Starbucks: What Went Wrong at The Top?

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  peterrsmith01/09/08 Report as spam
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  Starbucks

  What are the odds of following a wildly successful founder, entrepreneur and maintaining either the street buzz or the meteoric rise? The law of big numbers was going to eventually catch up and you can?t fuel a fad forever. Shultz will weather the market adjustment and the next guy or gal given the CEO title will fare better, no doubt.
  Bad career strategy by Donald to follow Shultz.

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  Michael Fitzgerald01/09/08 Report as spam
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  The Nike example

  Why would the next person fare any better than the multiple CEOs who've tried to follow Nike founder Phil Knight?
  
  Michael Fitzgerald

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  bholstein01/10/08 Report as spam
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  Founders and their successors

  I agree that this is a common problem. Michael Dell pushed out Kevin Rollins and took charge again at Dell, another case in point. But I still think it reflects a failure. If Howard Shultz wanted to build an enduring franchise, which outlasts him personally, he has to figure out a way to put management depth in place so that the company can enjoy internal CEO after internal CEO. The idea of parachuting in outsiders is now seen as pretty lame. Bill Holstein

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  kcouch01/09/08 Report as spam
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  RE: Starbucks: What Went Wrong at The Top?

  I think the perceived failure of Starbucks doesn't lie with Jim Donald, but rather with what the company established as benchmarks for success.
  
  I think Mr. Donald succumbed to the pressures of shareholders, which believe that site expansion is synonymous with company growth ??? it???s easy. Had he pursued other strategies, he would have been lambasted for not growing the company in terms of site expansion.

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  haney49901/10/08 Report as spam
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  RE: Starbucks: What Went Wrong at The Top?

  I believe it is not Shultz nor Donald mistake at all. Perhaps the expectation from all level of people thats gives so much of pressure to Donald. It is so difficult and not easy to maintain the perfect cup of coffee and that Starbucks experience and at the same time concentrating on the massive expansion...
  Perhaps Shultz is back as CEO temporary is a good idea whilst giving Donald more space to relook on the company expansion again...

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  LWeller201/14/08 Report as spam
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  RE: Starbucks: What Went Wrong at The Top?

  Society is in flux and Starbusks may decline as a consequence. It's that changing society that needs to be addressed and accommodated. If it isn't, then Starbucks needs to focus on the sale of speciality goods at reasonable prices (e.g., Trader Joes).

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  bholstein01/16/08 Report as spam
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  Is The New Starbucks The Wrong Starbucks?

  What you seem to be suggesting is that by expanding into a mass market, Starbucks may have betrayed its origins? Right? Bill Holstein

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  CT100001/20/08 Report as spam
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  Starbucks Simply Forgot About Their Customers

  As a somewhat regular customer of Starbucks I have seen the "customer experience" deteriorate over the last few years. From stores consistently being out of sandwiches or cookies (made in Seattle then shipped to California) to slightly dog eared stores and staff that just don't care like they used to.
  
  I've been telling my wife that Starbucks is on it's way out as a destination coffee house unless it gets back to it's roots of providing a complete customer experience. Sadly about the only thing that causes me to go into a Starbucks now is the craving for a cup of coffee.
  
  It is kind of sad really because I remember when Starbucks was really something of a great experience and destination coffee house.
  
  Mr. Shultz, bring back the old Starbucks before your competition does.

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  bholstein01/22/08 Report as spam
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  Get specific

  What exactly is different for you these days when you go into a Starbucks? I have been going from time to time over the years and don't understand why people such as yourself feel that something has changed. What is it? Bill Holstein

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  jlramirez01/24/08 Report as spam
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  Drive Thrus

  One major difference I've seen in the Starbucks experience and which I believe was a mistake was the implementation of drive-thrus. One morning as I was trying to get to a brainstorm meeting at a Starbucks, I couldn't park in an available space because the drive-thru line was backed up by a dozen vehicles.
  
  The drive-thru implementation creates an inconvenience for those looking to park, those trying to walk in without getting run over, those who experience longer delays inside because of the logistics involved with drive-thrus, and the lower image that drive-thrus bring to the brand.

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  EGornick01/25/08 Report as spam
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  Parking and quality product

  The parking lot situation is a problem. I've had to sit in my parked car on several different occasions, waiting for someone in the drive-thru line to let me back out. You'd think that the site planners might have taken a look at the layout for established drive thrus, i.e. lanes that wrap around the back of the building away from parking.
  
  A second issue I have is the automated espresso machines that are now in place. Speaking as a former coffee house employee, there's skill involved in pulling a good espresso shot. It takes practice, but once mastered a hand-pulled espresso beats a machine any day. I pay a premium for a Starbucks latte, I feel I should get a premium product. If I want a machine made latte, I can go to the gas station.
  
