It was over beer and wings, so technically it wasn’t a business meeting. Unless of course your business IS beer and wings.

During this not-a-business-meeting, my friend confided that she had “The world’s worst customer.”

We stared at each other.

“The. Worst.” she repeated.

We’ve had this conversation before.

“They keep us from being a great company,” she lamented.  “It’s demoralizing.”

She offered examples and metrics and evidence.  It was all compelling.

Just as we’d had this conversation before, she’s had it with her boss.

Her boss, he’s the President & CEO of her company.  He wants to know her plan to fill the multi-million dollar void after they part ways.

“For the record,” she says, “It wasn’t asked in a ‘Help me plan the strategy’ manner.  It was more of a ‘What the hell do you know?’ question.”

Let me get this straight, your company trusts you enough to manage this customer’s multi-million dollar project, but not enough to believe you have business knowledge?

“Yes,” she said, sounding exasperated.  “These are his control issues shining through.”

“No,” I said. “This is the kid showing the adult how open the childproof cap.”

The CEO’s question, “How do we fill the void afterward,” told the whole story.

You don’t fill the void after the fact; that’s not a strategy it’s a reaction.

It’s also counter-growth–no product development, no market development, no diversification, and no market penetration occurring.

This is the circle of Hell Dante created just for Ansoff.

I basically described the scenario as such:

“Is that about right?” I asked.

Yes.

What’s troubling is that I’ve seen this before.

No, not some dude whizzing on a kid – - you know what I meant, jackass.

Ask yourself, “Who is the enemy here?”  Is it The customer who keeps your company down? Is it the company who values the customer over the employee?

I could say something like “This is how Fight Club begins,” but that would only weaken the seriousness of this issue-even though it’s true.

It sounds trite and sophomoric, but books that rail against the way we do business, the way we treat people, the culture we’ve created, the people we’ve become; books that tempt you to tear it all down and destroy everything mankind has ever touched. Books like these exist for a reason.

The undercurrent of discontent that tugs at and sweeps across generation after generation strengthens with time.  Before long, it surfaces and becomes a tsunami of resentment and frustration.

What then?  On the precipice of disaster, when everything becomes an either/or scenario, do you trust business to make the right decision?  If the fate of all mankind rested in the hands of your company’s CEO or Board of Directors, how well would you sleep?

What does that say about your opinion of your company?  Have you ever taken the leader-member exchange test?

Let me tell you how this ends; the employee --who has all of that invaluable corporate knowledge and customer experience– she will leave.  This is a tremendous problem in American business.  Junior- to middle-level managers are leaving companies at alarmingly high rates and significant costs –financial and otherwise– to businesses.

Imagine the impact  on internal and external perception, company and departmental reputation, employee and customer stability, the impact upon work-in-progress, etc.

And why?  Because the old guard has stopped listening to their own experts. They’ve stopped respecting the customer-facing employee. They’ve forgotten that what they perceive and what others do are decidedly different.  It’s all a matter of perception.  Both views have value, but it’s easier to teach the people on the ground to understand long-term strategic thinking than it is to get senior mgmt. to remember what it’s like to be a junior, customer-facing manager.

Scoff if you like, but it really is that simple.  Consider  the 100 Best Companies to Work For list.  Now tell me why Amazon, Zappos, Google, Wegman’s, Whole Foods, and Starbucks are so popular that a single job gets a 1000 applications.  This before the economic downturn.  The answer, in part, is: A corporate culture that inspires unfettered openness, mgmt./staff collaboration, flattened hierarchies, and the valuation of employees as human beings.

We talk about Stakeholder Theory.

We talk about Transformational Leadership.

My friend, she’s wide-eyed now.

“I was just bitching,” she said.  “This isn’t business, it’s wings and beer.”

-  -  -

Two months passed and nothing changed: The customer continued being terrible.  The company continued to ignore her.  The world continued to spin.  And so she left.

Unable to get the level of support they required, the customer went shopping for someone a bit more reliable.

They called my company.

My boss asked what I thought about working with this customer.  My boss asked what I knew from my friend.

I explained the problems and said it was a bad idea.

My boss said I’d be handling the customer.  “You’ll fix it,” he said.  [Broken and Stupid are NOT synonymous]

I asked if he’d ever said “No” to a customer.

“We don’t turn down business,” he said.  “We never say no.  Never.  We say ‘Yes’ and figure out how to do it later.”

