It was in their DNA culture, customer orientation; atmosphere & total experience. They defined their core values. Starbucks made sure people understand and embrace their core values. Starbucks translate their core values into behavioral norms. Monitored behavior to assess consistency vis a vis cultural values and norms. They set measurable goals to improve their culture and culture management and measure improvements in their culture. Some believe it has been a great company and greater values at Starbucks are no more; and it is too expensive. Corporate preaches about customer service scores every day, yet the expectation is that we only acknowledge them when it’s convenient for us. At the end of the day, the customers are what drive our sales. If it wasn’t for them, most retail employees wouldn’t have jobs. It is not about the starbucks coffee.
What is corporate culture?
Although there is a considerable body of literature on corporate culture, the concept is still not well understood by practicing mangers and even academics. For many, culture still seems to be a “fuzzy” almost ethereal concept with limited practical value. This view is very unfortunate and potentially costly. It’s never just about the commodity - that’s easy to replicate. The Starbucks culture translates to a customer experience like no other. To monitor behavioural consistency across cultures and indeed to measure these outcomes is an unbelievable task to undertake. It certainly is not the coffee, as that is a weak and unimaginative brew. The (not so) secret is that they made their business about the ‘experience’ of the coffee.
One way to think about organizational culture is that it is “corporate personality.” Although there are many different definitions of the concept of corporate culture, the central notion is that culture relates to core organizational values. In turn, values are things which are important to organizations and underpin decisions and behavior. There are actually several levels or layers of culture in an organization. There is the surface layer which is what we see and observe, mostly in the norms of behavior on a day to day basis. However, below that is what might be termed a set of “cultural attributes,” which are the “DNA” of culture. These are things such as attitudes towards risk, or ethics; propensity towards planning (or not!), systems, processes; attitudes towards professionalism, or entrepreneurialism, or even bureaucracy.
Why is culture important?
If it was just about the product you could just as easily make coffee at home for substantially less. Automation changes the environment, thus the messaging, thus the brand. And Starbucks is very much about the brand. In short, just because something works in making Ford F-150 chassis’ doesn’t mean it’d work (nor relevant) in a customer-oriented front-end environment like a coffee shop. It’s not about the coffee, it’s about the sugar addiction. Strategic Vision and Leadership are key to success in any business or social arena. Having a corporate culture is not only ingredient… Having induced it in the environment and getting along with it everyday is also vital to the success of any organization. There are many reasons why culture is important. However, the “bottom line” is that a poorly managed culture can be dysfunctional or even toxic while a well-managed culture can be a sustainable advantage.
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Starbucks is quietly trying to solve a major problem as furious baristas slam the ‘cult that pays $9 an hour’
It’s a matter of time before automation is brought in to make coffee. There’s nothing done here that machines couldn’t do - maybe with one person to keep the machines filled and make sure they are working/condiments are stocked. All of these hurdles to employing people (mandatory health care, minimum wage hike demands, low-productivity employees) will continue to erode entry-level jobs. Entry-level jobs are not meant to be lifestyle-sustaining careers. They are meant to teach you the basic skills to make you more employable (customer service, counting money, accountability). Because people are trying to make them careers and employers face so many costs (and risks from ridiculous lawsuits), it’s becoming cheaper and more efficient to cut staff to the bone and look into future automation. So as all these demands are made on employers, the cost of labor goes up, and margins are squeezed, so labor costs must be cut. So you get fewer employees. The minimum wage isn’t $8.25/hr or even $15/hr - it’s $0/hr..
How is culture managed at Starbucks?
There are companies which are “champions or masters of corporate culture management.” These “culture champions” include not only Starbucks, but Ritz Carlton, Johnson & Johnson, and Huawei. These Champions of culture management are companies that manage culture so effectively that culture has become a strategic asset. However, it must be understood that being a corporate culture champion does not mean that the company’s culture is “soft.” Most companies that are corporate culture champions are very demanding of people. There are also companies whose management of corporate culture is so mangled and or dysfunctional that they are “corporate culture losers” and their cultures are a true liability! We can call these companies a “culture Frankenstein,” because they are creations that are true monsters.
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It is not whether they have good coffee or not (there’s better for sure), or whether SB will continue to dominate the coffee space, but how placing a high value on a desired cultural change can help take a company to tens of billions annually. You don’t do that kind of business focusing only on how the coffee tastes. Why are some of you confused that Starbucks is not completely focused on coffee? Is Apple focused on laptops? Is Google focused on search engines? We can certainly point out the “chinks in the Armour”, and companies do not always end up the way they were at one time. Of course it’s not just about the coffee because the coffee is shit, the real reason is they are pillaging farm lands across East Timor for next to nothing and making big on the up market they put on it. In a word: Starbucks has a soul. And the Founder is still around.
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What is a “Champion of culture management”?
A company that sells coffee…is not about coffee!? In Complete disarray… Everything they do is based around this: the writing of your name on the cup, the interior decoration and seating space, the location etc. A key takeaway is the need to translate core values into behavioral norms and then measure. Culture Champions do several things well:
- They define their core values.
- They make sure people understand and embrace their core values.
- They translate their core values into behavioral norms.
- They monitor behavior to assess consistency vis a vis cultural values and norms
- They set specific measurable goals to improve their culture and culture management
- They measure improvements in their culture[5].
- They have cultural improvement initiatives to continuously improve the effectiveness of their culture management and their core values.
In addition to the above, they also they tend to make sure that their core values reflect five key areas that our own published empirical research has indicated are drivers of financial performance and critical to organizational success.
What do “Champions of Culture management” do (to manage culture effectively)?
The true secret to Starbucks success is not found in its coffee beans or its recipe for making coffee! It is found its management of the culture of Starbucks, its leadership practices and its management of the entire enterprise. That is a secret “recipe” that can be copied and mastered by any company that truly wants to become a culture champion like Starbucks.
I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel. — Maya Angelou
This is what a lot of big companies excel at, they design and manage the experience, as this sets products apart. Much more needs to be done to understand, integrate, and implement corporate culture as value added and a differentiator. Like performance evaluation tools. Not necessary to keep repeating beyond the scope. Clearly then the coffee company needs to be rethought.
In United Kingdom they used their big cash reserves for an aggressive marketing and expansion program. To fuel the beast, they avoided tax responsibilities through a range of loopholes whist crowding out small independent coffee outlets. They then continued to pay poor wages, host horrific fair trade policies and try to convince the locals that they shouldn’t need to pay too much tax as they are a big employer of people, overpassing the fact the amount of jobs lost through the closure of small independent businesses who paid a higher proportion of tax to the government. So, communities lost, suppliers lost, tax revenues fell, employees lost and, if you’ve ever had a decent cup of coffee in your life, they definitely fail the taste test. Don’t glorify such businesses. Their PR machine and adverts that make you feel gooey inside hide the beast inside all our communities.