  Both of these situations smack of poor planning, over-expansion, and banking on a customer base committed to a well built lifestyle brand. Should be interesting to see how things play out for them. I hope they find their way back to the basics that made them successful in the first palce. In the mean time, I'll skip the hassle and expense and get my caffeine fix from my Mr. Coffee.

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  mikecpdx01/25/08 Report as spam
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  RE: Starbucks: What Went Wrong at The Top?

  I, for one, LOVE McDonalds coffee and strongly prefer it's far more aromatic, albeit milder, flavor to Starbuck's ashtray flavored drip coffee and it's accompanying arrogance. Don't get me wrong, I love the consistency of the Starbucks (non-drip) espresso-based drinks. Further, I love the Starbucks brand and greatly admire what they've done??? created an entirely new genre of store and an industry by itself. But what's happening there now is such a classic, classic example of several business cases:
  
  The inflexibility of bureaucratic giant companies to react.
  Giants unable to recognize or cope with paradigm shifts in the consumer, the industry, the competition, or technology.
  Management's failure to "look outside the box" and focus too narrowly on direct competition.
  Vision left in one man's hand (not deeping the management bench).
  Dominance breeds arrogance, arrogance breeds narrow-mindedness, complacency, and a lack of new ideas.
  A switch in managerial perogative from a desire to win to a fear of losing creating a bureaucracy of doing the same thing a little better, as opposed to taking risks.
  On and on...
  
  But nothing breeds improvement like a good kick in the arse and competition. I don't think Starbuck's miracle is done yet.

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  four-eyes_z03/13/08 Report as spam
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  I agree with your point about dominance...

  Dominance breeds arrogance and complacency. They've become blind to the needs of the customer because they've led themselves to believe that their success has ensured their dominance, and people don't have a choice anymore except for Starbucks.
  
  The sad truth is, they've succeeded in expanding to the point of cheapening their brand name. Having a strong presence is good, but it shouldn't be done at the expense of lower the quality of the service and the product. They've succeeded in commercializing themselves to the point that first timers to their establishments start to wonder "what's so special about this place anyway? I can get better coffee and service from the mom & pop coffee shop just down the street?".
  
  Success shouldn't always be about making the proverbial "quick buck". It should also be about the trust and loyalty you build with your customer base. After all, increased profit is just the by-product of having a lot of satisfied and happy customers. That's apparently something top management forgot somewhere along the way.

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  bholstein01/25/08 Report as spam
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  Dear Howard Shultz

  I think you need to read these comments. This is the heart of what's gone wrong with the Starbucks experience. Very truly yours. Bill Holstein

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  farango01/25/08 Report as spam
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  It's coffee

  Starbucks was the most convenient place to get coffee, it came to mind first, so this gave it a little buyer resistance. Now competitors and energy drinks have picked off the non loyal coffee snobs, which are the majority of people.
  
  Before, when you thought coffee and convineince you thought Starbucks, now you have many different options. Do not expect the fantasy to come back.
  
  Apple was one business that was able to come back once steve came back. He introduced new products new ideas, new fads. I doubt a coffee business has that potential.

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  Caroline Schroder, Sulgrave Resources & Research LLC01/25/08 Report as spam
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  Insulation

  Starbucks is typical of a successful category dominator, but perhaps more importantly Stabucks management is isolated and insulated in Seattle. It is easy to feel overly self-assured as the only game in town. Additionally, several CEO's, including Paula Reynolds at Safeco, have commented that it is hard to attract good senior management talent to Seattle because of the relative isolation; it's hard for incoming talent to see how to find the next gig if something goes wrong. That does not yield bench strength.

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  kikot01/29/08 Report as spam
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  Mc Donalds vs. Starbucks

  The joke is that McDonalds did the same stupid mistake back in the 90s. Many new stores cannibalized existing ones and as a result franchisor relationships were badly damaged. Starbucks clearly chose to learn the hard way - from its own mistakes.

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  ubercoach02/05/08 Report as spam
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  RE: Starbucks: What Went Wrong at The Top?

  Shultz turned Starbucks into a billion dollar retail operation because it was his baby, and when you have a dream of making something a success you work hard at it, he sweated tears and blood to get it off the drawing board. Shultz always maintained his goal to "serve a great cup of coffee" and that was Starbucks USP (great quality). Did Starbucks grow too big too soon, maybe. But the man with a vision is a back, he has a vision to make Starbucks better than before. Possibly with some reduce prices on the non-coffee beverages and eateries.
  
  So the expansion model based on McDonald's style is the game plan with room for improvement. Personally, McD's coffee is yuk and the whole over crowded plastic image of entering a noisy untidy place to sit and drink coffee in a burger place doesn't do it for me. Good thing about Starbuck its clean.
  
  Without failures of some kind you how else would you appreciate the successes ... Shultz took a rest but he's back for second innings, and good luck.