AD A M

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Successful organizations put people first, invest in their growth and provide

them with the tools, training and support they

need to be successful. This results not only in

bottom line success, but low attrition rates and

high levels of creativity, innovation and

excellence.

Microsoft, Motorola, W.L. Gores &

Associates, Southwest Airlines, Ben & Jerry’s Homemade, Hewlett-

Packard, Lincoln Electric and

STARBUCKS pursue “People-First”

strategies.

Evidence suggests that successful organizations

put people first. Employees are a company’s only true competitive advantage. Competitors can match

most organization’s products, processes,

locations, distribution channels and the like.

What practices differentiate people-first

organizations ?1. Cultural Diversity.2. Family-friendly.3. Investing in employee

training.4. Empowering their

employees.

In turn, this converts into higher employee productivity and

satisfaction. These employees are willing to

put forth the extra effort to do whatever is necessary to see that their jobs are

done properly and completely.

People-first strategies also lead to

organizations being able to recruit smarter, more

conscientious, and more loyal employees.

SUCCESSFUL

ORGANISATION

PUT PEOPLE FIRST

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Company Background

• Founded by Jerry Baldwin, Zev Siegel, and Gordon Bowker in 1971 in Seattle’s Pike Place Market.

• Purchased by Howard Schultz in March of 1987 and turned into what we see today.

• Schultz wanted to create a business that does the right things for the right reasons and is financially successful.

11Howard Schultz, CEO of Starbucks

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“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

Mission Statement

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To support their mission statement the following six guiding principles help guide the appropriateness of decisions:

• Provide a great work environment and treat each other with respect and dignity.

• Embrace diversity as an essential component in the way we do business.

• Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

• Develop enthusiastically satisfied customers all of the time.• Contribute positively to our communities and our environment.• Recognize that profitability is essential to our future success.

Guiding Principles

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Putting “people first” is easy to say. Putting people first is not

necessarily consistent with long term competitiveness.

Organizations are more typically pursuing a “labour cost

minimization” strategy rather than a people first strategy. As a result most business firms place profits

over people.

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Organizations with problems typically look to staffing cuts

as a first response. Few organizations have the luxury to be able to provide workers

with anything more than minimal job security.

Employees are a variable cost.

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Learning from StarbucksStarbucks is one of the most successful

and admired companies today. It has grown from a single coffee shop in Seattle 33 years ago to a $4.1 billion international company. From tasty beverages to proprietary whole bean coffee blends to strategic relationships, small businesses have so much to learn

from Starbucks.    

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Starbucks, the specialty coffee retailer, is one of the great 21st century American success stories. Considered as one of the most successful and admired companies today, Starbucks has grown from a single store in Seattle 33 years ago to 5,945 outlets in United States and 2,392 more in 28 countries. In fiscal 2003, the company posted revenues of $4.1 billion

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Cup by cup, Starbucks has changed the way people from different continents drink coffee. More remarkably, the company successfully transformed a pedestrian commodity into a high-end accessory. It has created a “Starbucks lifestyle” that more people continue to embrace in the United States and abroad.

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10 Lessons More than the taste of its

coffee, there are a number of factors that propelled Starbucks’ latte to the

forefront. Below are some of the things that you can learn from Starbucks – a company that started small, dreamed

big and grew to be a gigantic global corporation

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1. Start with a good business concept.Starbucks is a tremendous success because it capitalized on a concept that hadn’t existed before – the coffeehouse as a gathering place. It is not just a place to get a cup of gourmet coffee, but it has become a center for socializing and intellectual discussion, particularly among students and young urban professionals

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It turned an ordinary and humble product into an extraordinary

experience that customers are willing

to embrace.

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2. Think BigStarbucks opened its first store in

Seattle's Pike Place Market in 1971. The company started small, but even early on it always had big ambitions.

The company was made public in 1982, almost a decade after it started.

From its humble beginnings, the company currently holds about 40

percent of the specialty coffee market, and the

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• anticipated growth in this category will offer the company considerable opportunities for further growth and expansion in the future. In fact, it can be said that Starbucks is just at its early stages to colonize the globe. • Starbucks used the slow-but-sure approach to business growth. It was certainly not an overnight success

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3. Think outside the box Starbucks’ strength lies in its

ability to spot opportunities, even if that means debunking

accepted retail trends. Starbucks’ ability to think

outside the box is a common trait that propelled other small businesses to the big league.

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Starbucks has well demonstrated this behavior

in their approach to real estate, which in itself is legendary. Contrary to established tenets of

retailing, the company does not choose a location based

solely on demographics, traffic patterns, location of

competitors, and even spacing of its own stores.

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. Instead, it clusters its stores in chosen areas, making Starbucks ubiquitous in many city streets. Traditional retailing mindset warns against locating stores nearby as it can cut sales at existing outlets.

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4. Partner BigStarbucks has demonstrated that even a large company needs help to achieve its goals. In fact, a key reason for Starbucks’ success is its strategic partnership initiatives. In 1993, the company partnered with Barnes and Noble bookstore in the United States to make its coffee available to bookstore customers. Continuing its strategy to gain a foothold in the bookstore segment, Starbucks formed an alliance with Canadian bookstore Chapters Inc. in 1995.

