Revenues down. 600+ stores closed. Employees laid off. And traffic at U.S. stores dropped for the first time in its history.

Where is Starbucks heading?

Starbucks humble beginnings in Seattle’s Pike Place Market were birthed out of one central idea – to bring the café culture to America.

But over the past decade we’ve watched Starbucks do nothing short of diluting this brand focus…their big idea that transformed America from perceiving coffee as a cheap vehicle of caffeine to an experience they were willing to pay 8 times as much for. We’ve watched as they have added countless merchandise, grocery store products, prepared food, nuts, music, and the list goes on.

So what’s wrong with growing? Isn’t Starbucks still a $16B company? Haven’t they simply done what every company wants to do…grow?

So how does a company like Starbucks keep growing when adding ’stuff’ undermines the value of the brand?

Instead of getting rid of stores, they should have been getting rid of all the ‘junk’ diluting their brand. Its tempting to first blame a weak economy or overly aggressive growth as their problem. But watching their focus dwindle and therefore the filter by which they make growth decisions weaken, one can watch how they’ve paved the road for competitors to chip away at their formidability. They’ve slowly removed the café culture experience from the Starbucks brand value.

I’ll let CEO Howard Schultz take the reigns from here, “Of course, every change that Starbucks has made over the past few years – automated espresso machines, preground coffee, drive-throughs, fewer soft chairs and less carpeting – was made for a reason: to smooth operations or boost sales, two inescapable goals for a publicly traded company. Those may have been the right choices at the time, Schultz wrote, but together they ultimately diluted the coffee-centric experience. ‘We want to have the courage to do the things that support the core purpose and the reason for being and not veer off and get caught up in chasing revenue, because long-term value for the shareholder can only be achieved if you create long-term value for the customer and your people,’ Schultz says. ‘We have to get back to what we do.‘”

Next entry we’ll look at a company that has taken the simple, authentic experience that made them great and sustained growth within that focus.
References:

• Marty Neumeier’s Innovation Workshop
• Brand Channel
• Time
• Chicago Tribune

This entry was posted on Friday, November 13th, 2009 at 8:00 am and is filed under Branding, Business. You can follow any responses to this entry through the feed. You can leave a response, or trackback from your own site.