starbucks creativity profile
TRANSCRIPT
Starbucks Creativity Profile
Featuring: Michael Calo, Berket Nega and Brendan Rogers
HISTORY AND BACKGROUND
Starbucks was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker in
Seattle, Washington. It started a place that strictly sold gourmet coffee beans, based on the idea
of Peet’s coffee already established in California. Jerry Baldwin actually worked at Peet's. When
they opened up their own coffee shop in Seattle in 1971, they bought all their raw beans from
Peet. The Starbuck’s name comes from Captain Ahab's first mate in the classic novel Moby
Dick. The startup ended up doing well and has continued to grow.
In 1980, Zev Siegl sold his stake in Starbucks, when Starbucks had six retail outlets. A
year later, Howard Schultz noticed the number of thermoses that Starbucks was buying from
Hammarplast, his employer. Impressed with Starbucks’ knowledge of coffee, Howard Schultz
asserted his interest in working with them in hopes of providing a new vision for the growing
brand. In 1982 Schultz was hired as their head of marketing. From there he was sent to attend an
international show in Italy. Schultz found himself enthralled with the coffee culture. He noticed
things beyond the gourmet coffee; the customers were talking and enjoying each other’s
company. Inspiration struck and Schultz wanted to provide that same elegant environment in
America. "Why not create community gathering places like the great coffee house of Italy in the
United States?" Could the Old World meet the New World? If it succeeded, it would be
marketing genius.” (Garza, 2015) By 1983 Schultz wanted to imitate the magic behind the Italian
coffee shop and wanted to try selling gourmet drinks rather than just gourmet beans
Schultz's vision did not agree with with Baldwin’s. Baldwin was not ready to get into the
restaurant business and did not want to stray from his original plan based on the Peets business
model. Since Schultz couldn't convince Baldwin and the other owner’s, he went his own way to
start the Il Giornale chain of coffee shops in 1986, which was named after the biggest Italian
newspaper. Two months later, the new store was serving more than 700 customers a day, and it
was selling 300% more than the Starbucks locations.
In 1987 the owners of Starbucks Coffee Company decided to sell the business to a group
of local investors for $3.7 million. After Baldwin sold his stake in Starbucks, he later became the
chairman of Peet's and eventual director when the company went public.
Schultz raised the money by convincing investors of his vision that they could open 125
new shops in the next five years. He also changed the Il Giornale bare-breasted mermaid logo
into a more “appropriate” one. The company name surprisingly changed from Il Giornale to
Starbucks and changed the existing locations into elegant, comfortable coffee houses. After
conquering Seattle, the chain expanded across the United States and then internationally. The
first location outside of North America was in Tokyo, Japan where they have an even bigger
presence today. Over the course of its history, Starbucks has bought or acquired companies like
their inspiration Peet's, Seattle's Best Coffee, etc.
In 1992 the company went public and Starbucks continued to grow at an exponential rate
that the coffee industry had not seen before. By 1997 the number of Starbucks Coffee stores
grew 10 times more than before the IPO, with locations internationally. In the late 1990’s the
company was opening a new location almost every workday.
Starbucks' growing success was largely accredited to word of mouth advertising. “In
2004, Starbucks reached a record 1,344 stores worldwide and later having more than 9,000
locations in 34 countries serving 20 million customers or more a week. Today, Starbucks has
expanded to more than 17,000 stores in 55 countries around the world. Their biggest presence is
still in the United States, with 11,000 locations.” (Catalog, 2015)
Although very successful, Starbuck's received a lot of criticism. Their reputation of
taking over smaller businesses and forcing out competitors had caused some to think of
Starbucks being too corporate and too powerful for the relaxed lifestyle of the coffeehouse
demographic. At the same time, Starbucks does promote Fair Trade coffee products and have
been well known for endorsing the green movement by recycling and making eco-friendly
locations. Fair Trade meaning that the goal is to empower farmers by getting them fair prices for
their harvest, help create safe working conditions, and provide a decent living wage for workers
by paying “above market” prices for coffee produce. They are eco-friendly by promoting
renewable energy to power their operations and re-usable products such as containers. If
customers are not using the reusable containers then at least their disposable products are partly
made of recyclable materials.