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Starbucks entered into a partnership with Pepsi-Cola Company in 1996 to start the business venture called North American Coffee Partnership, which then sold a bottled version of Starbucks Frappuccino® blended beverage. During that same year, the company also partnered with Dreyer's Grand Ice Cream, Inc. and introduced Starbucks® Ice Cream and Starbucks Ice Cream bars, which quickly became the best selling coffee ice cream in the United States. In 2001, the company entered into a partnership with Hyatt Hotels Corp.

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To demonstrate and pursue its social commitment objectives,

Starbucks has also partnered with a number of organization such as Conservation International, the

international relief and development organization CARE, Earvin "Magic" Johnson's Johnson

Development Co., JumpStart, among others.

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Starbucks was able to achieve its objectives, break new markets, and increase its bottomline by entering into strategic alliances with the right companies. For your small business to succeed, you need to realize that you alone cannot fill the gap in serving the needs of your target market. You will need the

help of another entrepreneur or another company who is willing to work with you and share financial risks. It may not be Hyatt Hotel or Pepsi, but your partner may help you enter new markets, and get products and services to market faster.

Strategic partnerships will be your way to enhance your competitiveness in the marketplace and keep pace with the

rapid changes of technological innovation, just like Starbucks

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5. Create a unique experienceStarbucks has created a retail store experience that is attractive, comfortable, and even entertaining, designed to attract customers and keep them coming back to the stores. In its stores, you will find comfortable chairs, wireless Internet connection, even a selection of music. Starbucks began offering wireless high-speed Internet access in its stores in 2001 to enhance the experience for students, business travelers, and web surfers who take advantage of this service while sipping their favorite coffee.

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The product innovations and store ambiance that the

company created are all intended to promote an environment that would

enhance and complement the customer’s coffee drinking

experience. The end result is a pleasurable experience for the customer – a unique Starbucks

experience that is consistent from Seattle to Washington D.C.

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6. Keep Customers happyThe success of Starbucks is largely due to its steadfast commitment to the customers. The company lives by its mission statement “Develop enthusiastically satisfied customers all of the time.” Every strategy pursued by the company is intended to keep customers satisfied -- from the moment a customer walks into one of the retail stores, to placing of an order, to receiving a fresh cup of coffee and finally to the choice of relaxing in the Starbucks store or moving on with the daily routine.

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Even the decision to cluster stores stemmed from the realization that people are not willing to stand in a long line to buy a product considered to be a luxury item. Customers will not delay their day or alter their daily routines just to buy a luxury cup o’ joe. To make the process of buying coffee fast, Starbucks felt they needed to be where the customers are, even if it means that the next Starbucks is just around the corner. In the end, Starbucks succeeded in making their deluxe coffee lifestyle as accessible as possible.

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7. Dig deep into customer’s walletWith coffee as its main product, Starbucks continue to introduce new products in order to get customers to spend more money in their stores. The company knows that customers would want something else with their coffee; hence they introduced hot sandwiches and pastries to go along with the coffee. Later this year, they even plan to introduce CD burners in their stores so customers can sample online music from their HearMusic subsidiary while taking their coffee.

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Even the wireless Internet access that Starbucks introduced in many of its stores is a clever but indirect way to get customers to spend more and increase the stores’ revenues. Customers stay longer in the stores, and apparently purchase more coffee, food items and other products. In fact, company officials in interviews state that their most successful stores turn out to be the ones where customers loiter the most. They welcome people staying awhile in their stores, as they then have greater opportunity to market to them their other products.

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8.Ability to roll out new initiativesStarbucks’ ability to roll out new initiatives and products relatively quickly is a considerable competitive strength for the company. Its disciplined innovation is one of the primary reasons behind the company’s success in generating consistent high level of same store sales. It continues to experiment and introduce new products in the market, while making sure that it maintains the consistent strength of its core product.

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9. Good ManagementStarbucks has a well-seasoned management team that continues to develop winning strategies for the company. One of its best decisions thus far is its strategy of foregoing franchisees and making sure that its stores are company-owned. This strategy allowed the company to maintain a tight grip on its image and provide a consistent quality of excellent service.

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The depth of management resources is one of the main differences between Starbucks and small businesses. Starbucks has the money to hire the best minds to work on various facets of its operations, whereas many small businesses have less than 10 employees, if at all. Some small and home-based businesses are even run by a single person expected to do everything for the business.

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10.Diversified revenue streamStarbucks understands that good business does not mean putting all eggs in one basket. Hence, it strives to reduce its reliance of certain product lines in order to keep a healthy financial position and grow its revenues.

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According to Data Monitor, Starbucks’ retail sales mix by product type during fiscal 2003 was comprised of approximately 78% beverages, 12% food items, 5% whole beans coffees and 5% coffee making equipment and accessory. It is currently looking at additional opportunities in distribution channels for Starbucks products, whether in foodservice, grocery, licensed stores or business alliances.

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We’re not in the coffee business serving people…

We’re in the people business serving coffee.

-Howard Behar, Director of Retail Operations