At Starbucks, the key innovation was its company culture

 

Former Starbucks CEO Orin Smith I find it interesting that most people consider business innovation to be a function of the cold facts of the business plan.  That is, whether your business is successful is a function of whether your hunch—that the world needs a quality/fast service coffee chain, for example—is correct.  What is neglected in this analysis is the role that people play in the success or failure of the business.  And the biggest catch-all description of the way the people within the company relate to it and to each other, and the way their relationships affect the customers, is the corporate culture.

At the 2013 AIPLA Spring Meeting in Seattle, WA, former Starbucks CEO Orin Smith told the story of Starbucks’ success.  The story he told confirmed the critical role that an innovative business culture can play.

“If you ask the executives, they will tell you that the reason we have been successful is the culture,” Mr. Smith said.

Back in 1987, the company as it exists today was founded when Harold Schultz purchased the Starbucks brand, redesigned the stores to make them more comfortable meeting places, and launched an aggressive expansion plan.

“Harold’s vision was to create a third place—a place between work and home, where people would meet over coffee and create community,” Orin reflected.

In the early days, a brainstorming session was held to create a roadmap for the company’s future.

“The most important thing that came out of this brainstorming session was the mission statement: We want to be the premier purveyor of the finest coffee in the world.”

This statement led to a series of socially responsible, innovative guiding principles, including:

  • Consistently create a great experience for our customers, one person, one cup at a time.
  • Provide a great work environment and treat each other with respect and dignity.
  • Never compromise the quality of our coffee.
  • As the company grew, we would give back to communities and environments, including the communities from which the coffee originates.
  • We would create a great work environment for people and always treat them with dignity and respect.

“These [principles] turned out to be so powerful for the Starbucks organization.  Unlike most companies that create these statements and hang them on the wall, we brought them to life by communicating them constantly.  We communicated these message ad nauseum.  We included them in brainstorming sessions, training sessions, decision-making sessions, and debated them at open forums.  Some element [of these principles] appeared in every important piece of correspondence.”

For a time, Starbucks was quite concerned about imitators.  “People were imitating beverage names, etc.  We couldn’t do much about it. But later we realized it didn’t much matter. We were successful because we were able to consistently create the ‘experience,’ which is founded on the culture of the company.  Fortunately it is very difficult to emulate the culture of another company.”

And fortunately, the early brainstorming sessions allowed the key decision-makers to realize the important role that people would play in creating that consistent experience.  A consistent culture is necessary to create a consistent customer experience.  Keeping the principles of the culture alive and present—in every important communication and important meeting—provided the foundation for building that consistency.

If you are curious about building a corporate culture for high performance and which facilitates collaboration, check out this article I co-wrote for the American Bar Association, along with leadership expert Ron Bynum.

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