Experience Design meets Operational efficiency at Starbucks

In perhaps one of the finest lessons in how design (especially experience design) stands against operational efficiencies, Howard Schultz, Chairman of Starbucks, spoke out against the many, small, entirely rational operating decisions that combined to create a single, subtle, yet incredibly powerful undermining of the “Starbucks” experience.

In a memo entitled “The Commoditization of the Starbucks Experience,” Schultz describes how these many decisions have led Starbucks away from its roots and even from its guiding principles today. What a terrific note Schultz has written–something that should be required reading for every MBA in the country (and every design student as well, for what challenges they will face in corporations):

Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.

Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces. For example, when we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency. At the same time, we overlooked the fact that we would remove much of the romance and theatre that was in play with the use of the La Marzocca machines. This specific decision became even more damaging when the height of the machines, which are now in thousands of stores, blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista. This, coupled with the need for fresh roasted coffee in every North America city and every international market, moved us toward the decision and the need for flavor locked packaging. Again, the right decision at the right time, and once again I believe we overlooked the cause and the affect of flavor lock in our stores. We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma — perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage? Then we moved to store design. Clearly we have had to streamline store design to gain efficiencies of scale and to make sure we had the ROI on sales to investment ratios that would satisfy the financial side of our business. However, one of the results has been stores that no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store. Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee. In fact, I am not sure people today even know we are roasting coffee. You certainly can’t get the message from being in our stores. The merchandise, more art than science, is far removed from being the merchant that I believe we can be and certainly at a minimum should support the foundation of our coffee heritage. Some stores don’t have coffee grinders, French presses from Bodum, or even coffee filters.

Schultz has a point. Perhaps even more than he mentions. For while the Starbucks experience has lessened, many small coffee shops have been able to reap the spillover benefits of Starbuck’s scale and success. The market for premium coffee drinks is made: the majority of Americans now know what a latte is–many even know what a half-caf-no-fat-no-foam-latte is. And there is an increasing infrastructure supporting small and micro-roasters that enable even small, intimate, and local coffee shops to roast their own beans. Personally, I hold half my meetings at our best local cafe, Mishka’s, because the owner roasts his own coffee in the roaster set smack-dab in the middle of the store (and because I used to swim with him).

In concluding his memo, Schultz does not shrink from his portion of the blame for what has happened at Starbucks. That’s impressive. And I look forward to seeing the outcome of this memo. But I’m doubtful they can right this ship. When it comes to experience design, it can be an enticing (and worthy) goal for large service organizations but ultimately a dangerous one. Real experiences depend heavily on connecting with real people–both their employees and their customers–and the sheer scale of Starbucks makes it almost impossible to manage this connection efficiently without sucking the soul from it. And the aggregation of many small efficiency gains can be hard to pass up when you’re a large corporation.