What a Big Business Like Starbucks Can Teach a Tiny Business Like Yours

Not that we had won, because there is never a finish line, but that despite the odds, the brand and our partners were prevailing.”

It was the fall of 2010. And that’s what Howard Schultz, Starbucks ceo (they don’t use capitals), was thinking just as he was about to make a call to share some long overdue good news with his investors.

After two years of consecutive losses, numbers that had been in free fall were beginning to turn around. That quarter, the company had earned $152 million, compared to a loss of $7 million the year before, a pretty big shift for a company many thought was on its way out.

And the success was sweet, but it had been a rough ride.

In his book Onward: How Starbucks Fought for Its Life without Losing Its Soul, Schultz shares the behind-the-scenes story of Starbucks’ transformation from hanging-on-by-a-thread to alive-and-thriving through the Great Recession.

It’s a powerful story, and a fascinating read.

Schultz, the company’s founder, had stepped away from the CEO role eight years earlier, and everything looked like it was going well. Starbucks was opening stores around the globe at an astonishing rate. Profits were steady and always on the increase.

Yet by 2006, he’d begun to feel an intangible change when he visited stores. Something was missing; the customer experience had shifted in subtle ways that he could feel, but not explain. Traffic was down considerably.

Something was just flat off.

And it bothered him. A lot.

So in early 2007, he wrote a private memo to the corporate leadership team, speaking from his heart about his concerns. His intent, he says, was never to attack. He wanted to begin a conversation, and figure out a way to get back to the core of what Starbucks was all about.

But then, someone leaked the memo.

And the rest, as they say, is history.

It was a terrible moment, one that felt like a betrayal for him personally; one that hurt the company too when all hell broke lose in the media.

But in the end, that event lead to a series of changes that brought Starbucks back from the edge of self-destruction.

And then, to their highest profits ever.

Why should any of this matter to you?

Because the lessons Schultz learned, and the steps he took to save that company, are lessons that fit just as well for a tiny business like yours. And mine.

I’m not even that much of a Starbucks customer, and yet, I encourage you to read the book. It will make you think.

In the meantime, if you want the good stuff in a hurry, here are 7 takeaways from the Starbucks transformation.

1. No – you don’t have to compromise your principles to be profitable. Even as he fought to cut costs and restore Starbucks to health, Schultz never wavered on what mattered most: taking care of their partners (employees), and serving the best coffee in the world.

What matters most in your business? If you’re not sure, time to figure it out.

2. Growth for growth’s sake is not sustainable. No, size is NOT all that matters. Not even close.

‘Nuff said. :)

3. The smallest inefficiencies add up to millions lost. With the help of baristas and store managers, Starbucks managed to shave millions off their operating costs, all while maintaining top notch quality.

Your own inefficiencies may only be costing you hundreds (or thousands). Doesn’t that still feel like millions?

Find the leaks, and plug ’em.

4. Involve your people. They will have ideas you’ll never think of. Starbucks partners are a loyal, creative and brilliant lot, and they had all kinds of contributions that made a real difference. Your people will be the same.

Oh, and if you’re a team of one, your people may be your customers. Or your suppliers. Or your entrepreneurial friends. The point is, don’t problem-solve, or create, in a vacuum.

5. Bring them together every now and then, and find ways to inspire. Yes, I know. Today you can run your empire in your pj’s with nothing more than a smart phone and a decent internet access. But human beings need contact. And community inspires.

At least once a quarter, find ways to bring everyone together for inspiration, education and a much needed re-charge.

6. When it’s time for a change, start with a “Transformation Agenda”. One of the first things Schultz did was pull his team together for a deep-dive retreat to create a Transformation Agenda. That beautiful and carefully-crafted document guided their actions for the next two years, through one of the darkest periods in their company history.

If your business is stuck, or just a little stale, what would a Transformation Agenda look like for you?

7. Relationships are everything. For Schultz, the experience of each customer who walks into a Starbucks anywhere in the world was his North Star. Second only to that, was his determination to take care of his employees.

Always come back to your customers’ experience, first. Look for ways to deepen that connection. Then do the same for your team.

Those connections will carry you through the worst times in the best ways, and you’ll never regret it.

Photo Credit: Rebecca Krebs on Flickr


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