. Customers have repeatedly shared experiences of Starbucks partners making a connection well beyond conventional greeting. Individual staff uniqueness gives them a special way to connect with others. 2) Discover. Business success requires the discovery of each person’s needs and individual situation. Discovery is essential to developing a unique & genuine bond. The special qualities & needs of each customer must be determined 3) Respond. A lot of businesses do manage to achieve the first two elements, but they don’t always act on what they learn. Starbucks employees not only listen to their customers, but also take action immediately based on what they hear & learn from these experiences for future customer interactions. Connect, Discover & Respond Listen to understand & not Listen to reply
  15. 15. Make It Your Own-The 5 ways of being WAY #3: Be Considerate  Starbucks partners look beyond their needs & consider the needs of others – Customers, Potential Customers, Critics, Co-workers, other shareholders, & even the environment – in sum, the entire universe of people and things Starbucks affects.  At the Corporate level, “being considerate” means exploring the long-term well-being of partners & those individuals whose lives the partners touch – while being mindful of the earth’s ability to sustain the demands placed on it.  Thoughtfulness should become a part of a company’s Culture. Leaders should place a priority on consideration and encourage their staff to put their own twist on the concept. Take care of yourself, each other and the environment
  16. 16. Make It Your Own-The 5 ways of being WAY #4: Be Knowledgeable  What does being knowledgeable mean in this context? Starbucks partners are always encouraged to love what they do and share it with others.  Partners are encouraged to enhance their expertise in coffee and customer service. Value is always added to partners’ efforts when they gain work-related knowledge. In addition, as they become more informed, their value to the business, self-confidence, and the impact they have on others all increase.  Starbucks Top management also offers formal training & Learning opportunities to develop their knowledge of coffee that can lead to personal insights for customers, and also give out incentives for partners to undertake such training. Love what you do. Share it with others
  17. 17. Make It Your Own-The 5 ways of being WAY #5: Be Involved  This means nothing less than active participation in the store, in the company, and in the community – a “yes, I will” attitude where breakthrough products and service are created. There must be a move away from a “bare minimum is OK” mentality.  Partners look around the store for clues on how to make the customer experiences and the business better and to improve the manner in which customer needs are served.  The management makes it a point to listen and respond to the ideas and suggestions of partners – as a result, partners frequently take responsibility for suggesting and championing new product ideas based on the inputs from their customers.  Lastly, there is community involvement, which can take many forms – from creating a community meeting place to staff volunteering in community-related activities, all of which are encouraged and supported by Starbucks leadership Connect with one another, with the company, with your community.
  18. 18. Ideas to “Sip” On Reflect & Share
  19. 19. 2. Everything Matters
  20. 20. Principle 2: Everything Matters  Business is all about attention to details  If you overlook or miss out on details even the most patient customers can be frustrated and costly errors can occur.  What’s more, only a handful of unhappy customers bring their complaints to management – the rest simply bring their dollars elsewhere, switch to alternatives and share their grievances with family members, friends, and acquaintances. (People are more likely to talk about unpleasant experiences than pleasant ones. This is fact of life )  Leaders have to understand that they must take care of both the “below-deck” (unseen aspects) and the “above-deck” (customer-facing) components of the customer experience. In the world of business, everything truly does matter.  Small details makes a big difference between success & failure  Something as simple as a little 7-cent valve did more than its share towards making Starbucks a publicly traded company.  Important details live in both that which is seen and that which is unseen by the customer.  There is absolutely no way to hide poor quality in anything. Hide it though some may try, it always becomes evident in the end.
  21. 21. Principle 2: Everything Matters  The outlet layout, design and show up ., Quality of the Product, training & grooming (doesn’t need to be boring, conventional or mundane), fun to work atmosphere (a playful and positive work environment produces vital and engaged staff members), and a social conscience all matter a great deal.  The “Starbucks sensation” is driven not just by the Product quality , but by the entire atmosphere surrounding the transaction of purchase of its coffee, the openness of its store space, interesting menu boards, the shape of its counter, and other things besides.  The art of retailing coffee – and indeed many other things as well – goes way beyond product. The details of the total experience matter, from napkins to coffee bags, store-fronts to window seats.
