The Business Pages

Yesterday, around 5:30 EST, Starbucks closed its 7,100 US stores for three hours so it could “retrain” its teammates on the art of making espresso drinks.

(Thankfully, I was not in need of a latte at that time.)

It’s amazing how far this company has fallen, in that it needed to do something this dramatic to revive its fortunes.

CEO Howard Schultz encouraged all of his teammates on a video message by proclaiming “This is not about training. This is about the love and compassion and commitment that we all need to have for the customer”

That’s vintage Howard – the Howard I praised and admired when I reviewed his book “Pour Your Heart Into It”. The “Starbucks experience” was something he originally treasured and nurtured. And it paid huge dividends – Starbucks became a welcoming “third place” that people could visit and linger, savoring the intoxicating smell of the roasted beans and nestling down in comfy chairs with their triple lattes, hand made by smiling baristas.

But alas, something appeared to happen somewhere along the way that fundamentally changed this equation – it seemed that the focus on growth and profit eclipsed the focus on the customer.

Or was there something else going on as well that hastened this almost desperate effort to reclaim the higher ground?

I’ve been going to Starbucks regularly for over 15 years – I too was originally attracted by that “third place” vibe, as well as the boldness of the brew. It didn’t take me long to be hooked. But as every year has gone by, I’ve been less and less focused on it as a “place” and more focused on it as simply a means get my morning latte, and as quickly as possible.

It’s like you discover something that is really best enjoyed in a leisurely and “fuller” way, but reality sets in because you just don’t have the time and so you narrow it down to its bare essential – hot espresso with steamed milk.

Perhaps Howard sensed this same change in his customers as the Starbucks empire expanded – that certainly would explain their switch to automated espresso machines. If you’ve read Howard’s book you’d be hard pressed to believe that would be something he would ever allow to happen.

But it did.

They needed to push more customers through the store. “Need more growth”, the investors and analysts said. “I need my latte quicker” said Terry Starbucker (and most likely many, many more folks like me).

It was a lethal combination. The vibe is long gone, and now Starbucks is just a coffee commodity competing with the McDonald’s and the Dunkin Donuts of the world. Espresso has been “McDonaldized” (see my recent post on that).

From a personal standpoint, I guess I’m getting from Howard what I evolved to ask for – I do indeed get my daily latte quite quickly each morning (and it still tastes pretty darn good). And so I look at this recent action quite ambivalently, since I’m long past sitting in those comfy chairs and reveling in the espresso making experience.

So be careful Howard- I certainly don’t mind a few more smiles and a great deal more competence in your staff, but it’s going to be much, much harder to “retrain” your most loyal customers like me - I still need to get in and get out of your store in 3 minutes.

It’s just too little, too late when it comes to turning the clock back 15 years. The ship has sailed.

I’ve always been an admirer of Amazon.com - I remember back in 1998 being inspired by Jeff Bezos’ vision, and imagining how I too could sell books online from my garage for a hefty profit. That never materialized (thankfully), but I did become a loyal Amazon customer, and later a stockholder.

I bought the stock at it’s peak in 1999 (quite a stockpicker am I, which is why I leave it to professionals these days), and watched it go way, way south when the tech bubble burst. I bailed out of it a year later, but hoped that this business model would survive the downturn.

And survive it has - Amazon now generates $1 Billion in annual free cash flow.

What’s more impressive is how the company did it - by putting customers first.

There was a great column in the NY Times today by Joe Nocera that chronicled his own Amazon experience just before the Christmas holiday, where a $500 item (through no fault of Amazon) never made it to him, but yet Amazon gladly sent him another one, no questions asked.

As a result of this pleasant experience Nocera looked a little deeper into why Amazon has thrived over all these years, and the answer became clear just listening to what founder and CEO Jeff Bezos has to say about it:

“They (customers) care about having the lowest prices, having vast selection, so they have choice, and getting the products to customers fast. And the reason I’m so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them.”

Pretty darn simple. But there’s a catch to customer focus - it takes time, money, and effort for it to pay off over the long run. You need patience, and lots of it. Your shareholders also need patience, as you spend money on “intangible” elements like better training for customer service agents, or more intuitive web sites to aid customers.

Nocera notes, quite correctly, that Wall Street never has put much value on this focus on customers - hence, the lack of faith in the business model back in 2000 and 2001 when the stock got hammered. What’s really admirable is Bezos’ unwavering position in the face of all the naysayers - “the customer, the customer, the customer, the customer“.

12 years later, all the loyalty is paying off in spades. Check out this statistic quoted in the article - “According to Forrester Research, 52 percent of people who shop online say they do their product research on Amazon.”.

Think about that one. 52% of ALL online shoppers.

Happy customers bring you the ultimate payoff - great word of mouth. And oh by the way, much more profit growth and stability.

You just gotta be patient. And courageous. Just ask Jeff Bezos.

PS: Because of my admiration for this company I’ve joined their associates program and am happy to offer my readers “one-click” convenience of shopping for my reviewed books at my “Amazon Store” - check it out. All commission proceeds also go to the National Park Foundation too - a nice “twofer”.

One of my favorite business books is Jim Collins’ “Good to Great“. If anything, it got me to think a lot more about greatness and what that really means. It also pushed me to figure out, in combination with my own 25+ years of experience, what “essential elements” need to exist within a company to achieve lasting greatness.

As I noted in last Saturday’s post, I’ve reduced the elements down to 4, and I presented them to my management team last week. Here they are:

• Quality
• Service
• Leadership
• Accountability

Number 1, we have to infuse quality in EVERYTHING we do - every interaction and transaction, no matter how small or seemingly insignificant. And, even more importantly, we cannot sacrifice quality at the altar of expediency. I find that to be the biggest impediment to real quality - someone thinks that doing it faster is better than doing it right. If you can get that mindset eliminated, you are really accomplishing something.

