The Starbucks story: how the brand changed the world

141 Pages·2012·3.59 MB·English

by  John Simmons

The Starbucks Story

How the brand changed the world

To my founding colleagues in 26:
Margaret, Martin, Tim, Tom, Jim, Ben, and Simon
www.26.org.uk
Copyright © 2005 John Simmons
First published in Great Britain in 2005 by Cyan Books
This edition published 2012 by Marshall Cavendish Business
An imprint of Marshall Cavendish International
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Marshall Cavendish is a trademark of Times Publishing Limited
The right of John Simmons to be identified as the author of this work has been asserted by him in
accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by
any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of
the copyright owner. Requests for permission should be addressed to the publisher. The author and
publisher have used their best efforts in preparing this book and disclaim liability arising directly and
indirectly from the use and application of this book. All reasonable efforts have been made to obtain
necessary copyright permissions. Any omissions or errors are unintentional and will, if brought to the
attention of the publisher, be corrected in future printings.
Cover design by Benson Tan
eISBN: 978-981-4408-76-9
The photographs, illustrations and artworks
on pages 10, 33, 36, 44, 63, 71, 113, 116–7,
126–9, 136, 137, 163, 170, 171, 176, 178
and 179 are © 2005 Starbucks Corporation.
All rights reserved. Used with permission.
Starbucks, the Starbucks logo, the Starbucks Card and
Starbucks Card Duetto are trademarks or registered
trademarks of Starbucks US Brands, LLC in the US and
of Starbucks Corporation outside the US. Hear Music
is a trademark or registered trademark of Starbucks
Corporation. Used with permission.
Contents
Acknowledgments
Introduction to 2012 edition
A short shot
Chapter 1 Starting with a bean
Chapter 2 Setting out on the voyage
Chapter 3 Expanding the horizons
Chapter 4 Friends and neighbors
Chapter 5 Head for a different place
Chapter 6 Here, there, and everywhere
Chapter 7 Doing well by doing good
Chapter 8 The next port of call
Six important things for other brands to learn from the Starbucks story
Afterword: Keep on keeping on
Acknowledgments
Martin Liu asked me to edit a series to be called Great brand stories that he
intended to publish. Having known Martin from his time at Texere, when he had
published my book We, me, them & it, I was delighted to accept. We then
planned the series and agreed that I would write this book on Starbucks. Thank
you, Martin: it would not have happened without you.
People at Starbucks have helped me by making themselves available for
interview. I thank them for their openness. The further I have gone with this
book, the more I have found to admire in Starbucks. Above all, it has great
people. I thank especially Howard Schultz, Orin Smith, Soon Beng Yeap, Cathy
Heseltine, Wanda Herndon, Cecile Hudon, Thomas Yang, Tom Walters, Kathie
Lindemann, Rebecca Burke, Sandra Taylor, Sue Mecklenburg, Dave Pace, Jim
Donald, Dub Hay, and Marc Stolzman. Extra-special thanks to Carole Pucik, my
guide to Starbucks in Seattle, and an endlessly patient recipient of requests and
questions. The opinions expressed here are mine and not Starbucks’; any errors
are mine alone. My thanks and admiration go to the Starbucks Foundation and
the National Literacy Trust, which will receive part of the proceeds of this book.
Three books have been especially helpful in my research. Howard Schultz’s
Pour your heart into it (with Dori Jones Yang, Hyperion, New York, 1997) for
his personal account of Starbucks’ development; Scott Bedbury’s A new brand
world (with Stephen Fenichell, Viking, New York, 2002) for his insights into
Starbucks from his time there; and Mark Pendergrast’s Uncommon grounds
(Texere, London, 2001) for its story of coffee over the centuries.
Pom Somkabcharti has seen this book through production with great care and
diligence. Rob Andrews at R&D&Co has designed it with real flair and talent.
Finally, thanks to my daughter Jessie, who took many of the photos. And my
constant thanks to Linda, who not only read and commented on the text, but
typed most of it, too. I could not have written it without her.
Introduction to the 2012 edition
th
On 26 February 2008 Howard Schultz closed every Starbucks in the USA. It
was a dramatic and unprecedented move by the once and present chief of
Starbucks. Schultz had built the company, turned it into one of the world’s best-
known brands, run it for many years, moved away from day-to-day running of
the business as chairman, then became so concerned that he felt compelled to
return as CEO in January 2008.
He came back because he believed that Starbucks had ‘lost its soul’. He was
determined that it would recover its soul, by returning to the principles, values
and spirit that had created the Starbucks brand. The one-day store closure was to
retrain the baristas, to reassert the Starbucks romance with coffee. This came
with a huge risk and cost – actual and potential – but it paid off. Stock that had
been trading at $7 subsequently rose to $55 after Schultz’s return to brand
principles.
Howard Schultz tells the story of the turnaround in his book Onward, a stirring
tale of leadership in the face of adversity. Starbucks has now bounced back in