I never thought I’d loathe someone’s inability to say “No”.  But there it is.

Here’s why that terrible customer is the worst:

First, they want mindless automatons to do their bidding not free-thinking, well-educated, professionally competent subject matter experts to provide them with industry best practice support, services, and advice.

Second, they drank their own kool-aid and now overestimate the value of their organization, their product, and their ability.

So what just happened?  Let me sum up: The world’s worst customer became my customer.  Why? Because the boss who wouldn’t listen to my friend became my boss when the world’s worst customer became my customer.  It’s like musical chairs for idiots.

Let me tell you how this will end . . .

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I saw these Coca-Cola holiday ornament-shaped bottles at the store today.

They’re 13.5 oz., sell for $1 each and fit into no cup holder ever designed.

Next time, shape the cap so they can be ornaments, Coke.

*photo [via]

I’ve been working in the defense realm for several years now, and I’ve seen some interesting civilian business tools come to contracting. Why does this matter to you? For one, encouraging news about the Govt and taxpayer dollars is fairly hard won.

Two such tools are Earned Value Mgmt. and Six Sigma. For a very interesting tale of how the Govt is demanding more of defense contractors like ME by saving money that belongs to YOU, read this story: Deploying Lean Six Sigma within the U.S. Navy.

It’s like an Urban Tracking Guide . . .

I recognize some of my own work there. Good stuff.

Seems only right to plug my buddy Rick’s blog, The Weekly Banjo.

I’m writing an article for TWB on the tactics macro-breweries are taking to win back more discerning customers.

Ask “Why?” . . .  and then do something to bring about positive, sustainable change.

Of course, you could just keep doing what you’ve been doing.

Most people would rather be certain

they’re miserable, than risk being happy.

- Dr. Robert Anthony (via L’Aureola)

Every have one of those weeks when –after thinking that you’d experienced it all– you find that shit can get really weird, really quick?

I’ve been living that week for nearly a month (or 24) now.

. . . and the hits just keep on coming.

In case you haven’t heard, once again AT&T is being sued for discriminating against its very own retirees … read about it HERE. 

Yes, I know. The blog used to post crazy stories about my childhood. Now all you get are stories about Starbucks and AT&T.

All I can say is, “Watch out now, you may learn something.”  See, one of the nice things about being an MBA candidate is that I get to play armchair judge.  What follows is my ruling in the case based upon the mock trial we conducted.

- – -

Though outwardly and at first blush the case possesses the hallmarks of a disparate impact or age-based discrimination lawsuit, upon investigation of the facts the court believes neither to be accurate.  Instead, the court believes the Plaintiff’s charges of disparate impact and/or age-based discrimination are defeated by the Defendant’s claim of business necessity.

The very same negative economic situation affecting the Plaintiff(s) seeking reemployment is affecting AT&T.  As such, it is patently unfair to force AT&T to incur a greater economic burden by, in essence, expecting AT&T to serve retirees as a place of hop-on/hop-off employment.  Additionally, it is unrealistic and shortsighted to believe that the burden of rehiring 400 people would not have tremendous operational  impacts upon AT&T.  It is also shortsighted to believe, especially during the current and future similar economic downturns, that droves of retirees would not use this incident as a precedent to file comparable litigation.

AT&T has demonstrated a willingness to temporarily employ its retirees to meet business demands (Slackman, 2008).  It has also demonstrated a willingness to employ American citizen when the opportunity to do so is in its best fiscal interest.  Case in point, AT&T has sought to return 4000 jobs previously performed offshore to the US (Karpinkski, 2009).  To answer Ms. White’s charges that “it is ironic that within the time frame between the 2006 early retirement of the plaintiffs and 2008, AT&T issued a statement that they were having difficulty finding qualified workers in the US;” the investigation indicates a divorce between perception and reality.  Citing a near 50% high school dropout rate in portions of the United States, AT&T’s CEO went on to explain that

The “American public isn’t educated enough to handle customer service jobs at AT&T and probably thousands and thousands of others with all different kinds of employers, these companies will have little choice but to continue shipping jobs overseas” (Cafferty, 2008).

Additionally, the skill set AT&T is seeking and the skill set the Plaintiff(s) offer may not have been equitable, and geography may have played an important role.  As such, the irony is not the CEO’s comment but the Plaintiff’s use of this counterproductive quote.

