My Starbucks Idea, A “C” At Best

I keep an eye on Starbucks — as readers of this blog are well aware. I do this not as an investor, but as a student of all things innovative, and as a bona fide coffee lover. Starbucks is a fascinating study because it’s a combination of good practices and not so good practices when it comes to innovation. Their recently slide into hard times and 600 shop closings indicates trouble in paradise; sadly, I see them as an on-going case study in innovative failure at this point. I don’t think they are listening to their consumers, the key to incremental innovation. Nor do I see them making any radical departures, or starting any new ventures, the key to disruptive innovation and growth. Howard Schultz is like a quarterback who’s suddenly been traded to another team. The plays he’s calling are sincere attempts to score, but they don’t fit the team. He may have some plays up his sleeve we don’t know about. If he doesn’t, I don’t see their stock price, or their growth rate improving any time soon.

As I mentioned in my June post on Starbucks (Starbucks is Dead), they put together a website for consumer suggestions called “My Starbucks Idea” (otherwise known as MSI). I saw the site as a hopeful sign that they were listening to consumers and making an effort to re-create the vaunted experience that made them great in the first place.

I’ve been watching the site for about three months now and I’d like to report what a great success it is, unfortunately, I can’t. It seems to be a sincere effort but it’s flawed and therefore it slides into mediocrity.

What’s good about it is a lot of consumers have jumped in and suggested thousands of ideas. Like any unfocused brainstorming session, the ideas range from the sublime to the silly. There is also lively discussion about various hot issues (like Wifi fees, food, and of course the various coffee drinks). This discussion is rich with consumer data, it’s a real asset for Starbucks — if they use it! The problems with the MSI site, in my opinion, are the following:

1. Very, very few of the ideas are actually being taken into action. The site has an Ideas Into Action blog. What I see reading the entries is a great deal of Starbucks spin – usually reasons why they can’t do an idea (and therefore can’t innovate). You read lots of PR-ish statements about new drinks or food items from Starbucks employees — which is not bad information — but it’s not about Ideas In Action. This blog should be about ideas that have been done, or, how to get an idea done, and could be more productively used in that fashion. What’s the use of a consumer site if you don’t move forward with the best ideas? I realize the percentage of ideas implemented will be very low, but there ought to be some winners, and consumers should know what they are.

2. Starbucks Is Not Really Listening. Some key issues, particularly Wifi and Bold Coffee All Day Long (Not Pikes Peak!) get consistent consumer feedback saying basically the same thing: Wifi should be free and there should be a Bold Coffee option all day long. This is Very Clear consumer feedback and I find it amazing that Starbucks would ignore it. In my many visits to various Starbucks sites, it’s clear they are ignoring it. Surely their qualitative research bears out both of these desires, I would be shocked if it didn’t. And yet, these unpopular decisions (charging for Wifi access, and, a weaker non-bold afternoon brew option) remain in place. This is, IMHO, a classic mistake. They are leaving the door open for competitors to provide what they don’t.

3. Poor Convergence Tools. The site makes it easy to enter a new idea, that’s good. The problem is there is no place to easily compare ideas with each other, no rank ordering, no easy way to sort through all the ideas. What it suggests is that Starbucks wants to leave the consumer out of the convergence process. I get that Starbucks needs to make final decisions, of course, but they are leaving a lot of consumer wisdom on the table by not providing better viewing, voting, sorting, and ranking tools.

I’m still hopeful that MSI can evolve into a more meaningful site for consumer-based ideation, but now, I’d have to give it a “C” grade and just barely that. The moderators and site managers are doing the best they can but I get the sense they are not really empowered to take the site to the next level. My suggestions:

1. Focus the ideation on more specific problems. These would be problems that Starbucks really wants solved, and are motivated enough to make real changes. Take control! So, get the ideas for the problems You Want To Solve, pick one, and put it into action. Then tell us about it.

2. Put the discussion of ideas into a separate area. Separate ideation from discussion. Then list ideas in categories so you can see them at a glance. It’s impossible to scan quickly through ideas on the MSI site.

