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valuestockplayers.com Book Reviews

The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary
by Joseph Michelli

Management consultant Joseph Michelli spent two years of his life trying to figure out what makes Starbucks such a successful operation. Remember, Howard Shultz the founder of Starbucks took essentially an ordinary cup of coffee. Prior to him, it was sold daily in some of the seediest places on the planet (still is). He elevated it into an art form, presented in a European style environment, and sold it repetitively day in and day out for 4 to 7 times what you pay somewhere else for it.

It's an AMAZING STORY

It's one of those stories where you say to yourself, this was a NATURAL. Why didn't someone think about doing this? Home Depot, McDonald's, Duncan Donuts, Bed, Bath, & Beyond, all of these operations were naturals, so natural in fact that you would think that someone else would have thought of doing it first.

Starbucks is in a class by itself

Had you invested $10,000 in the Starbucks IPO in 1992, you would be sitting on $650,000 today. If you had been one of the 100 employees with the company in 1987, and had you stayed with them, you would be looking at 100,000 fellow employees today. Who else has had growth like this?

How do you replicate the customer experience every day successfully among 11,000 stores? How do you do it in such a way, that if a customer travels from NYC to Miami, to Detroit, and then on to Chicago, and LA, and into San Diego, you can count on CONSISTENCY in each Starbucks that you would enter?


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This is such an extraordinarily difficult thing to do, that you will immediately realize how many other great companies including Home Depot along the way, have STUMBLED, when it came to maintaining that unique CUSTOMER EXPERIENCE. This wonderful little book answers all of these questions and more, in less than 200 delightful pages to read. There's more wisdom here than you realize upon first reading Michelli's work. Here's more of what you will learn. There are five critical sections to the book. The author has named them Principles 1 through 5. Each is a separate chapter in the book. They are:

1) MAKE IT YOUR OWN

The people who work in the stores, who do the everyday work you see are called PARTNERS, not workers, not employees. The objective is to get a lower level associate functioning in an entrepreneurial fashion. Somehow Starbucks gets it done. Basically, each partner is asked to conduct himself in accordance with what the company calls the "FIVE WAYS OF BEING".

A) Be Welcoming
B) Be Genuine
C) Be Considerate
D) Be Knowledgeable
E) Be Involved

2) EVERYTHING MATTERS

There are two fabulous quotes that are used in this section. We should all memorize them:

A) Retail is Detail

B) All Business is Detail

I was floored by these quotes. When you think about it, Starbucks is completely right. You have to get those DETAILS right. If you do that, the mosaic that you are trying to create between store, coffee and customer - it all comes together.


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3) SURPRISE AND DELIGHT

It might be opening a store an hour early because you see a customer standing outside. Perhaps you had 10 regular customers from the library across the street, and now the library has moved. You run the Starbucks, so what do you do, you visit the new Starbucks where the library moved, and you introduce your old customers to the new Starbucks. Who does this type of thing; what business has such people affiliated with it? The answer is Starbucks. Somehow this company has managed to create these types of dedicated professionals.

4) EMBRACE RESISTANCE

Most companies seem to fight off criticism or complaints - not Starbucks. They look upon criticism as an opportunity to learn from the person doing the criticizing. A case in point is a high level Starbucks executive calling up a person who did a radio show flailing against what he viewed as a lack of consistency in the coffee and service at his local Starbucks. The company embraced the criticism as an opportunity to learn on a company-wide basis. This is very unusual to say the least.

5) LEAVE YOUR MARK

It's right in the company's mission statement. The company will "contribute positively to our communities, and our environment." From buying environmentally friendly products to constantly worrying about developing a reputation for integrity, Starbucks takes what it does seriously. This is reflected in every nuance of the customer experience.

Is this the only major company in America that gives health-care benefits to all employees who work 20 hours a week or more? I think so. Most companies could care less about the living and working conditions of the overseas companies that it buys from. Starbucks couldn't care MORE.

In fact, they pay an average of $1.26 more per pound of coffee than their competitors, to insure that their foreign business partners treat their employees better that what is normal country practice. This includes looking at the books of their providers to insure that the wealth trickles down all the way to the guy picking the coffee beans.

CONCLUSION

If you are a student of management than this is a company you need to study. If you are an investor, you have to think about why you are investing in arcane, esoteric companies you don't understand, when companies like Starbucks are right under your nose, and you visit them every day. What's going on here? Who's driving the bus?

Read "The Starbucks Experience". It will give a whole new meaning to your leisure time activities. You will learn that this company is a whole lot more than just a cup of fresh, wholesome, good tasting coffee. See you at Starbucks.


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