What these employment-related examples illustrate is a company that forecasts, budgets, and manages itself to be successful for its shareholders, while also being conscientious of public opinion and the law.  Though not relevant in my ruling, AT&T has been cited numerous times for social awareness and inclusivity.  These accolades speak to its character as an organization.   Conversely, and also absent from weight in my decision, are AT&T past legal indiscretions.  The company has, as many pointed out, been successfully sued for similar –but not identical– situations.  These are NOT indicators of character, as they are situational and not applicable in this Judge’s ruling.

In cases of disparate impact, which is what the Plaintiff asserts this case to be, the burden of proof lay with the Plaintiff.  Defendants can counter disparate impact by claiming business necessity, which is what AT&T has done.  To that end, the court agrees with Mr. Hansberger’s assertion that “’employers enjoy fairly wide discretion to adopt hiring practices that they deem valuable to their organization’ resulting in laws that are ‘more proscriptive than prescriptive’ (Azera) .  The laws are written this way in order to allow employers the latitude required to run a successful business.  If the laws were written or interpreted in a highly restrictive manner, it would become impossible for employers to efficiently allocate their human resources” (Hansberger).

There is a fundamental difference between what Ms. White deems the Plaintiff’s “right to pursue gainful employment after retirement” and one’s right to be hired.  AT&T’s refusal to rehire retirees does not preclude the Plaintiff’s right to pursue such employment; the two are mutually exclusive.  As Ms. White stated, the members of American society have aged and the demographic has shifted.  The reality is that this change does not favor the Plaintiff, as the change sees so-called 83 million baby boomers retiring at a hire rate than any other segment of American society (L’Allier and Kolosh, 2005).

As Ms. White asserted, “Workforce planning strategies are used to reshape a workforce in response to skill set requirement changes in response to functions of organizations changing.  Resource managers do not offer an early retirement to a seasoned worker who has the skill set needed.  This does not make fiscal sense” (Ryan).  Furthermore, Ms. Ryan goes on to claim that the “VRIP and ERP programs are used to reduce, reshape or restructure the workforce of an organization.  These retirement incentive programs are costly in the short term however,  cost savings are realized over the long term in savings of salary and benefits.  In addition, a restructure of the workforce may mean that the function requires a different skill than what the retired employee has” (Ryan).

To expect that the former employers of these retirees should be obligated to rehire them at the whim of the retiree holds potentially catastrophic economic results.  The Nation is entering an era wherein population growth is dipping below levels in the 1950’s; conversely, the work force population has held steady for two decades and is forecasted to remain steady out until 2050 (L’Allier & Kolosh, 2005).  As such, the burden of rehiring retirees while the workforce population provides suitable alternatives is a case of business necessity and common sense.

Additionally, the case possesses elements of a legally-binding business contracts.  As Ms. Tinsley argued, AT&T’s Voluntary Retirement Incentive Plan/Early Retirement Plan (VRIP/ERP) package is both voluntary and contains consideration.  ‘The consideration is something of value to which a person is not already entitled that is given in exchange of an agreement to do, or refrain from doing, something’ We believe that the consideration was accepted by Yates and many others in exchange for him resigning from his job not to return” (Tinsley).

The court agrees that, from a contractual perspective, the scenario meets all of the requirements to being a legally binding contract.  Upon acceptance of the VRIP/ERP, the retirees received consideration.  As such, the contract, whether implied or explicit, is legally binding.  In absence of available information on this case, the court assumes that AT&T did consult with its legal and human resources departments to apply lessons learned and require that acceptance of the VRIP/ERP be a legally-binding contract that forbade rehire.  The VRIP, by nature, has an Incentive that is mutually beneficial; the employee retires early with his/her benefits and pension, and the company is able to manage its workforce, personnel budget, and forecast manpower availability in relation to needs, which includes business skill sets.

Notwithstanding contractual recourse, the court agrees with Mr. Mazzocchi’s assertions the Plaintiff fails to meet the criteria established in precedent cases.  Specifically, four criteria must be met:

[…] that the [Plaintiff] is a member of a protected class, that [the Plaintiff’s] job performance was satisfactory, that [the Plaintiff] suffered a negative employment action, and that another individual who is not a member of the same protected class was treated favorably in the same situation as [the Plaintiff]. If the plaintiff can prove these four things, they would have established prima facie evidence of discrimination under the ADEA. If not, summary judgement [sic] for the defendant should be granted.