3. Hire the best ideators and pay them. Use the site to find prolific ideators.

4. Improve the convergence tools, and use consumers for convergent activities.

5. Empower the MSI team to do more.

Starbucks - No Longer Innovative

In early June I posted under the title, Starbucks Is Dead. In that post I explored how, for me as a consumer, the experience had changed, and I was walking away from my favorite coffee. I expressed some hope that they would return to innovative greatness under the newly resumed leadership of Howard Schultz, the original founder. Well, things have taken a decided turn for the worse; Starbucks posted its first ever loss last week, and announced the closing of over 600 American stores, and nearly all its Australian ones. Don’t Aussies like coffee?

The closings might be a smart move in the long run. Schultz undoubtedly has gotten that advice from the bean counters (no pun intended). Starbucks has grown awful fast, and the stand-up joke about their locations holds some truth, that’s why it’s funny (”did you hear where the new Starbucks is gonna be…in Starbucks”). Former CEO Jim Donald was a bit growth crazy and has been quoted as saying his big mistake was not growing fast enough in the international market — because it would have balanced the USA slowdown. Perhaps, but for me that kind of thinking is exactly what slow-roasted their quality, their biggest asset.

What bothers me, and what I think bodes ill for them moving forward, is that Schultz says “the experience hasn’t changed.” He blames things on the recession which is having people pinch pennies and not buy expensive coffee. I’m sure his market research department is telling him this is true, and, I would say the research is missing something, is asking the wrong questions of consumers. Small indulgences are what people can afford when times are tough, so, blaming the recession doesn’t ring true to me. I suppose Schultz has to say that for the benefit of the street — admitting they’ve lost their way in providing a great coffee experience would send their stock even lower. Still, how about some transparency, how about returning to the style of game that got them to the level of success they enjoyed for so long. That style was all about really great coffee. Believe it or not, you can go into a Starbucks in the afternoon and not be able to get a fresh brewed cup of bold flavored coffee. It is sometimes a special order, which they will do, but hey guys, the reason people go to Starbucks is for Strong Coffee. If I wanted the middle of the road stuff I could go anywhere.

I also question all the closings. Why not get creative about making those shops more profitable? It would be innovative for them to create a new model for site profitability instead of slam dunking the marginal locations in the poop can. All those shuttered stores are a real black eye for their image as a corporate good guy. Even granting the impact of the recession on stores, I don’t believe they’ve done enough to create new profit centers. If they had been more creative in new product development, if they had worked harder at keeping the experience fresh, fun, and enjoyable, they wouldn’t be in the spot they are now.

Starbucks is not going to slash its way back to the top; the way they win is to re-invent the experience, re-create something surprising and cool. The market isn’t going to reward them with a better stock price until they do. Time to wake up and smell the coffee Starbucks — and make it a bold brew — time to start innovating fearlessly.

Starbucks is Dead

Okay, maybe a bit of an overstatement.  I say it because my "experience" of Starbucks has gone from a "highlight of my day" to one of avoidance.  Why do I see Starbucks as dead? Because when I go its dirty, crowded, and often staffed by dizzyheads who don't leave enough room for milk.  And, this hurts the most to say, the coffee itself has slipped.  I still find good cups at Starbucks, but not always.

Visionary founder Howard Schultz is back at the helm because results have suffered.  Awareness is the start of a return to greatness.  Apple came back from the doldrums, maybe Starbucks can as well.  

I'll never forget my first Starbucks.  They opened their first Chicago location on Wacker drive and I stumbled into it while waiting to make a sales call at Morton Salt.  I dosed my Americano and took my first sip and was instantly addicted -- this was clearly the best cup of coffee I'd ever had.  I've had thousands since then, I was a true believer.  

Until things started going pear-shaped.

Innovation for a company like Starbucks is incredibly challenging. It's like trying to make love in a straight jacket.  How to keep things fresh and new, how to keep old customers happy while bringing in new ones, etc.  How not to have locations stepping on each others customers.  The key is continuously looking at, and implementing, fresh ideas while maintaining focus on the core business. 

When I heard the suits had changed things from fresh ground to pre-packaged I knew they'd lost it.  Suits are great for keeping the books, not so great when it comes to creating a real cool experience for customers.  

In researching this blog entry I stumbled on My Starbucks Idea -- a site for consumers to post ideas for Starbucks consideration.  In just a few days participating I've noticed real ideation, real dialogue on the site.  It's a good signal.  The heart stopped but it's beating again.  If they want to continue the recovery they'll not only listen, they'll take action on the ideas that have been posted.  

Lots of action!  

Good luck Howard!