  22. 22. Principle 2: Everything Matters  Details has an impact on the emotional connection (the “felt sense”) that others have with you and your store or product.  People should go out and ask what details customers notice about their businesses, in order to know exactly what to focus on (this doesn’t mean however that whatever’s invisible to the customers can be neglected, of course).  Acknowledge the importance of everything, celebrate all the details, and play – have fun while working hard to make sure that everything is as good as you can make it!  Lastly, not only does everything matter; everyone matters as well.
  23. 23. Ideas to “Sip” On Reflect & Share
  24. 24. 3. Surprise & Delight
  25. 25. Principle 3: Surprise & Delight  This idea behind the importance of this principle is hardly a new one. As early back as 1912, the Rueckheim brothers, who are behind the successful candy brand Cracker Jack, already knew that adding a surprise to each package would dramatically increase the appeal of their product.  In that vein, delight is the caramelized popcorn – the basic product that your customers get – while surprise is the prize they get! Customers want the predictable and the consistent, while hoping for an occasional positive twist or added value thrown in.  Nowadays, people have a certain anticipation for something special with just about every purchasing experience, or hope they will get surprised, even in the most mundane experiences.  Today’s customers are far more discerning than ever before and far harder to please than any others who came before them.  To make matters worse, they have developed an insatiable appetite for what is unique and amazing in just about everything they buy. Most consumers have such a high threshold for the cutting-edge and the most up-to-date that they thumb their noses at almost everything that doesn’t qualify as such.
  26. 26. Principle 3: Surprise & Delight  The most effective events are natural and spontaneous, not artificial or forced. Look first for a need, and then step in and fill it in the most genuine and spontaneous way possible.  Surprise can result from as simple a series of events as offering a little guidance, and then stepping in and getting out of the way and watching (and learning) as people search for the things that bring them joy.  Your efforts to surprise others are a contagious force. Look for genuine opportunities to do the positively unexpected. This creates a “ripple effect” that will have customers talking and not only will help bring people to the store, but will also serve to spread good word about your product quality and level of service. And, customers often end up surprising the store staff and/or one another as well!  Customer delight comes from surprise as well as predictability. You should ensure that your customers rely on you and your staff to provide both products and experiences at a consistently high level of quality. The occasional surprise will only serve to sweeten the pot and bring people back for more.
  27. 27. Principle 3: Surprise & Delight  When breakdowns occur, businesses can still delight customers by making things right. You can and should view breakdowns as unexpected (and not entirely unwelcome) opportunities to improve your customer experience.  Delight is the result of an unwavering commitment to creating a comfortable and trusted relationship. If extra time and energy has been invested in delighting others and not simply satisfying them, you will be rewarded with nothing less than extraordinary results.
  28. 28. Surprise & Delight “I slept and dreamt that life was joy. I awoke and say that life was service. I acted and behold, service was joy.” -Rabindranath Tagore
  29. 29. Ideas to “Sip” On Reflect & Share
  30. 30. 4. Embrace Resistance
  31. 31. Principle 4: Embrace Resistance  It was once noted that a person only profits from praise when he values criticism, and Starbucks management has taken this to heart. Valuing criticism is a major part of the Starbucks puzzle.  Embracing resistance involves a complex set of skills that can enable businesses and individuals to create business and relationship opportunities when confronted with irritation, skepticism, and/or wariness.  This principle requires leaders to distinguish between customers who want their concerns to be resolved and those individuals who just can’t seem to stop complaining or seem to find it impossible to be satisfied. Embracing resistance is more than simply placating these groups; it focuses on learning from those individuals who don’t always make it easy to listen.  The ball and chain of unintended obligations – virtually all successful companies make such obligations with their employees and communities and often they can prove difficult to fulfill, such as what you might owe your retiring employees some years down the road
  32. 32. Principle 4: Embrace Resistance  The Warning signs of volume obsession:         Guideline-free, ad hoc spending – the company has “more interesting” and “more challenging” things to think of instead of controlling costs. Functional-level cost centers – profit and loss are always calculated at the corporate level, even though it may no longer be efficient or sensible to do so. A culture of cross-subsidies – the success of one business unit is used to conceal the failure of another one. Truth in numbers – the company’s auditors, stock prices, or industry analysts are saying that the numbers are not in the company’s favor. It’s important to realize that nothing in nature grows without facing limiting forces, and businesses are no different. Therefore it’s best to learn to live with such challenges – and even use them to your advantage. To work with resistance effectively, you must distinguish between those people who really do want their concerns resolved and those who simply want to complain. For some concerns, listening is all that is required. It offers space for commentary and constructive discussion. For other types of resistance, direct action is required; management should know when listening is simply not enough.