Mazzochi correctly argues that the Plaintiff does not meet the established criteria:

Firstly, [the Plaintiff] has not suffered a negative employment action. Use of the various retirement programs such as VRIP and ERP would be entirely voluntary, and would bestow a benefit (early retirement) on [the Plaintiff]. Failure to be rehired does not necessarily constitute a negative job action, as the plaintiff was at one time an employee and left voluntarily while obtaining a benefit. Since [the Plaintiffs] who accepted the retirement plans obtained a benefit, there is no disparate impact to the policies described. (Mazzocchi)

The crux of the business necessity defense is that the employees seeking rehire did not possess the skills necessary to make them valuable to AT&T.  They were not unfairly subjected to a test that precluded them from reemployment inexorably linked to their age, but rather to their lack of business skills.  Had the retirees possessed such skills [that is, prior to retirement], AT&T would have conceivably offered a counterincentive in order to effectively dissuading them from retiring.   The court believes that it is coincidental–but unrelated to being denied reemployment– that the retirees are of a protected class.

Judgment in favor of the Defendant.  Case dismissed.

Please send hate mail to: The Honorable Corey King

- – -

References

Bagley, C.E. & Savage, D.W. (2006). Managers and the legal environment: Strategies for the 21st century (5th ed.). Mason, OH: Southwestern-Cengage Learning

Dessler, G.  (2009). A Framework for Human Resource Management, 5th Edition.  Pearson Prentice Hall. Upper Saddle River, New Jersey.

Brown and Keeley. (2007). Asking the right questions: a guide to critical thinking. 8th Edition.  Pearson Prentice Hall. Upper Saddle River, New Jersey.

Cafferty, J. (2008, March 3). What does it mean if AT&T is having trouble finding skilled U.S. Workers? Cafferty File. Retrieved October 26, 2009, from http://caffertyfile.blogs.cnn.com/ 2008/03/27/what-does-it-mean-if-att-is-having-trouble-finding-skilled-us-workers/.

Disparate impact. (2009). Retrieved October 29, 2009, from http://law.jrank.org/pages/6188/Disparate-Impact.html

EEOC.  (July 2009). Understanding Waivers of Discrimination Claims in Employee Severance Agreements. U.S. Equal Employment Opportunity Commission. Retrieved October 28, 2009 from http://www.eeoc.gov/policy/docs/qanda

Karpinski, R. (January 2009). In tough economy, AT&T brings off-shore jobs back home. Retrieved Oct 31, 2009 from http://telephonyonline.com/residential_services/news/att-brings-jobs-back-0130/

L’Allier and Kolosh.  (June 2005).  Preparing for baby boomer retirement.  Retrieved Oct 31, 2009 from http://www.groco.com/readingroom/babyboomer_retirement.aspx

Salckman, D. (July 2008). AT&T seeks assistance from retirees during possible work stoppage. Retrieved Oct 31, 2009 from http://retireearly.ning.com/group/attemployeesformeremployees/forum/topics/830039:Topic:2861

Sauls, J.G. (April, 1995). Proving business necessity: the disparate impact challenge. Retrieved Oct 31, 2009 from http://findarticles.com/p/articles/mi_m2194/is_n4_v64/ai_16921449/

Smith, E., (2009). EEOC goes after AT&T on class action age discrimination case. Employee Rights Post. Retrieved October 31, 2009 from http://www.employeerightspost.com/tags/equal-employment-opportunity-c-1/

Transvestite Dorothy Zombie …. uggggghhhhh, bitches

I‘ve been paying a lot of attention to Starbucks as of late.  What began as an assignment for my MBA coursework has grown into an addiction.  For those of you keeping score at home, this is my third SBUX-related addiction.

Sadly, I’m not hooked on the tasty goodness of the Pumpkin Spice Latte or those delicious Cranberry Bliss Bars.  Instead, I’m a spectator witnessing an iconic institution … hmmm, how to phrase this? … over-roast itself.

A few weeks back, I described what makes for an excellent organization.  I was thinking about SBUX, as well as many other companies.  Don’t get me wrong, I’m not reversing the engines or changing course.  I’m not fickle.  Well, not that fickle.

But even excellent organizations don’t get “it” right 100% of the time.

You’re a coffee house, SBUX.  People COME TO YOU for coffee.  At HOME, people use your whole bean or pre-ground coffee.  So why-oh-why then would you willing associate yourself with the lowest common denominator in your industry’s product lineup?