Starbucks has received criticism because its operations are not truly green, but they claim
they are working toward that goal of being 100% green. Starbucks’ history has its pros and cons,
but either way it is a household name that most people love. For example, here are quotes from
customers that show loyalty to this very successful brand:
"I've been a Starbucks fan since I lived in Portland in the late 80's and I've been in Mississippi
for the past 11 years enjoying Starbucks." (CNN, 2011)
"I have been a big supporter of Starbucks since the early days, taken expensive rides in taxis to
get my morning coffee, even waded through two feet of snow in my business suit.” (CNN, 2011)
This unwavering dedication from a large consumer base throughout the United States and
internationally is due in large part to the creative efforts and innovative attempts made by
Starbucks to provide a comforting and enjoyable coffee drinking experience. Next, we will show
how Starbucks’ corporate culture, fundamental values and genuine compassion have become
integral parts of their success as one of the world’s most successful coffee houses and
identifiable brands.
CULTURE, INSPIRATION AND SOCIAL RESPONSIBILITY
Corporate culture is the common values, philosophy, policies and procedures of a
corporation. This can either be catalyst or impedance in harboring a professional atmosphere that
invigorates and supports organizational citizenship behavior (OCB). Culture affects an
employee’s actions, feelings and even their creative potential. Every organization has a different
perception about the ideal culture for their firm, Howard Schultz, CEO of Starbucks worked to
infuse strategic values and guiding philosophies into the Starbucks culture. The fundamental
value was to build a company with spirit and compassion. Schultz crafted a philosophy for
Starbucks to passionately pursue the perfect cup of coffee. Starbucks understood that the
tangible benefits of coffee like, taste and quality were not the only factors to consider in their
pursuit of the perfect cup of coffee. Starbucks focused on enhancing the intangible benefits of
their brand, chiefly the atmosphere during the coffee buying experience. Starbucks made a
concerted effort to appeal to customers on a more intimate and emotional level. The idea of
creating an intimate and romantic coffee experience mimics the traditions of the Italian coffee
culture that mesmerized Starbucks CEO during his travels to Milan, Italy. Schultz believes that
creating a warm and friendly “coffee experience” is the key to becoming the “third place” place
people go between work and home. To become an oasis where customers can come to unwind
after work, enjoy social interaction, or just relax by themselves. Starbucks was instrumental in
the proliferation and evolution of the coffee culture in America.
Starbucks employees are the soul of the company, which enables the firm to create that
warm and inviting atmosphere that Schultz’s envisioned. Well-informed and wholehearted
employees, who know the company’s brand, deliver consistently pleasing customer service and
able to convey the company’s passion for coffee. Jim Alling, Starbucks Senior VP of Retail
said, “our goal it so create an uplifting customer experience every time you walk through our
door.” (the dieline.com, 2013) When asked what the design philosophy of Starbucks was,
director of brand strategy Jean-Marie Shields said, “ It’s about nurturing and inspiring the human
spirit. It’s really through that lens that we do everything—with that warmth.” (thedieline.com,
2013) When designing the “coffee experience” an emphasis is put on providing a feeling of
intimacy with customers that can form connections thus leading to customer satisfaction and
loyalty. Jean-Marie Shields describes the Starbucks brand, “ The brand is almost like a friend—a
unique, well-traveled, cultured friend you know well but who always manages to surprise you.
That’s always our focus. I think the design aesthetics reflect that. But it’s not that friend who is
always the same. It’s the friend who leaves you feeling energized and who you always can count
on to have a great exchange with. A friend with warmth.” (dieline.com, 2013)
Starbucks attempts to stay connected with its customers not only through face-to-face
interactions, but also through a digital medium. As the social media landscape continues to
evolve, Starbucks identified this as an opportunity to enrich and create intimate connections with
customers through online interactions. Starbucks digital initiatives incorporate “expanding and
enhancing their core web platform globally, creating world class mobile applications for iOS and
Android, as well as developing an in-house eCommerce platform and business, a branded and
differentiated Wi-Fi strategy (which includes the Starbucks Digital Network), a social media
engagement platform, and building the Starbucks card and loyalty programs globally”3. The
Starbucks Digital Network (SDN) is a system that enables customers who connect with the free
Wi-Fi in Starbucks stores to have access to a “rich blend of great things to read, watch and listen
to – making our customers’ coffeehouse experience even more enjoyable.”(Kanani, 2012) These
digital initiatives are an example of creative and innovative methods that Starbucks utilized to
endorse and uphold the perception of being brand that’s “almost like a friend “1 to its customers.
This understanding of the expanding role that technology will play in the future has allowed
Starbucks to be at the cutting edge, creating a multitude of platforms and applications that will
extend the relationship that Starbucks has with its customers beyond the front door of each
coffee shop.
