What Organizational Characteristics Make Starbucks So Innovative?
What organizational characteristics make Starbucks so innovative?
It’s time for me to tackle another Quora question. This time, I have been asked to answer the question, “What organizational characteristics make Starbucks so innovative?” The full question is as follows:
Starbucks consistently is one of the first companies to introduce emerging tech and innovative practices as part of their overall offering. What are the main characteristics of their organization (Executive Leadership, Marketing, Finance, etc) that makes this possible for them?
This is not an easy question. The best answer would likely come from someone in the heart of the company, in an executive position. Notwithstanding my caveat, I’ll tackle this interesting question.
The short answer is this:
- Listen to feedback
- Listen to your heart
- Follow your intuition
- Then, listen some more
Willing to listen to feedback:
Historically, Starbucks has always been a company to embrace feedback. In 1990, Starbucks created their first Mission Statement. According to Pour Your Heart Into It, at the same time that the Mission Statement was crafted, Starbucks came up with a system to keep themselves in check with their ideals. The system was called “Mission Review.”
Every employee was given a postcard-sized card and encouraged to report it to a “Mission Review” team if they saw a decision that did not support the company’s Mission Statement. This Mission Review system existed throughout the 1990s, as a way to report an action that appeared contrary to the organization’s mission. All new employees were given these cards, and advised that they would receive a phone call or response within two weeks of sending in a Mission Review card.
I am not sure if there still are Mission Review cards provided to new employees – that was the era before email was common, and as such, it is likely that Mission Review has been replaced by some more modern technology. Either way, the fabric of the company was based on being willing to listen – and you can’t begin to innovate and change if you’re not listening. While this isn’t likely what makes Starbucks innovative now, it’s part of the laying the groundwork for the modern era of Starbucks.
Leading From the Heart:
Historically, also the executive leadership at Starbucks is expected to lead from the heart. You can lead from other places – You can lead from the head. Analytical abilities are important to the company. You can lead from the hip – entrepreneurs can shoot from the hip. But at the end of the day, Starbucks leaders are expected to take themselves seriously, and take others seriously, and lead from the heart. There is a YouTube video talking about executive leadership training at Starbucks (with Dave Olsen, co-founder of Starbucks, speaking) and creating that leadership from the heart. The You Tube video is the best description of Starbucks leadership training that I’ve ever seen.
I have no idea what the current executive leadership training is, but when times get tough, we don’t want to have a bunch of leaders reverting to other behaviors – that might work very well in IBM or Taco Bell – but not aligned with the Starbucks Mission Statement.
In other words, the leadership has to be on the same page. This might not sound like it relates to innovation, but it does: Discord, disagreement, and torn ideals are going to make it more challenging to figure out what direction to go with innovation. Even more important, the leaders have to trust each other that they’re innovating in the right way: it’s about the people. And this sustains the culture for the future.
I am not privy to what happens between Starbucks leaders. But I assume and believe, there still is an ideal of leading from the heart.
Great Entrepreneurs Have to Have the Curiosity to See Around Corners:
About two years ago, I listened to Howard Schultz talk about innovation. He was responding to a question in a webcast, which was part of his book tour for Onward. And here’s what he said:
Even though Starbucks has become a big company – and I think especially since when I came back – I wanted to kind of reignite the entrepreneurial DNA of the company. And great entrepreneurs have to have the curiosity to see around corners. And then the organization must have the courage to kind of go after it. I think we don’t want to bet the company on a new idea but we want to stretch the envelope a bit. This is not a science; it’s more of an art. Some of it is intuitive. We do use some forms of research sometimes. We want to be able to test things and surprise and delight our customers. So… but the majority of ideas that get generated don’t make it to the store. There is just so much we can do. But every now and then I think you gotta take a very big swing, like we did with Via. And demonstrate that you could take the road less traveled and bring quality and execution to a category that has not had it. And I think great companies, whether it’s Apple or Nike or other consumer brands, provide the market place with products and services that perhaps the customer didn’t think they needed. And all of a sudden they say “God, I can’t live without this.” And those things are hard to research. A lot of it is intuitive.