Next, we have to serve - and to me, that means it’s all about exceeding expectations. We have to be there when our customers need us. We have to fully explain our products and services. We need to follow the “Golden Rule” at all times. And, above all else, SMILE. It’s amazing how doing these simple things can be considered extraordinary, but that’s the consumer world we live in right now.

Then there’s leadership - I sum it up this way: we need to be leaders who
roll up the sleeves, focus on people and are involved and empathetic with them, filter effectively, inspire trust, look at and paint the big picture, are good teachers, are humble yet possess a strong will to succeed, lead from the full spectrum, and are part of a unified team. An even shorter way to say it is “Greatness is as greatness does“.

Lastly, we must hold ourselves and our teammates accountable to the established values, standards and policies that govern our business conduct. We can’t do this sitting in what I call the “comfortable middle” of neither reward nor retribution. We have to lead using the Full Spectrum - it is the foundation of a great team.

The benefits of focus on these 4 elements are threefold:

1. Sustained bottom line business growth
2. An excellent reputation as the employer of choice in the communities served
3. (and what I call the “Holy Grail“) Individual job satisfaction and fulfillment

That’s what I’m shooting for in 2008 with my group. Is it Quixotic? I think not. I’ll let you know how we do.

What do YOU think are the keys to greatness?

During it’s 6 year run, my wife and I were diligent watchers of the HBO series “Sex in the City” (we now watch the reruns in the evening - over and over and over again). One of my favorite episodes was where the character Miranda had described a particular date with a man who seemed to be giving off mixed messages about his feelings for her.

A man who heard this lament fired off the now famous line -”he’s just not that into you“.

The line came from Greg Behrendt, a writer on the show, who went on to write a best selling book of the same name.

Greg was certainly onto something - as he put it, “if a (sane) guy really likes you, there ain’t nothing that’s going to get in his way”. In other words, anything less than head-over-heels enthusiasm and devotion just ain’t the real thing.

It turns out that in the working world that the same scenarios are playing out. Companies and their top management putter along with the business thinking that at the very least a majority of their employees are “into” them (i.e. truly engaged), but in actual fact, they are not.

Look at these statistics: A 2005 Towers Perrin survey found that just 14 percent of workers were fully engaged on the job. Another survey by DDI said only 19 percent were “into” it, and The Corporate Executive Board pegged the number at 11 percent.

Sobering stuff.

Just like Miranda, leaders need to stop kidding themselves and realize that in order to be truly successful, they need many more of their teammates to be enthusiastic and passionate believers in the company, and more importantly, believers in them.

How can a leader do this, when based on the statistics it’s a quite difficult task?

One approach is found in the NY Times in a column which noted a piece in Pink magazine written by Karen Benjack Glatzer, who said:

“A manager who wants to engage and develop talent must look to her own motivation first, experts say. That’s because employees want their managers to be role models for growth and ongoing learning.”

That’s a very interesting point to ponder, because I’m sure (based on my own experience) that many leaders don’t spend a lot of time thinking about how they can be better role models. More “nuts and bolts” type activities typically fill their time.

Another interesting clue for employee engagement improvement was in an article in the Pittsburgh Post-Gazette entitled “Boss Sets the Tone for Employee Morale“. The premise there? Fix the big bosses, not the direct supervisors. That seems so counter intuitive, doesn’t it?

In a Towers Perrin survey, employees said that the the tone set by senior managers when it comes to the employees well-being was the single most important element in keeping them engaged in the business. The relationship with direct reports was listed as the ninth most important element.

I guess my old boss was so right when he kept telling me that “a fish stinks from its head down” - another way of saying that the tones, attitudes, and philosophies of executive management deeply permeate an organization, and if they are off-kilter, the whole company is off-kilter.

It seems so elementary, so basic - but yet so many people “are just not that into” real employee engagement.

Maybe the answer is to just get more executives to watch Sex In the City - and by the way, they are now making a movie with all the original characters that is coming out next spring. Little do they know that the future of management hangs in the balance……..

There was a piece in last Saturday’s NY Times Business section that caught my eye - it was about an article in the MIT Sloan Management Review about managers and intuition.

The authors theorized that managers can improve their intuition over time, and explained how it could be done.

Here was their key statement:

Intuition is “not a magical sixth sense or a paranormal process. Rather, intuition is a highly complex and highly developed form of reasoning that is based on years of experience and learning and on facts, patterns, concepts, procedures and abstractions stored in one’s head.”

I reduce this down to two words:

Common Sense

To me, it’s really not that complicated - the sound application of common sense is the best “intuitive” action any leader can demonstrate. I would argue that this trait isn’t necessarily related to years and years of experience - it’s more of a discipline that, if ingrained early in one’s development as a leader, can set the foundation for a long career in good decision making.

The authors go on to warn us about a reliance on “intuition”:

“Like any good thing, a reliance on intuition can be taken to extremes. Executives should reflect on their intuitive decisions before they execute them.”

In their view, intuition and reflection are two different processes. The way I see it, in the application of common sense, this “step back” is always part of the process.

(I wrote about this on a guest post on Perfectly Petersen back in July, entitled “One Step Back to a Better World“)

Perhaps I am oversimplifying all of this, but I truly believe that the consistent application of good ‘ol common sense is the most important facet of good leadership.

And that’s as uncomplicated as it can get. And a bit more comprehensible to boot.