Starbucks compassion for its customers stretch’s beyond the interactions during the
“coffee experience”. Being that “ friend” having an intimate connection with customers,
encompasses embracing their burdens and concerns as well. Starbucks viewed the recent
economic downturn and increased awareness of global warming as opportunity to revive the
economy and focus on renewable energy and energy. To enact change Starbucks became a
founding member of Business for Innovative Climate and Energy Policy (BICEP), which is an
advocacy coalition within the business community that partners with “policy makers to pass
meaningful energy and climate legislation”. 4 “BICEP members believe that climate change will
impact all sectors of the economy and that various business perspectives are needed to provide a
full spectrum of viewpoints for solving the climate and energy challenges facing
America.”(Ceres.org, 2015) Starbucks planned to improve its environmental stewardship by
focusing on the firm’s water and energy conservation, incorporation of renewable energy and
achievement of the LEED certification.
Starting in 2008, Starbuck set a goal of decreasing its water and energy consumption by
25% by the year 2015. In regards to the water consumption, the goal was realized through the
installation of efficient fixtures, improved filtration systems, and monitoring consumption to
swiftly identify leaks. In ordinance with Coffee and Farmer Equity (C.A.F.E.), Starbucks is
“working with non-profit organizations to help improve livelihoods and quality of life in many
coffee growing regions by investing in programs addressing critical community needs such as
water access, sanitation and hygiene.”(Ceres.org) In regards to energy reduction, the goal was
realized through new energy management systems that reduced energy requirements for stores
Heating, Ventilation, and Air Conditioning (HVAC), which is the single largest source of energy
consumption in buildings. Another method of reducing energy consumption is by utilizing more
energy efficient LED lighting, replacing incandescent and halogen lights in over 7000 stores
around the world. This well-rounded approach to reducing utility usage and improving access
and conditions of the water supply in many coffee growing regions shows Starbucks’ concerted
effort to not only reduce their footprint on our environment but also work to improve the quality
of life and unsanitary water conditions that many people are subject to in coffee growing regions
throughout the world.
On top of reducing its energy use, Starbucks partnered with Green Power Partnership, “a
voluntary program that encourages organizations to use green power as a way to reduce the
environmental impacts associated with conventional electricity use.”(EPA.gov, 2014) Starbucks
set a goal to purchase renewable energy credit certificates (RECs) equivalent to 50 percent of the
electricity used in our U.S. and Canada company-owned stores by 2010. RECs “represent 1
Megawatt-hour of renewable energy generation on the electricity grid. RECs are the sole means
to claim usage of grid-connected renewable electricity in the United States. Renewable
electricity generation and use are tracked through RECs, and so by matching RECs with your
electricity service you are using renewable electricity. A REC represents the environmental
benefits of 1 megawatt-hour of renewable electricity that can be paired with electricity. “Through
the Green Power partnership, purchases of RECs help advance renewable energy by subsidizing
wind farm owners, which successively enables farmers to sell electricity at a more competitive
price. Starbucks not only achieved their goal in 2010, they also established a new protocol that
calls for the purchase of RECs 100% equivalent of the energy used. For their efforts, Starbucks
was honored by the U.S. Environmental Protection Agency as one of the top ten private sector
green power purchasers.” (Starbucks.com/responsibility, 2015) Starbucks partnered with the U.S
Green Building Council (USGBC), to implement LEED certification as a requirement when
constructing new company –owned buildings. LEED stands for Leadership in Energy and
Environment Design. LEED is a certificate program thru the USGBC that certifies buildings that
are built according to specific methods and guidelines throughout the design and construction
process that are proven to save money and resources while simultaneously promoting the use of
renewable energy. “Businesses and organizations across the globe use LEED to increase the
efficiency of their buildings, freeing up valuable resources that can be used to create new jobs,
attract and retain top talent, expand operations and invest in emerging technologies.”(usgbc.gov,
2015)
The recurring ideal ingrained in all of Starbucks business practices is that, Starbucks
strives not only to be the “the third place” people can go within a community but to have a
meaningful and positive effect on the surrounding communities. Forging strong intimate
relationship with customers and neighbors that create an environment conducive to collaboration
and innovation. They constantly look to provide opportunity and assistance to those in need and
continuously look to create value for customers, partners, suppliers one cup of coffee at a time.
These methods, values, and ideals first established by Starbucks CEO have profoundly affected
the lens in which the company views its interaction between stakeholders and surrounding
community members. Striving to cultivate the perfect cup of coffee through planting seeds of
warmth and compassion embedded in every strategic decision. Ultimately, spawning a corporate
culture that allows for a professional environment where organizational citizenship behaviors,
intense focus on the future and innovative ideas are common occurrences.
