Starbucks Says Good-bye to the Bears

Starbucks advertising image, 2007 holiday campaign


When Madison Avenue waved good-bye to Starbucks headquarters last month, I wonder if "I Love N.Y.E." by Badly Drawn Boy was playing on their iPods? When I first saw the 2007 Christmas ads on TV I could only imagine that Howard Schultz was having a stroke. Apparently he was.

Since retaking the helm as "president, ceo and chairman" of Starbucks (titles are always in lower case at SBUX), Schultz is steering the Transformation Agenda with the steady hand of an experienced captain on a tight ship.

Schultz posted seven directives in as many weeks to stockholders and partners (employees) that:

1. Refocus the company on its customers, products and mission to be the "premiere roaster and retailer of coffee"
2. Lay out the purpose and framework of the new organizational structure
3. Reassure employees that the number of positions being eliminated is minimal as growth continues
4. Inform investors that new investment will be directed internationally and that some 100 (of 7,100) company-operated locations will be closed

While the repositioning of the brand and the store environments will play out over months, not days, customers will begin to notice changes soon. A $1 "short" coffee (8 oz.) is being introduced; free AT&T WiFi service will be offered to customers; and the reheated breakfast sandwiches will be discontinued, though warmed pastries and lunch items will still be available.

In an unusual move, Schultz announced that all U.S. company stores will close between 5:30 p.m. and 8:30 p.m. on Feb. 26th so that partners can undergo coffee training. Back in the last millenium, Starbucks considered coffee training so important to the initiation of new partners that even this consultant was required to take the full 3-hour course on the first day of our engagement with the company.

In those days management and partners shared a common belief that they were changing the retail course, outfitting an organization with an able crew with respect for their craft. The Siren on the logo provided all the cartoon imagery required to convey the message of this iconic brand. As the bunnies and bears go back to Madison Avenue, and the store experience improves, you can almost hear the Siren sing again.

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Parody of Starbucks TV ad for 2007 holidays

On Management Consulting

Banshee and crew, The Race to Mackinac

Beware of consultants offering advice. Though many of us aspire to be “trusted advisers,” that role is rarely sought out by clients.

Consultants are more like explorers, architects and engineers than sages. Simply put, consultants organize projects to help clients seek out, design and build sustainable business models. To each role they apply specific tools, skills and temperaments which extend and complement the capabilities of the client. Typically the client sets out the mission, the consultant charts the course, and the client provisions the resources, commissions the expedition, and claims the spoils. At each stage of the journey consultant and client reflect on what they have learned and derive the business implications. As the they learn, they rewrite the specifications for the business model.

For, guided exploration and reflection (and not repetition) are the basis of learning. Consultants should be expected to organize projects that help their clients apply directed learning to the development of more effective business models.

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Best Practices in Corporate Design

The Heineken keg can, introduced in 2000

The late graphic artist Paul Rand is credited with the expression "good design is good business." Thomas Lockwood* has honored his legacy by cataloging a number of best practices followed by businesses that incorporate design into their corporate culture.

In an article derived from his doctoral thesis, Lockwood promotes the following ideas he has seen in action at these companies:

1. Innovate by separating and differentiating the processes for managing legacy designs from those for managing new, "quick-release" designs (Nike), thereby allowing the former process to maintain the company's heritage while the second becomes the engine for reinvention.
2. Keep the brand fresh but coherent by introducing innovative packaging that echoes iconic elements from the brand's heritage (Heineken).**
3. Use iconography with a common design style to present a consistent visual image across all sub-brands. Microsoft maintains consistent imagery across more than 6000 icons for its Windows and Office platforms.
   
4. Reinforce the information architecture with the design architecture by using identical icons and names for corresponding features and functionality across all product lines (Microsoft).
5. Engage customers in the product design process as requirements are developed and preliminary designs are reviewed (British Airways).
6. Reinforce cultural norms by designing work environments that promote those values. StorageTek promoted collaboration and creativity by remodeling common areas in its buildings with inviting lighting, materials and color pallets and using these spaces to showcase the work of local artists.
7. Formalize design rigorously after developing design concepts creatively. Nike uses "sandbox meetings" with three-person development teams to come up with concepts, then expands the teams with specialists to drive designs to final forms.
8. Treat design as a capital resource that both requires investment and creates on-going, differential value. Starbucks empowers key resources to review store designs and merchandise selections and schemes so that the essential brand experience can be preserved as the enterprise expands and develops.

By following these principles of alignment, empowerment, and process discipline, organizations can develop and maintain distinctive brands that concisely convey their values.

*See Integrating Design Into Corporate Culture, by Thomas Lockwood, Design Management Review, Spring 2004.

**See Shape of beer to come. Beverage packaging gets more emphasis, The New York Times, The Media Business: Advertising, 22-June-1999.

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Digital Restaurant Design

Design in process (Autodesk)

Among the important PLM techniques now being applied to restaurant design is rapid visualization of 3D interior spaces and kitchens. The more sophisticated of these tools now incorporate parametric modeling, allowing the designer to build business rules into the design process itself. For example, the designer may require that customer aisles be at least 2 feet wide; that hanging lamps never fall below 7 feet from the floor; and that kitchen equipment never throw off more heat in an area than the HVAC system can handle.

Digital architectural modeling:

• Promotes early review of design and functionality by non-technical users of the design process, such as executives from operations, marketing and procurement
• Avoids expensive building of prototypes while permitting extensive trial and error
  
• Preserves a record of the design history
• Allows designers to reuse components of the design in future models
• Facilitates cooperation among spatially and temporally separated contributors

We consider it an indispensable component of Retail Lifecycle Management (RLM).

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The US Export Opportunity

Declining value of the US dollar as calculated by the US Federal Reserve Bank in their Index of Major Currencies, 5-Feb-08, 15-year trend

I recently asked a panel of experts in the food and beverage industries to rank a set of five topics by level of importance in their 2008 strategic plans. Among 6 respondents these were their rankings in order of importance:

1. Supply chain development
2. Product innovation
3. Outsourcing
4. International trade channel development
5. Safety and compliance

Results indicate continuing emphasis on the competitive necessity of reducing input costs by buying abroad (items 1 and 3), but also strong emphasis on innovation.

This analyst sees opportunity in international trade channel development (4) for U.S.-based multi-nationals in light of weakness in the U.S. dollar and the trade imbalances that are sustaining that weakness. U.S. businesses have gained price competitiveness, as the value of the US dollar has fallen more than 10% in the past year against major currencies and 33% since 9/11/01 (see chart above).

U.S. sales channels overseas have not developed nearly as fully as have our supply channels, despite the fact that U.S. made products are generally valued for their quality and safety. In part this results from draconian government policies in China, now our largest trading partner, which prevent Chinese consumers from fully participating in the value they create. This imbalance has become so extreme and prolonged that some analysts are predicting that it will cause substantial unrest within the next couple of years.

Nonetheless, in China, India, Brazil and other rapidly developing countries the fast-growing middle classes represent important potential markets for U.S. goods. Manufacturers are advised to invest in opening trade channels to these consumers and take advantage of excess ocean container capacity flowing into these markets.

See "Midwest Manufacturers Fight to Stay Competitive in Global Marketplace", On Line NewsHour, 29-Nov-07

To learn more about our work in consulting, read about our Practice or check out our Case Studies