Starbucks Evolution from a U.S. to Global Company

Normally I focus my articles on marketing ideas and case studies but today's post is a little different. I'm a big fan of Starbucks, not only because it's such an iconic and successful brand but because I have a personal interest (ok, I did spend 12+ years of my life contributing to its success around the world in various brand & marketing leadership roles). Oh and I do have a little stock - full disclosure :)

So what are they up to and why am I excited?

Starbucks announced a number of strategic changes this week that will continue to position the company for strong growth. All of these, in my opinion, are really smart changes.

The most important change is in the underpinnings of the company– a leadership restructuring that signals the move from Starbucks operating as a U.S. company doing business internationally, to Starbucks becoming a truly global company. This is good news for the brand and business.

The company will be divided into 3 regions – The Americas, EMEA and Asia Pacific/China. This is a big shift from the prior model which was split in two - a U.S. Division and the rest of the world under SCI (Starbucks Coffee International) . Leading each of the new divisions are familiar faces:

• The Americas: Cliff Burrows (President U.S. and former President UK - a dynamic operations leader, motivating leader and storyteller)
• EMEA: Michelle Gass (President Seattle's Best and former head of marketing/category as well as global strategy - super smart, long time trusted leader and confidante of H. Schultz who grew up in Starbucks - also has an engineering background and P&G pedigree)
• APAC: John Culver (President SCI, former head of Food Service - smart business leader, highly personable and great team leader)

These changes will help Starbucks build global consistency while balancing local relevance. The new structure will also bring more focus and improve the leadership's ability to leverage regional opportunities.

In addition, the structural changes include additional responsibilities for Annie Young-Scrivner, CMO. She has a CPG background (PepsiCo) and loads of international experience and while fairly new to Starbucks ( Sept 2009) has made impact. Annie will now take on the leadership of Tazo Tea. Since Starbucks acquired Tazo in 1999, this little gem of a brand has been under-leveraged so it will be interesting to see what innovation comes out of the tea business with Annie at the helm.

The other change is the addition of Seattle's Best Coffee to Jeff Hansberry's portfolio which currently includes CPG and Food Service. While I don't know much about Jeff, I hear positive things from ex-colleagues who work in his group. He's also a relative newcomer to Starbucks joining the company in June 2010.

All in all, smart and strategic changes that will see the continued success of Starbucks, a brand that is barely tapping it's opportunitites in the rest of the world.

I'm excited! What are your thoughts?

Is brown the new green?

Good ideas are still aplenty at Starbucks....

After VIA (ok, not everyone a fan) and their new Heritage design store (the good idea is that they are located down the street from me -thank you free WiFi and comfy leather chairs!!)....the other good idea is the new umbrella shape.

These new umbrellas are triangularly shaped and can fit into tight spaces. They are also designed to withstand the wind and thus avoid being picked up in the air like an unfortunate Mary Poppins.

But hold on..... for all you brand & marketing gurus that follow Starbucks, check out the new graphics (click on image to enlarge) where's the familiar logo?....and wait....where's the green???

While the new style is practical and modern, people do not associate brown with Starbucks. In locating a store, the signature green umbrella has worked as a visual landmark breaking through the patchwork of overhead signage and streets littered with sandwich boards.

What do you think? Is Starbucks moving too fast and too far from the equity in the green umbrella?

Is this a good idea??

And the Sign Says....

A curious event happened today as the scaffolding around the corner of Pike and 1st Avenue in Seattle came down and a new Starbucks store was unveiled. (Another Starbucks in Seattle you may ask…..how is this possible??)

The store opens tomorrow but already it is a show stopper. The first thing you notice is the logo. It’s the old mermaid who is making her reappearance. We saw her last Fall with the launch of Pike Place Blend – she was on the coffee packaging and on all the paper cups. She’s also the beacon for the original Starbucks store in Pike Place Market.



I had a chance to speak to one of the Starbucks designers and this is the first store launched under a new concept called “Heritage”. As I recall from my days at Starbucks, this concept has been in the works for quite some time and draws it’s inspiration from…. guess what? You got it - the heritage of Starbucks and the traditional coffeehouse.

It’s a beautiful store. From the outside there’s lots of glass (notice the glass overhang to protect patrons from the famous Seattle rain), wooded blinds frame the windows and there is a Parisian café style patio with marble top tables and wicker chairs. Inside the colours are warm – dark browns and large chalk boards instead of the usual “QSR” style menu boards. It’s also a Leeds certified building.



This place is probably about 3000’ feet and including the patio could seat maybe 50 people. Given it’s prominence to the entrance of Pike Place Market, Seattle’s #1 tourist draw, this store will easily be a $2.5 to $3 million dollar store for Starbucks.

This is a good sign for Starbucks. They know that their success resides in creating the “Third Place” but over the last couple of years we’ve seen stores built with cheap seats and horrible acoustics. We’ve been terrorized by blenders and loud music from tinny speakers. Business meetings become shouting matches. No fun.

So here’s my question……what about the other 8000 or so stores that need TLC??? When will you fix “My Starbucks”?

OK - perhaps I’ll walk the 3 extra blocks to this new one.

Great brands deserve great leaders

I want to thank everyone for their comments and emails to my last post, “Instant Controversy” - the introduction of Starbucks instant coffee.

I agree with most of the points raised, but perhaps we’ve all missed something important. Sometimes when a team is down, what you need is a win to build momentum. Starbucks has been battered by a string of losses. Jobs have been slashed and close to a 1000 stores closed. For those who remain, trust has been broken. Morale is at a historic low.

I’m not saying that the introduction of an instant coffee will bring back the magic, but it could serve as a rallying point for the people who make up Starbucks.

What Schultz needs to do is believe in his people once again, because it’s their creativity and hard work that’s given Starbucks the success it’s enjoyed. Howard Behar, one of Starbucks’ original thought leaders, often shared the belief that a great leader creates an environment where people can bring their “souls to work”. Just as a sports team can’t rely upon a single point or guard to carry the game, it’s the core and the motivation of the entire team that matters.

"The goal of many leaders is to get people to think more highly of the leader. The goal of a great leader is to help people to think more highly of themselves." - J. Carla Northcott

So when Schultz talks about getting back to the core, he should remember that the core is the people. And the people are the team.

Or as Howard Behar, also said…..It’s not about the coffee.

Great brands deserve great leaders.

Instant Controversy

Starbucks has launched an instant coffee - Via. Brand pundits are saying this is another signal of the brand’s demise. Many reminisce to the days when Starbucks brewed each cup by hand using the La Marzocco. Yet, Starbucks has been using “push button” technology now for years. Why? To improve product and service quality. The La Marzoccos were tricky to calibrate resulting in an inconsistent brew and in more down time that slowed customer service. The push-button machines, while not flawless, were more consistent and faster.

Most people, no offense, make a lousy cup of coffee at home. How many coffee drinkers do you know that actually grind their beans and stick the grounds in a coffee press every morning? And how many coffee drinkers know what the correct portion or grind are, store their coffee in an airtight container and ensure their beans are no longer than seven days old?? (My parents love Starbucks coffee but I shudder when I read the date stamps – of OPEN coffee bags still in use)

People love convenience. Via will finally provide all the coffee lovers out there who don’t want to fuss with coffee brewing or who don’t feel like getting dressed in the morning to grab a Starbucks, a pretty decent cup of coffee. And as long as it does not distract management from their immediate priority - fixing the retail business - a great innovation in a very "stale" category.