INNOVATIVE PRODUCTS/SERVICES AND THE DESIGN PROCESS
As mentioned previously, Starbucks understood that there was more to coffee than the
products sensory qualities. Beyond the tangible product received by the customer, the Starbucks
in-house design teams realized that a more holistic approach was necessary if they were to
differentiate their brand in a saturated and competitive coffee drinking market. Thus, Starbucks
laid out its entire value chain of activities and analyzed every possible way they could creatively
adjust their product, the experience for customers or the process of developing new ideas and
business practices. Starbucks knew that due to their status as a premium priced product, they
would need original innovations and improvements to differentiate their product from the
national competitors such as Dunkin Brands, McDonald’s, Caribou Coffee, Nestle and Panera
Bread.
Within their value chain, Starbucks has initiated a multitude of adjustments that separate them
from all other main players in the American coffee industry. First and most profound is
Starbucks interest in purchasing, running and improving many of the coffee farms throughout
Costa Rica. Their involvement in the very first link of the value chain ensures that they can have
the greatest impact possible on the quality, hygiene and sanitation of the Costa Rican
environment and the coffee farm ecosystem. As discussed earlier, Starbucks is committed to
improving their C.A.F.E. sustainability practices while also opting to use the open-source
approach. They share this insight with competitors in a hope to provide the best tools, practices
and resources available to ensure improvements for the long-term sustainability of the Costa
Rican coffee farms. Being the first company to go to such lengths to improve the sustainability
of these regions, focusing on the source of their product, Starbucks has set the standard and
paved the way for numerous competitors looking to replicate the commendable practices that
Starbucks has incorporated into their efforts in the coffee growing regions of Costa Rica. Their
choice to make all of their tools and ideas on long-term sustainability available to competitors
demonstrates the care and compassion that Starbucks was founded on. Their ability to
acknowledge the bigger picture and see that everyone’s inclusion in these efforts allows the best
chance for the world’s long term sustainability and success is key to the culture of the Starbucks
brand and is a primary reason why their brand is so revered in the coffee drinking industry.
Working our way down the value chain, the next facet of Starbucks chain that
incorporates a high level of creativity is the step-by-step design process employed by starbucks
award winning in-house design team. Jennifer Quotson, director of visual presentation
commented on responsibilities of the in-house design team, “ set every product and sign in store,
consider the customer journey, and feel insanely passionate about the retail space. We also
support and consult on many other things, as we own the holistic retail experience.”
(brandautopsy.com, 2004) Regardless of the project, the first step of their design process is to
conduct a project briefing in which a cross-functional team meets collectively, establishing key
objectives, ideas, time frame and general course of action. In this cross-functional design,
collaboration often occurs “between the packaging team, the in-store retail promotions 2D team,
the writers and the visual presentation team.” (thedieline.com, 2013) Regardless of the project’s
specifications, the team always builds a tangible, dimensional idea of the end result through the
exorbitant use of duct tape and toothpicks. In addition, their design process is centered on
learning from the past, improving the present and focusing on the future. Each project that is
orchestrated is attacked in a tiered approach, contemplating how each decision builds on the past,
improves present operations and expands opportunities in the future. Starbucks’ conscious ability
to look itself in the mirror and honestly critique their successes and failures is a key component
to their success as innovators in the industry.
Within the value chain, there are several tangible examples of how the Starbucks design
team and specific step-by-step approach to the design process has created innovative new aspects
to their business model and an emotional appeal that is used to attract and comfort customers.
For example, this design process was a crucial aspect of Starbucks’ initiative to individualize
each shop’s layout and storefront. Specifically, the store Design team works to constantly
renovate store designs, pushing the notion of local relevance. Through intense market research,
testing, consumer insight teams and constant interviewing, the design teams are able to truly
respond to their customer’s preferences without being presumptuous. The individuality used with
this approach guarantees that Starbucks adheres to their goal of providing an intimate and
tranquil atmosphere to all its patrons.
A prime example of this relatable atmosphere and comfort created is exemplified by the
efforts made within the coffee shops throughout Seattle, Washington, the birthplace of
Starbucks. The large influence that the shipping industry has had on the city of Seattle has led
Starbucks’ creative team to incorporate shipping containers into each store's design. Through the
use of these containers, the design limits the use of unnecessary resources while giving the
location an attractive atmosphere to the local Seattle population. By using this process, each
Starbucks location targets a specific demographic and works to create an atmosphere indicative
of the surrounding area. This design process and individual store design approach is even taken
to the media level, with each specific Starbucks location playing its own playlist and assortment
of music genres that are indicative of the surrounding demographic. By doing this extensive
market research and catering media playlists to each individual coffee shop, Starbucks support
structure, customer involvement and exposure has expanded across social media platforms and
adds additional value to the coffee buying experience. Their conscious efforts to understand
customer preferences and genuinely strive to constantly improve and expand current capabilities
has given Starbucks the reputation for appealing to their customers on a more intimate and
personal level, something never employed by other national competitors.