I’m speaking of Via, which I blogged as being an 8oz. flavorless mistake with a coffee-like aroma.  The bigger questions regarding Via is: Why? What was the need, SBUX; was Folgers crystals posing a hostile takeover threat?  Are you testing the market’s perimeter; seeing if perhaps McDoanld’s will follow you here as well?  Or are you trying to create a monopoly so that you can become the Wal-Mart of coffee and thereby destroy your brand identity?

Up Close and Blurry is a high-level investigation into  . . .

ORGANIZATIONAL EXCELLENCE (?) – STARBUCKS

Introduction & Background

For all intents and purposes, there are effectively two Starbucks’: The first is the well-known, revered and reviled, coffee franchise that existed from 1971 through July 2008 Starbucks.  The second is the post-July 2008 Starbucks.

More is known about the former, as there is nearly 37 years of evidence to review.  The latter is the hopeful Phoenix, trying to be reborn from, and rebranded after its financial conflagration of July 2008.

That firestorm was the result of Starbucks’ pursuit of rapid and widespread  (read: unsustainable) and overzealous (read: reckless) expansion.  While the flames may have subsided, the ashes had not settled.  In July 2008, Starbucks began closing 600 stores and terminating 12,000 full- and part-time employees (Starbucks.com).  That was the announcement in July 2008; by January 2009, however, the company announced that the number of store closings would be increased to 900 (Flynn, 2009).

To their credit, Starbucks earned praise in the public relations realm for how they handled the closings.  They first notified employees, rather than announce to the media.  In addition, Starbucks leadership placed the responsibility for the need downsize on their own shoulders, as well as the poor global economy  (Schade, 2008, p. 10).

Little is known about the new Starbucks, other than what it is reporting to its stakeholders.  Regardless, for both Starbucks’, organizational excellence in all business areas is a seemingly paramount core value.  They strive to optimize, expedite, streamline and manage costs, all without sacrificing quality or injuring the mythical Starbucks experience.  Nevertheless, while the majority of their initiatives are spot on, others make one wonder what Starbucks was thinking.

Below, I break out a few areas of the Starbucks Corporation to detail their pursuit of organizational excellence.

Corporation to Consumer Interface

Understanding that its products, services, and overall experience are what customers purchase, Starbucks has invested heavily in Business Process Management (BPM).  While the true dollar figures are unknown, the extent of their efforts can be witnessed in the accounts below.

First: The Customer.

Starbucks conducts extensive research regarding its customers’ wants and needs.  This focuses heavily upon flavor, and there’s an entire team of coffee testers at the company’s Seattle headquarters (The science, 2009).  It also focuses on selection.  For example, the sale of espresso, which did not begin until 1982 when Howard Schultz, now CEO of Starbucks, experiences the drinks popularity in Italy and pushes the company to follow suit (A brief history, 2009).

Starbucks fumbled when it deviated from its core business, which it describes as “all things coffee” (Starbucks.com, 2009).  The introduction of foods beyond simple baked goods proved to be a debacle, one from which the company did not learn as they have launched, canceled and re-launched the initiative numerous times.  And while the average consumer did not notice, the company’s skeptics and shareholders did.

What stands out about this blunder is that, in my opinion, it demonstrates Starbucks’ misunderstanding of its market, meaning it is confused about whom it is serving (the customer) and with whom it is competing with (its competitors).  A company cannot have an achievable long-term strategy if these two inputs are shifting or unknown.

Second: The Store.

Each location is designed to be welcoming. This is a sensory experience, with sights, sounds, smells, and tastes recognized as playing critical roles.  Employees are told that Starbucks stores should be the customers’ “third place” – third to home and work, that is.  In fact, on their website’s jobs page, they describes the store as providing “a sense of belonging,” likening it to “a haven,” which provides escapism from “the worries outside, a place [to] meet with friends. It’s about enjoyment at the speed of life—sometimes slow and savored, sometimes faster.  Always full of humanity” (Starbucks, 2009).

A portion of that humanity was lost, however, when Starbucks optimized the store-building process utilizing a so-called kit of parts approach.  Opening six locations per day, the cookie-cutter was necessary, but it ultimately robbed the stores of their uniqueness, leaving customers with the feeling that Starbucks had no soul (Moore, J., & Williams, P., 2007).  As a result, Starbucks is now redesigning many of its locations based upon customer inputs and the corporation’s own research (Introducing a new store design, 2008).  New stores will feature local flavor, a more relaxed atmosphere, and new names.

