WSSD – What Should Starbucks Do

I haven’t sparked as much conversation with a blog post or observation as I did with my recent post McStarbucks in quite some time.  My employees, my friends, and my clients have all analyzed, taken issue with and empathized with the post.  One client summed the feelings up best when he said, “Yeah, I guess I just don’t want to believe that [the points made in the post] because I’ve been such a fan [of Starbucks].”

The most frequent (and at times aggressive) question I’ve gotten in response to the post is simply, “Okay Doug, what should Starbuck do?”  It’s a great question and one that I’m going to attempt to answer.

Before I get to my answer, let me state for the record that I focus on and immerse myself in the world of small and mid-sized business enterprises.  Further, I focus predominantly on B2B and high-end B2C providers, so Starbucks (being large and retail) is out of my wheelhouse.  I’m taking up this challenge for three reasons:  1) because it seems like a fun thing to do, 2) I think some of the thoughts can stimulate ideas within the base of companies that I work with, and 3) my mom taught me not to say anything negative if I couldn’t come up with a better alternative.

One final caveat – Starbucks started going down the wrong path several years ago.  The issues they’re dealing with are complex and simple, one-line solutions won’t do anyone a lot of good.  So take these ideas in the context they’re intended- to provoke thought.

Here goes:

1. As mentioned earlier it took Starbucks several years to get into this mess, so the first thing I’d do, if I ran Starbucks, is realizing that it’s not going to be a couple of months to get out.  Starbucks violated the trust of core customers.  Trust building takes a long time, and it takes even longer to rebuild.

1. I’d look at the roadmap Steve Jobs created at Apple (point of clarity – I’d look at it, I wouldn’t copy it).  Apple was where Starbucks is.  They violated the trust of their core customers and almost lost their franchise as a result.  What did Steve Jobs do when he came back?  He cut.  But, he didn’t cut for cutting’s sake – he cut to get back to the core.  The primary focus of Steve Job’s first 90 days as CEO was to review everything in the product pipeline and cut the number that they were going to focus on.  I don’t have the facts with me, but I recall he cut from 22 to 4 (2 for the business/design market and 2 for the consumer market).  Jobs told Wall Street, employees, and fans that Apple was going to get smaller before it got bigger again.  Apple has maintained that focus and has rebuilt their franchise to one that is stronger than ever before.Starbucks can do the same thing, but they have to get back to their core – “the coffee experience,” or “the third place.”  They’ve got to get back to those who can love them the most – coffee lovers.  If they want to expand the market, start catering to tea lovers (I realize they’ve started doing this).  Create battles, rivalries, whatever; but get back to the lovers.  Starbucks is not going to fix this without feeling the real pain.  It appears to me that they’re trying to fix things without pain.

1. If you want cut prices, don’t cut the prices of your core offering – coffee (and maybe tea).  Here’s an idea – cut the price of wifi.  Make it free for anyone visiting Starbucks – whether they have a T-Mobile account or not (or whichever provider they are using – I haven’t been there to hang out in a while, so I don’t know).

1. Make it fun, enjoyable and/or useful to hang out there.  My experience at Starbucks of late can be summarized as:  loud, chaotic, dirty and congested.  Clean the place up and keep it clean.

1. Reduce the offerings, don’t increase them.  Here’s a general rule – increase in good times; decrease and refocus in bad times.

1. Appreciate and love your customers.  Not with discounts (I’m worth more than a $2 cup of coffee) or “frequent buyer” programs.  Just make me feel appreciated and loved.  I used to love the fact that when I went to my local Starbucks, I didn’t have to give them my order – they knew it.  Today, I’m happy if I can get eye contact and a genuine, authentic statement from a “barista.”

1. Cut the number of locations by 1/3 and focus on making the remaining 2/3 great – and I mean great.  Anything less than great from Starbucks is not going to be enough to turn the tide.  By the way, get rid of (or rename) the in-store kiosks in supermarkets and other places – the service there is horrible, the people aren’t trained and it destroys the brand.

1. Focus, Focus, Focus.  Decide how you are going to be defined and focus manically on that.  What is Starbucks today anyway?

1. Stop worrying about the competition.  I’ve heard Howard Schultz refer to Dunkin Donuts and McDonalds more in the last three months than he did in his entire first go around as CEO.

1. Get back to having fun.  I don’t get the sense that Starbucks is having fun and that makes me less likely to go.