Business and Management

Accordingly, case notes will be collected. case notes should include , answers to the questions at the end of the case, and annotations or additional issues you think are pertinent. These analyses should be approximately 1-2 typed pages.

Starbucks Returns to its Roots

You are probably so used to seeing Starbucks coffee shops
everywhere that you might not realize the company went
from just 11 stores in 1987 to 2,600 in the year 2000. This
incredibly rapid growth sprang from the company’s ability
to create a unique experience for customers who wanted
to buy its distinct brand of lattes and mochas wherever
they found themselves. At Starbucks’ core, there was also
a culture of treating each customer as a valued guest who
should feel comfortable relaxing and taking in the ambience
of the store. Whether you were in the company’s
founding location in Seattle, Washington, or at the other
end of the country in Miami, Florida, you knew what to
expect when you went to a Starbucks.
This uniform culture was truly put to the test in the face
of massive expansion, however, and by 2006 Starbucks’
chairman and former CEO Howard Schultz knew something
had gone wrong. He noted that “As I visited hundreds
of Starbucks stores in cities around the world, the
entrepreneurial merchant in me sensed that something
intrinsic to Starbucks’ brand was missing. An aura. A spirit.
The stores were lacking a certain soul.” Starbucks’ performance
had become lackluster, with hundreds of planned
store openings being canceled and hundreds more stores
being closed.
So, Schultz took the dramatic step of coming back as
CEO and engaging in a companywide effort to change
the corporate culture back to what it had been before
its expansion. All 7,000 Starbucks stores were closed
for a single afternoon as part of a training effort of
135,000 baristas. Quality control was a primary mission;
baristas were instructed to pour every glass of espresso
like honey from a spoon, to preserve the flavor. This emphasis
on quality over speed ran counter to the principles
of mass production, but it was just what the company
needed to ensure it could retain its culture. Espresso machines
that obscured the customers’ view were replaced

with lower-profile machines that allowed baristas to look
directly at guests while making beverages. And “assemblyline
production,” like making several drinks at once, was
discouraged in favor of slowly making each drink for
each customer.
Schultz is convinced his efforts to take the culture
back to its roots as a neighborhood coffee shop—one entranced
with the “romance of coffee” and treating every
customer as an old friend—has saved the company. Today,
Starbucks earns more than $10 billion in annual revenue
and serves more than 50 million customers a week around
the globe.
Questions
1. What factors are most likely to change when a
company grows very rapidly, as Starbucks did?
How can these changes threaten the culture of an
organization?
2. Why might this type of radical change process be
easier for Starbucks to implement than it would be
for other companies?
3. A great deal of the return to an original culture has
been credited to Howard Schultz, who acted as an
idea champion. Explain how Schultz’s efforts to
change the Starbucks culture fit with our discussion
of culture change earlier in the chapter.
4. Schultz’s change initiative might succeed at another
company that values customization and high levels
of customer service, but how would it need to differ
at a firm that emphasizes speed and efficiency of
service?


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