Starbucks is renaming stores and removing the company’s name, logo and moniker, all in an effort to appear less corporate, more local, and more inviting (Allison, 2009).  This constitutes the third brand in the company’s line up, as they already own Seattle’s Best.  In my opinion, Starbucks is quickly venturing into brand-dilution territory.

Third: The Employee.

The Starbucks experience relies upon properly trained employees with positive attitudes serving quality products quickly.  Starbucks has gone to great lengths to remove the variables from the customer service process.  This includes extensive foundational training for all employees, from baristas to corporate leaders (Weber, 2005).  Additionally, it means adopting kaizen principles, ensuring that continuous improvement makes the entire process –for customers and employees alike– as efficient and positive as possible (Glover, 2008).

However, quite often the process does not always work, and the reason is simple: Starbucks’ process for churning out smiles and lattes did not grow with the company.  As Inc. Magazine’s Joel Spolsky (2009) discovered during a horrible Starbucks experience, Starbucks achieved its status by conducting operations research.  However, with the company’s rapid expansion, HR theory and store realities are divergent.  On an unofficial Starbucks site called Starbucks Gossip, employees and customers alike lament just how out of touch corporate seems to be from the front lines.

The Corporation and the Community

Starbucks operates within the framework of an extremely diverse Corporate Social Responsibility program.  Under the CSR umbrella is everything from Starbucks’ social agenda, to employee healthcare, to environmentalism.

First: The Employee.

Employees who work more than 20 hours per week are eligible for healthcare.  The company picks up 75% of the cost.  In a 2004 interview with BusinessWeek, Schultz reported that the company would spend more on employee healthcare costs than on its source product: coffee beans.  The rationale was simple: it’s the right thing to do.  But the reasoning is also personal, as Schultz reported that it is linked to his impoverished childhood, a childhood which he recounted bearing witness to his father’s “fractured American dream” due, in part, to a lack of healthcare (O’Connell, 2004).

Second: Society.

Starbucks’ social agenda includes rights for domestic partnership, universal healthcare, support of supplier and workplace diversity, and voting.  Its employee benefits include the standard fare, but they are available to same-sex or domestic partnership relationships (Starbucks.com, 2009).  It’s been involved for many years lobbying for universal healthcare, to include involving Sen. Bill Bradley in the effort, though Starbucks insists they are not involved in political activism (O’Connell, 2004).

Their CSR efforts include Starbucks RED, an effort to combat AIDS in Africa; Starbucks V2V, an online community action forum; and Starbucks Shared Planet.  The latter includes numerous CSR activities, including ethical sourcing/supplier programs, environmental stewardship, and community service (Starbucks, 2009). The company’s efforts extend as far away as Rwanda, where the company has established a partnership with coffee producers to provide certified-100% Fair Trade coffee (Starbucks.com, 2009).

The “All Things to All People Business” Model

Starbucks relentlessly pursues providing consumers with the highest quality products, services, and experience. If nothing else, Starbucks is an innovative tactician.  However, as with the previous areas, many of their business choices seem to be in contradiction with their espoused overarching strategy. For this reason, it is obvious that Starbucks has embraced the notion that failure is a learning opportunity, not a point of contention. Though, they may want to rethink the scope of their failure allowance, as it seems entirely too permissive.

The company’s product line goes far beyond drinks.  Starbucks has become as well known for their music as their odd array of names for drink sizes.  The drink size names, by the way, led to a hugely successful YouTube video wherein a customer enters into a Suess-ian tongue twister (Small is tall, 2008).  Later, Dunkin Donuts used the popularity of the original video to introduce its coffee to the market, as well as itself as the common person’s Starbucks.  This is quite similar to the McDonald’s coffee campaign that simply stated, “four bucks is dumb. now serving espresso,” (Ankarcrona, 2008).  The point being, Starbucks’ popularity and unpopularity has invited competition and given them a soapbox from which they can preach . . . while selling their own coffee.

The company has its own XM Radio channel, free iTune downloads on Tuesdays, and a line of CDs sold through their stores.  However, none of these are fairing well for the coffee purveyor.  It was reported that the average Starbucks was selling two CDs per week, though corporate disputes this and claims the music units sells 4 millions CDs per year (Sandoval, 2009).  Regardless, Starbucks announced that in-store CDs would be scaled back to four selections per-store, as the company “refocuses on [its] core business” (Sandoval, 2009).