Design teams often initiate their own projects because, “we want to challenge an aesthetic, or
we really want to up-level a certain piece of the journey.” (thedieline.com, 2013) For example, in
an attempt to modify the Starbucks brand identity, a project design team decided to take a look at
the Starbucks logo, breaking down its four basic components and thinking of ways to improve its
image and reflect the current state and feeling behind the Starbucks brand. Once contemplating
hundreds of ideas, the answer was simplicity. Removing the words, bringing in the green and
removing the Siren from her ring, created an emboldened new look with the siren as the focal
point. After 20 years of keeping the status quo, the slight alteration in the logo created a mark
that “ celebrates the Siren in a much bolderway—it’s more expressive and energetic and still
uses the same vibrant green circle that is so well recognized by our customers around the world.”
(Starbucks.com/blog, 2015)
At the end of the value chain, Starbucks has also sought to create a playful and enjoyable
relationship between their customers and employees during their face-to-face interaction. This
has been achieved through their purposeful ploy to misspell customer names on their cups. The
tendency for these customers to express their feelings, good or bad, about the misspelling
through social media only increases Starbucks’ word of mouth and additional related sales.
Despite the occasional agitated customer, the majority of customers find the personalization of a
hand written name, spelled correctly or not, to be a beneficial, added touch to the coffee shop
experience found at Starbucks. In addition to simply receiving your order, each visit comes with
the promise of a laugh and the possibility of an Instagram or Twitter-worthy post that increases
social media traffic and potential for attracting additional customers. Although this small facet of
the experience doesn't actually impact the product’s quality or improve resource allocation, the
subtle personalization and use of humor is an creative tactic that continues to differentiate the
Starbucks Coffee experience from competitors who simply provided a numbered receipt and a
generic coffee-drinking experience.
Last but not least is Starbucks attempts to innovate their business model through the
extension of the value chain. In a partnership with Pepsi, Starbucks aspired to revamp the hot
coffee vending experience by creating a convenient, superior, hot drink in comparison to the
current alternatives such as the Nestle machines found on campus. Unlike coffee vending
machines that are currently on the market and operational, the Starbucks vending platform
utilizes proprietary heat-on-demand technology, developed by Pepsi, which will offer customers
yet another convenient way to access Starbucks on the go. “With a simple swipe of a payment
card (or with cash), a high-quality, hot latte or hot cocoa is served up in a ready-to-drink package
in less than a minute. Utilizing proprietary packaging, each hot beverage will come in a
convenient 9 fluid ounce recyclable steel can with an insulating label, designed to keep the
beverage warm, enjoyable, and still comfortable to the touch." (Wyss, investor.starbucks.com ,
2015) Starbucks focus on providing an additional channel for customers with minimal free time
to still access their product is critical to their attempts to continuously innovate and improve their
relationship with customers. By creating an environmentally conscious, high quality, dependable
product to a market of consumers that was previously untapped by Starbucks, the brand will be
further extend its reach and receive more exposure in relation to competitors. Due to the brand
loyalty that Starbucks has been able to gather, their attempts to become more mobile friendly and
technologically savvy will go great lengths towards ensuring that they will remain on the cutting
edge of innovative technologies and methods within the coffee industry.
In conclusion, Starbucks’ adherence to their CEO’s belief, that creating a warm and
friendly “coffee experience” is the key to becoming the “third place” place people go between
work and home, is fully demonstrated by their use of innovation throughout each part of the
business’ value chain. Whether it is improving worldwide quality, sustainability, hygiene and
sanitation for coffee farms through the creation of sustainability standards or creating a holistic,
step-by-step design process that ensures each project fully reflects the needs and preferences of
consumers at each individual location. Starbucks continuously looks to improve, refine and
create new ways for their brand to reach, impact and serve their customers. Their resolute focus
on expanding the Starbucks brand beyond the coffee shop experience, into the world of social
media and on-the-go products serves to exemplify their unwavering efforts to remain at the
forefront of high quality coffee shop experiences and maintaining its reputation as the elite
coffee brand and culture in America.
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