This is important – you have to be able listen to your gut (all the while leading with your heart!). There is an intuitive element to innovation – sometimes people don’t know what they want next.
And then, listen some more:
In 2008, Starbucks launched a customer idea site called MyStarbucksIdea.com. It’s a place where Starbucks customers can suggest new ideas, advocate for change in existing policies and practices, and vote and comment on others’ ideas.
I’ve often described MyStarbucksIdea.com as a weather vane: There’s definitely no precise science to what happens with the vote totals and ideas, but it will always show you which way the storm is blowing. On top of that, the ideas can be the source of inspiration for innovation, and/or be the basis for immediate change.
There is both a customer side and a partner side of the MyStarbucksIdea.com site. I definitely think that MyStarbucksIdea.com is part of an important listening tool. It’s far from a perfect system. There are times that it’s flooded with groups of people acting in response to the latest social media craze – for example, numerous new ideas on “suspended coffees” – but it still represents a very genuine opportunity to listen to new ideas, and hear direct feedback from customers on what’s working and what is not.
This essay might not really be the expected answer, but an organization has to have the right vital signs to really thrive at innovation. And Starbucks has that history, and ongoing blueprint for innovation. They listen. They lead from the heart. They understand that some of innovation is an art not a science. And then, they listen some more.
Again, I write this as someone who is taking the time to learn about Starbucks. I think the best answer would come from someone who is within Starbucks leadership at the headquarters. I’m just a Starbucks commentator! 🙂
By the way, I don’t plan on making a regular habit of answering Quora questions here, but if particularly good questions about Starbucks come up, I’ll tackle them!
Melody, “leading from the heart” is still very much alive at Starbucks. At the 2013 Global Leadership Conference in Houston, Howard Schultz used the phrase “managing through the lens of humanity”, which really hit home for me. Mission Review is still available in digital format, but MyStarbucksIdea also has a partner site, which helps us support product innovation from the front lines!
@Purple1 – One characteristic of innovative company is that they change a lot. I think that can be frustrating, but it’s part of adapting and surviving.
@Marrion – This question could seriously be a book. As I think about it, there are tons of examples, and you could have a pretty thick chapter on leading from the heart. I wrote above that I believe that they still lead from the heart, and I do believe that. Of course, what I know close to nothing about it the current top executive leadership training as described by Dave Olsen in the video.
This really would make a book!
Melody I totally understand that companies have to change to advance and adapt to the many issues- the economy, customer base, etc. but in some cases as you have discussed in the blog on different levels SB needs to review their goals. But, I do think they are continually trying to make positive changes in many ways.
I do not think Starbucks follows this mantra as they are too politically charged and they have overextended their reach in many areas while trying to make the almighty profit.
I think most stores are just churning out drinks and trying to get them right and the customer connection is lost in the process most of the time. It is just a global company that puts out a product that customers buy and the CEO likes to say whatever suits his next speech to the stockholders.
Get back to making COFFEE and at least trying to get the customers’ orders right and their names written correctly on the cup.
Good reflections. I think the keys are innovation that keeps us coming back for new items, without compromising overall quality, and continuing to insist on warm, friendly and consistent customer service.
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Melody what an interesting question and answer. I really do not know if I can respond to this question in such a complete and detailed fashion as you did. Thank you for your thoughts. I think over time I tend to think that SB has moved away from its original mission statement and I believe the leadership objectives have been lost somewhat. Also, I feel depending on the region the listening aspect has also not been as effective as it used to be. I suppose that is a natural course of things depending on the mgmt in place and the partners behind the counter. However, I still get a nice feeling when I walk into my local SB because I get the feeling that overall they acknowledge the customer and interact with them. Look forward to reading other people’s comments.