Perhaps Starbucks has cleared away the “too big to fail” haze.  Whereas the company heretofore employed a top-down, command and control approach to business decision, they’ve now opened the forum to the consumer and employee. Since March 2008, Starbucks has been using a blog called “My Starbucks Idea,” to solicit ideas concerning their products, environment, and social involvement.  The site is active, with many employees, and even Howard Schultz himself, weighing in with ideas.  Still, the company is behind the power curve, as a site called Starbucks Gossip has been actively doing the same thing since August 2004.  Except, this site is not as polite with their comments as the company’s site (Romenesko, 2009).

Conclusion

Starbucks routinely receives industry and activist accolades; among them: “Best 100 Companies to Work For,” “Most Ethical Companies” “Most Admired Corporations” “100 Best Corporate Citizens” “Best LGBT Places to Work” and more. The list of honors, available on their website, is quite impressive and stretches back to the mid-1990’s (Starbucks.com, 2009).

Admittedly, the company does many things well and, to use a subjective term, correctly.  For example, as defined by Dessler (2009), Starbucks’ hiring practices are designed to ensure a candidate is suited to help the organization achieve its desired end goal.  The mandatory 24 hours of training within the first few weeks reinforces this.  And the company’s investment in more efficient processes, equipment, and policies all lend themselves to an environment that is supposed to enhance the Starbucks experience (Dessler, 2009, p. 11-13. Kinicki & Kreitner, 2009, p. 36-41).

According to Kinicki and Kreitner (2009), Starbucks is conducting its HR business correctly.  They have established Total Quality Management (TQM) principles, and reinforced them with policies and training (p. 11).  Nevertheless, one must question the choice to purchase an $11,000 espresso machine for every Starbucks location in the midst of closing 900 stores.   This is precisely what Schultz did after drinking an espresso made with a Clover espresso maker.  In fact, he thought the cup of espresso was so good that he bought the Clover  company (Hanon, 2008).  Meanwhile, 12,000+ employees are being terminated.

Additionally, as noted earlier, the corporate HR office in Seattle has become divorced from the realities of the front lines.  Operations processes should be focused on creating value, improving efficiencies, and enhancing the Starbucks experience, instead they appear to lack focus.  They obviously have a grasp on the big picture, as Kinicki and Kreitner (2009) explained, Starbucks has cultivated plenty of Human and Social Capital (p. 15).  Nevertheless, they are misspending that resource by neglecting the details.

That is a true statement of Starbucks by and large.  While the organization provides for its employees hierarchy of needs (a la Maslow), it fails to provide for its own.  The inability to remain focused on its core business has led to failure repeatedly, and these repeated failures have been within the same arena: The company’s brand identity.  Is Starbucks a music store? A café? A coffee bar? The MarComm professional and Life Cycle Manager in me fears that even Starbucks executives do not know.

Starbucks does many things very well.  They have built a successful empire with a loyal following, and they have set the standard for quality.  They have also illustrated that, minus the recent meltdown, a company can be extremely successful while financing 75% of their employees’ healthcare, respecting the environment, and upholding high standards of product quality, staff performance, and meeting the mythical Starbucks experience.  These attributes make them an excellent organization.

Where they appear to be falling short is in their focus on the core business, growing their organizational structure and procedures to reflect their current size, and delegating managerial authority to the correct levels.  These three areas:  1) Business strategy and planning, 2) business process management, and 3) operational management are the company’s vulnerabilities.   Push on any one of these too hard, and the organizational becomes a house of cards.

Organizational excellence rating: C+

References

A brief history of starbucks.

A full-bodied talk with mr. starbucks.

Coffee war brews between mcdonald’s, starbucks.

Dessler, G. (2009). A Framework for Human Resource Management (5th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

How hard could it be?: Good system, bad system.

Introducing a new store design.

Kinicki, A., & Kreitner, R. (2009). Oranizational behavior: Key concepts, skills & best practices. (4th ed.). Boston: McGraw Hill.

Preserving the Starbucks Counter Culture.

Small is tall.

Solving starbucks problems: loss of store soul.

Starbucks.com

Starbucks and kaizen.

Starbucks, awaiting recovery, says profit fell 77%.

Starbucks gossip.

Starbucks scaling back music offering.

Starbucks tests new names for stores.

The coffee fix: Can the $11,000 clover machine save starbucks?

The next starbucks.

The science of coffee.

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