The Wall Street Journal had an interesting article on the Starbucks turnaround
Heather Haddon The Latest Overhaul of Starbucks—by the Numbers
CEO Brian Niccol is making simple but powerful changes. And these insights can be applied to scaling omni channel brands. Let’s dive in.
Cutting down the menu
You can’t be awesome at everything. As you expand the offerings, you dilute the effort. I am sure someone liked the Royal English Breakfast Latte. But Starbucks is coffee and a Royal English Latte was just too far afield from the core. It’s better to be awesome at some things than mediocre at a ton of things. What are your Royal English Breakfast Lattes?
Reduce complexity. I’ve only observed baristas, but I feel for them. As the menu exploded they had to master more and more drinks and skills. This slowed operations down, frustrated customers and I am sure caused burn out for the baristas. How many after work training sessions for a new type of frappuccino can you handle? Brands introduce complexity with expanded products and expanded channels. Where can you reduce complexity and add simplicity?
Improving the customer experience
Niccol mandated bathrooms are for customers only and wants baristas to have time to write customers’ names on the cups.
This was in reaction to an increasingly transactional experience fueled by the mobile app. Howard Schultz had railed against this because it was counter to the founding ethos of the company.
Or check out this ad that plays up the theme of baristas and customers coming together and bringing a little joy into each others lives.
We live behind computer screens and our customers have unique identifiers. How can you break out of the transactional and build more meaningful experiences for your customers?
Changing people
One of the biggest C level changes is the CFO. If your company is struggling, which Starbucks was, you have to question whether you have the right financial people in place. This is especially true in brands where the working capital complexity can quickly put you at risk.
Niccol also eliminated over 1,100 corporate jobs. Maybe you have a lean, high octane team. But in my research on finance and accounting headcount, I was shocked at some of the headcount sizes of companies compared to their likely revenues. Headcount makes profitability harder. You need that much more contribution profit to cover the additional salary and benefits and costs of each person you add. But more importantly, headcount can slow execution. More people with more agendas are weighing in on every decision.
I coach founders to wealth through improved cash flows. If you are sick of your status quo and ready to make a change, let’s talk.