Did Process Improvement Destroy Starbucks?

I came across a memo from Howard Schultz, the chief executive of Starbucks, the other day.

From: Howard Schultz

Sent: Wednesday, February 14, 2007

Subject: The Commoditization of the Starbucks Experience

Over the past ten years, in order to achieve the growth… from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks experience…

Many of these decisions were probably right at the time… but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces.

For example, when we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency. At the same time, we overlooked the fact that we would remove much of the romance and theatre that was in play with the use of the La Marzocca machines. This specific decision became even more damaging when the height of the machines, which are now in thousands of stores, blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista.

This, coupled with the need for fresh roasted coffee in every North America city… moved us toward the decision… for flavor locked packaging… We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma — perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage…

Now that I have provided you with a list of some of the underlying issues that I believe we need to solve, let me say at the outset that we have all been part of these decisions. I take full responsibility myself, but we desperately need to look into the mirror and realize it’s time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience…

I think the memo is fascinating in two ways:

1. It shows the problem with process improvement

The memo highlights the Achilles heel of process improvement beautifully.

It is easy to blame process improvement for the installation of automatic espresso machines. It is easy to say that it was the process improvement team that started to deliver bags of ground coffee to the stores direct. But in both cases, blaming the process guys misses the point.

Who were these “improvements” implemented for? The company or the customer? Did they fix an internal business metric or an external customer need?

A process improvement only counts if the customer benefits. Let the customer judge. If they don’t like the improvement then it doesn’t count as an improvement… does it?

2. It is all about management integrity

The second fascinating point is one of integrity. It is a brave man who, when he sees a mistake, takes full responsibility for it and does a U-turn to solve the problem.

How would your CEO behave? Would he admit that the organisation had been wrong to focus on its internal measures and face into the issue? Or would he have blamed the process improvement initiative and scapegoated the people responsible?