the eyes of Schultz, customers and business analysts. The recovery has all been
about restoring the value and distinctiveness of the Starbucks brand.
This makes the book I’m now introducing as relevant as ever. It’s the story of
the Starbucks brand and it was originally written and published in 2005 when
Starbucks was at its most Camelot-like height of wellbeing. It describes the story
of the company’s foundation and growth, the pivotal role of Howard Schultz,
and in particular the development of the brand that is the driving force for
Starbucks’ success. It’s what Howard Schultz means by ‘soul’. When you read
this story you will be reading the Starbucks brand story, but you will also be
reading a book about branding. Because, as I write in this book, Starbucks is in
many ways the quintessential modern brand. I’m happy to stick by these words:
“Starbucks is actually one of the purest examples of a brand that we have. It
starts with a commodity product – coffee beans – and invests them with
extraordinary added value by creating an experience that transcends the simple
act of drinking an unnecessary beverage.”
Seven years on from the time I wrote that originally, Starbucks has grown again.
The numbers – of countries, outlets, sales – change constantly so you can never
fix the story of Starbucks by using these business measures. What matters more,
and what is enduring, are the brand’s principles, values and philosophy. This
means that I’m able to say that the story in its essentials is as up to date now as it
was on first publication. Perhaps the story has even been proved true by the test
of time. All the lessons and conclusions that I drew about branding are as
relevant now as they were when first written.
It should be recorded, though, that there have been some major changes since
2005. Let me update you on those changes under four headings.
1 Get back to brand essentials
Howard Schultz’s return sent a powerful signal to many audiences, not least the
internal one. His swift decision to close the US stores for a retraining day was
dramatic, risky but right. It stemmed from a feeling that the company had taken
its eye off the ball. In effect, Schultz was saying (to adapt Bill Clinton’s election-
winning mantra): “It’s the coffee, stupid.”
Starbucks is first and foremost about coffee. It needs to cherish and build its
reputation for coffee expertise, and Howard Schultz felt that the reputation had
slipped. The change in the coffee market, driven to a large extent by Starbucks
over the last three decades, meant that the taste for better coffee was now an
irreversible trend throughout the world. Forays into music, once seen as an
interesting and possibly vital part of the future, were now considered a
distraction because they softened the focus on coffee.
At the same time, as part of this reassertion of fundamental values, Schultz was
restating his belief in Starbucks’ people and its core values that are centred on
people. He was not afraid to take principled stands – for example, in favour of
employee healthcare and gay marriage – that would make him and Starbucks
deeply unpopular in many constituencies. As a symbol, Schultz took to
brandishing the key to the original Pike Place store in meetings, emphasizing his
personal, emotional commitment to original Starbucks principles. As part of this
process, a team redrafted the mission statement (very much in tune with the 1990
version) to begin with the following words: “To inspire and nurture the human
spirit one person, one cup, and one neighbourhood at a time.”
2 Become more respectfully international
In the early years of the millennium Starbucks seemed hell-bent on growth. It
expanded into new regions and countries at a rapid rate, opening new stores at
dizzying speed. In doing so, a large element of homogeneity entered the brand
and its store design. It seemed that one size/one design would fit all, and there
was a sense of Seattle imposing its view on the rest of the world. And the rest of
the world, with a wider range of competitors now on offer, was signalling that it
no longer wanted to accept this.
As a result, Howard Schultz initiated a number of important design changes to
the stores, the products and the graphics. Experimental ‘new look’ stores opened
to test the market. Customers responded well. Now, more than previously, new
stores are individually designed to reflect the places where they are situated.
Centralized design has been abandoned.
In the same spirit, there is now much greater latitude for different countries to
respond to their own cultures and tastes in eating and drinking. In France, for
example, you can order a mild or a strong espresso. This greater flexibility
reinforces Starbucks’ commitment to its core product, coffee.
A brand’s logo is too often seen as the be-all and end-all of a brand. Many brand
redesigns have been pilloried as the result of a logo redesign. Starbucks managed
to get its redesign right – it was seen as a natural move for an international brand
to update and simplify its logo. This made sense especially since the visual
element of the brand had become so universally recognised. By focusing
strongly on the graphic element of the siren, presenting it more boldly, Starbucks
achieved a new logo that was more striking and adaptable than the previous one
– and that would work in countries where languages other than English were
spoken.