  33. 33. Principle 4: Embrace Resistance  While it’s natural to want to avoid complicating the issue and avoid contact with one’s detractors altogether, quite a lot can be gained by welcoming these people to the early stages of problem-focused discussions. Their grievances can thus be voiced and their inputs incorporated early on – when doing so matters most.  If and when the concerns of critics are allayed, these people can and often do become your most ardent supporters.  It’s vital to correct misinformation as swiftly and rapidly as you can. Misinformation has a way of spreading and becoming even more complex and convoluted as it is spread, and the further this goes the harder and costlier it is to deal with.  If and when errors are made, it’s important to take direct, unequivocal responsibility and follow this up with corrective action.
  34. 34. Ideas to “Sip” On Reflect & Share
  35. 35. 5. Leave Your Mark
  36. 36. Principle 5: Leave Your Mark  We all end up leaving some mark or foot steps on the world.  The difference & the important thing is whether that mark is positive or negative.  Do we give back more than we take, or do we take more than we give?  This is particularly significant in the world of business, where Leader’s actions have profound effects on individuals & societies.  Some leaders are content with hitting the firm’s product goals and cut corners on everything from employee benefits to capital expenses.  Others believe that an important part of their business success is linked to the powerful and positive impact they have on their communities.  Successful leaders realize that a key component of their success is leaving a powerful and positive mark in the communities in which their businesses operate.
  37. 37. Principle 5: Leave Your Mark  Many business executives initially decide to be good corporate citizens because they hope it will improve their business.  Almost all who sustain this type of commitment do so because it becomes patently obvious that this is the right way – indeed, the only way – to do business.  People want to do business with, work for, invest in, and patronize socially conscious companies.  The most talented and qualified applicants increasingly consider a company’s ethics and community support when selecting an employer.  Employee morale is three times higher in those companies where community development is an integral part of the business model than in their less-involved counterparts.  When employees’ work environments match their personal values, they become far more productive than employees whose work environments don’t match what they value or uphold.  By participating in community-based activities, employees are given the chance to build leadership skills and grow as teams.
  38. 38. Principle 5: Leave Your Mark  The value of a business’s brand is 100 percent linked to the trust people place in the company to do what it says it will do.  Corporate social responsibility shouldn’t be seen as a passing fad or fancy. Instead, it should be valued as the way global business really gets done.  We can all be the change we want to see in the world!
  39. 39. Take Away  The impact of these principles transcends the Starbucks story and offers all leaders an opportunity to greatly enrich their workplace.  They demonstrate how an entrepreneurial spirit and extraordinary leadership skills can elevate a product or service and even change the way in which that product or service is delivered.  These guidelines allow each of us to improve our workplace, whether by developing appealing new products, opening new markets, or just paying attention to the aspects of our business that we can readily enhance.  In the spirit of Starbucks, these principles encourage us to listen and respond with a greater awareness of opportunity.  They remind all of us that we are responsible for unleashing a passion that ripples outward from behind the scenes, through the customer experience, and ultimately out into our communities.  Let’s take a closer look at each of these principles with an eye to how they work inside Starbucks and how we can tap into their transformational power.
  40. 40. Mail your comments to ramaddster&