“How do you get big but stay small?” Starbucks CEO, Howard Schultz, recently discussed the keys to the immense success and growth of the company. Focusing on operating with the goals of the small, 100 employee company that Starbucks began as is essential, no matter how large the scope of the company gets. Sometimes success can come from the simplest of goals; Schultz discloses that the secret to “getting big while staying small” is focusing on customers as individuals, one cup of coffee at a time.
When it comes to strategy and operations decisions, Starbucks is obviously not competing for cost leadership. Every time I grab a latte and see that my total is $5.14, I flinch a little at the cost. Then when my coffee is handed to me, I breathe it in, take a sip, and say, “Oh, but it’s so worth it.” Hence, their success, for the quality and product differentiation of a Starbucks cup of coffee is what keeps loyal customers coming back day after day. With suppliers of the highest grade coffee from 30 different countries, Schultz provides that Starbucks’ greatest goal is “to stay committed to our coffee core.” Not only do they maintain the best quality coffee by doing this, but they also ensure that their each and every action is sensitive to the needs of both the environment and the farmers. Treating the farmers as partners supports one of Starbucks’ most fundamental missions, to maintain the importance of every employee as an asset to the company. Further considering the environment, the recycling efforts and introduction of reusable cups are constantly improving.
With companies that have such continued success as Starbucks, I often assume that they got big and then just stayed that way. But, in reality, a commitment to innovation as well as social perception is essential to truly growing as a company. Starbucks has no shortage of either; with more product lines, global expansion, and ethical efforts than virtually any other coffee supplier, the company ensures that they provide they next best thing before anyone else. From K-cups to the newly released Vismo system, VIA ready brew coffee to the new Veranda blend, customers always have a fresh taste to try. In addition to trying these coffees, thousands of customers also tried a new way to purchase it. The Starbucks mobile app allows for purchases and account management.
Whether the motivation is impeccable quality or the convenience of a store being located on every corner, the numbers prove that customers think very highly of Starbucks. With global revenues of $13.3 billion in 2012, reflecting a 14% increase from the prior year, Starbucks is hitting record highs in sales.
If you are a Starbucks addict, do you take into consideration the ease of mobile technology or the benefits of the loyalty program when buying coffee? Or do you remain loyal simply because the coffee tastes that good? If you steer clear of Starbucks, would the environmental or social efforts have the ability to make you reconsider?
Starbucks CEO Schultz on Digital Innovation: http://www.usatoday.com/story/money/business/2013/04/24/starbucks-howard-schultz-innovators/2047655/
Starbucks: FY 12 Annual Report: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome