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Why Starbucks Is So Successful: 5 Must Have Ingredients

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Why Starbucks Is So Successful: 5 Must Have Ingredients

Starbucks has not only revolutionized the way we think about coffee, but they have literally transformed the English language.

Starbucks has introduced terms like barista, chai, latte, venti, and Frappuccino into everyday vocabulary.

The “third place,” as many of us refer to it as, has had a global impact on the way coffee is purchased, sold, and ultimately consumed by millions of people each day. Howard Schultz, CEO of Starbucks has no plan of scaling back his efforts either.

Starbucks continues to open 5 stores daily, 365 days a year. With that type of continual rapid growth, there are many key insights that have attributed to this success. There have been many books written about this story, however I am a stickler for empirical evidence.

Joseph Michelli, author of the Starbucks Experience, spent countless hours, days, and months working alongside Starbucks senior management figuring out what the key success principles are that have allowed this company to have such rapid growth, while staying vigilantly consistent across the board. I have deduced what I believe to be the top 5 insights that we, as business managers and owners can use to help scale our businesses and create raving fans.

Before we dive in to the insights, I would like to set the stage by sharing with you a quote from Jim Alling, President of Starbucks U.S.

Sure, one of our principles is to recognize that profitability is essential to our future success. But it’s not the first item on the list; it’s the last one. And when you live and work according to those kinds of principles, good things seem to come your way.

 

Key Insight #1: Create strategic alliances with your employees

Starbucks links their partner’s efforts directly to the success of the whole business enterprise: if the partners win, Starbucks wins. This eliminates the normal zero-sum game and creates a win-win scenario because the more profitable Starbucks is, the more profitable the individual partner at the store level is as well. Not every company can reward employees in the same fashion or scale as Starbuck’s. What we can do is treat our teams with enough care and concern to inspire passion and creativity.

Many companies have shied away from talking with their employees about profit, however, Starbucks takes a completely different approach. “Starbucks leadership has done an exceptional job of both linking a partner’s financial gain to Starbuck’s profit and helping partners understand that profit is the lifeblood of a business.” Michelli

Starbucks consistently spends more on training than it does on advertising which results in 120% less turnover than the industry average.

“The way we have built our company by including the success of the company with everyone in it and not leaving our people behind is a great example of building a business the right way.” – Howard Schultz

Key Insight #2: Living the mission statement

It was said best by Paul Williams: “The mission statement and the intentions – they’re not just on paper. They truly are meant to be the way things get done.

Leaders walk the walk, so they don’t have to talk the talk. The company is aligned on their vision across all levels of the business. This creates a culture of living the mission statement which in turn encourages the partners to offer the same vision to their customers.

Leading by example –  Michelli noted a perfect quote for this point: “For any organization, it’s difficult, albeit not impossible, to soar with the eagles if you are led by a flock of turkeys.

 

Key Insight #3: Starbucks 5 ways of being

Every partner is coached on embodying the Starbucks 5 ways of being, which creates a consistently fresh and delightful experience for patrons.

  • Be Welcoming – make it your own – leaders encourage partners to use their own unique style to produce inviting encounters.  Different means to the same end goal – each person is different and should champion their own strengths to create a lasting relationship with the customer
  • Be genuine – Starbucks definition – “to connect, discover, and respond.” This requires listening followed by action. Do not get stuck in paralysis by analysis
  • Be considerate – consider the needs of others, how can you invest more of yourself and encourage your teammates to increase their investment to be more considerate?
  • Be knowledgeable – Starbucks definition – “love what they do and share it with others.” In today’s information age, we add value to our efforts when we gain work related knowledge. Sharing knowledge with customers makes for more sophisticated consumers – AKA the “ideal customer.” When we add value/knowledge to our customers, they offer our business their loyalty and come to see us as trusted advisors rather than just transaction handlers!
  • Be involved – community, and in the store with customers.

Howard Schultz

Key Insight #4: Everything matters

This is referring to solid processes and procedures in daily operations – “retail is detail.” Starbucks puts an emphasis on consistency, even in the minute details. They take the mentality of nothing is trivial and our customers notice everything.

Starbucks focuses on finding ways to deliver existing products and services in ways that make the brand more significant to the customer – more than just a transaction, they focus on the whole buying experience. Starbucks focuses on creating a “felt sense” about the business

Dr. Eugene Gendlin defined this term as the result of a myriad of tiny details that lurk below our conscious awareness. How can we make our customers “felt sense” align with our businesses brand/vision? Focus on all the details.

“The Starbucks sensation is driven not just by the quality of its products but by the entire atmosphere surrounding the purchase of coffee.” – Corporate Design Foundation

 

Key Insight #5: Embrace resistance

This requires leaders to distinguish between customers who want their concerns to be resolved and those who will never stop complaining or be satisfied.

When faced with customer complaints, there is an opportunity to actually turn that perceived negative into a head over heels positive. You gain a rare perspective into the customers mind. This is an opportunity to learn more about what you can do, how to become better, how to approach processes differently, and ultimately become closer to creating a great experience for the customer.

Just listening is not enough, you must take action which shows the customers that their voices are heard and that leadership cares, thus creating brand loyalty.

Starbucks example – when entering new markets, in some cases Starbucks receives a lot of resistance. The way they have combated this is to keep their core products and services the same, but tailored other aspects such as food offerings to the local cuisines. This creates a sense of caring, and turns many “haters” into long lasting patrons.

Embracing resistance involves a complex set of skills that can enable business and individuals to create business and relationship opportunities when they are confronted with skepticism, irritation, or wariness.” – Michelli

It is important to remember that these insights were not implemented over night, it has taken Starbucks many years to find the right ingredients for the perfect cup of coffee.

My advice to us as business leaders and owners is to understand these insights at a granular level, and start to implement them one at a time in our respective businesses. In the next strategic planning meeting, brainstorm on how these insights relate to your industry, and create an implementation plan. Remember; it is all about the customer.

I want to end with a quote that Michelli ended his book with – “Starbucks excellence emerges from visionary management, a passionate entrepreneurial spirit, a social conscience, and guiding principles that are inculcated into the fabric of the business.”

 

Go forth, and create your “third place.”

Logan Freeman is a former college and professional football player turned entrepreneur.Currently he is focused on mastering the skills of influencing, goal achieving, and motivating others to break out of mediocrity and achieve big goals. Reach out to Logan on Twitter. “Be Great, Nothing Else Pays.”

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5 Comments

5 Comments

  1. Jamelle

    Jun 15, 2015 at 5:34 pm

    Phenomenal keys for business success!

  2. Kimberly

    Jun 10, 2015 at 3:08 pm

    #5 is a truth that every business should understand. I recently had an experience with a major airline. They were so amazing in how they handled my issue, with excellent customer and genuine concern, that I will never forget how they turned a frustrating problem into a great experience for me. I will always be a loyal patron for that very reason.

  3. Logan

    Jun 9, 2015 at 9:35 pm

    Joseph,

    Thank you for your hard work and fantastic writing style. My business partners and I really enjoyed reading and implementing the insights you shared while working closely with Starbucks leadership. I can’t wait for your book on Mercedes to come out, thanks again and I am glad you liked the post – it is being shared like wildfire.

    Logan

  4. Joseph Michelli

    Jun 8, 2015 at 11:41 pm

    Logan, WOW what a thoughtful analysis of my book. You get to the key elements of value with such clarity. You do a great service to your readers. I hope you will consider taking a look at an advanced copy of my upcoming book on Mercedes-Benz. Let me know if your interested. Otherwise, thank you again for sharing your gifts.

    • Logan

      Jun 9, 2015 at 9:44 pm

      Joseph,

      Thank you for your hard work and fantastic writing style. My business partners and I really enjoyed reading and implementing the insights you shared while working closely with Starbucks leadership. I can’t wait for your book on Mercedes to come out, thanks again and I am glad you liked the post – it is being shared like wildfire.

      Logan

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Startups

You Are The Problem With Your Business

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A great way to screw up your company is to get into the habit of blaming your suppliers, the market, your staff or your product for your failures.

I recently heard a story of a business that had set up a website. They sold various products and services focusing on helping people with psychological issues. The business owner was smart. The product solved a problem.

Unfortunately, the company was making almost no money. They’d hired someone to help them with their digital marketing and it wasn’t working.

Plenty of traffic was coming to the site, users were having a look around and then not buying a single thing. Who’s fault was this?

Well, according to the business owner it was the person running their digital marketing. As a result, they wasted approximately eight months marketing a website that couldn’t make any sales. The reason the business was failing according to the owner was because of the keywords that were being targeted in the marketing campaign. This is a horrible excuse.

The reason your business fails is because you’re blaming someone other than yourself. It’s the quickest way to bankruptcy. Don’t do that.


Your company is a reflection of you.

It took me a long time to figure out that a company is a reflection of its founder.

One of the businesses I had, had a toxic culture and a bunch of people that were rude to customers, arrogant and not nice people. That was a reflection of exactly who I was at the time.

The company was reflecting the flaws of my own life and what I refused to admit.

In the case of the business owner above, what was obvious is that they were good at telling lies to themselves. It was easy not to change as a business owner and insist that the change needed was nothing to do with their vision.

The issue of their company was not the digital marketing strategy but their lack of understanding around what their customer wanted.

The thought that their products were too complicated, not solving a real problem or priced incorrectly was an admission of guilt they wanted no part in. Hence the eventual demise of their company.


Take responsibility and it will change.

When you own the business, everything is your fault.

You have the power to solve any problem you choose. It starts with you being brave enough to admit that there’s a problem, and then secondly, being bold enough to insist it’s your fault and that you can change it.

The problems in your business can all be solved. That’s what it took me a very long time to understand. When I changed as a person and faced up to my hidden battle with mental illness that I didn’t want to talk about, the odds turned in my favor.

Had I have not taken responsibility for my mental illness, I would have never become a leader in a business or started another side hustle. I would have been crippled by the big, bad world that I thought I could control.

Control came from responsibility, and responsibility solved the major problem in my business: me.


Change is a must.

Not with your digital marketing strategy.
Not with hiring new people.
Not with developing a new product.

Changing yourself is the *must* because YOU attract the problems and the solutions into your business”

You can’t find the solutions or stop the never-ending problems until you stop the cause of it all: you. You’re the problem with your business. The good news is that it’s entirely within your control to fix.

Change you.

Not the business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Startups

The Different Ways of Measuring the Success of Your Start-Up

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startup success
Image Credit: Unsplash

You’ve probably heard people use the term “unicorn” in a business context. This means a privately held start-up whose value has grown to at least one billion American dollars. Think Airbnb, Uber, and so forth. There is no doubt that some start-ups have been major financial successes. And many smaller-scale start-ups are doing great as well, working hard and turning a steady profit. But that begs the question of whether finances are the only way to measure the success of a start-up. As it turns out, they might not be. At least, not always and not on their own.

How to Evaluate Success

As anyone who’s been involved with start-ups knows, you need a fair amount of flexibility to do well in this environment. Take the division of labour for example – rather than strict roles, you’ll often see everyone do a bit of everything. The same principle extends to measuring success. It can be vague and mean different things to different people, and it can change over time.

But amongst all that vagueness, one thing has become clear. Predicting the success of a start-up is very difficult for external observers. As a matter of fact, it’s often impossible. Therefore, in order to evaluate how successful a start-up has truly been, we need to know the goals of its founder(s).

“Success means we go to sleep at night knowing that our talents and abilities were used in a way that served others.” – Marianne Williamson

The Numbers

When people think about business, it’s common to boil matters down to the finances. And it certainly is possible to use numbers to measure and predict the performance of a start-up business. Net worth, gross margin, customer acquisition cost – these can all be indicators of success. But, a start-up can post impressive numbers for a while, perhaps even attract large investors, and still shut down in the end. So does this make it a failure?

The answer to this depends. If the founders wanted to start a lasting business, then yes, they failed to meet their goal. However, that isn’t always the case. If they were looking for a short-term solution and came out with more money than they had coming in, a closed-down start-up needn’t be unsuccessful. It can actually be the opposite of that.

So, looking at the figures isn’t enough, and there are different perspectives to consider. When they start planning their business venture, start-up founders may not have any particular numbers in mind when it comes to profit. Instead, they can judge their success according to some of the following criteria.

1. Happy Customers and Solving Problems

The story of a start-up often begins with a problem. The desire to help people overcome a specific issue can be the spark which ignites the creation of an entire business. And in the end, that may be all that matters to the founders.

This is closely connected to the happiness of the customers. If the resulting product or service has made people happy by helping them solve a problem, that is all that may be required for a start-up to be a success. Now, no business wants unsatisfied customers. But in cases like this, happy customers aren’t the way toward the ultimate goal – they are that goal.

In other words, some start-up founders don’t just use financial reports to measure how much they’ve achieved. To them, the one metric which stands above all others is the quantity of positive feedback they’ve received. The main area of focus is customers who use the start-up’s products or services to solve a problem they were having.

2. Impact

Every start-up founder likes doing well in terms of revenue. But for some of these entrepreneurs, the profit is merely a side effect of what they actually set out to do – impact the world in a positive manner. You can see an example of this line of thought with Elon Musk. He said that back in college, he had wanted to be a part of things that could end up changing the world. The continuation of this philosophy is evident in his electric cars (which aim to reduce pollution) and the SpaceX program (which strives to break down some of the barriers of space exploration).

In both cases, the furthering of mankind is the ultimate goal. Many other start-up founders feel the same, even if they have smaller goals in mind. To these people, there is no greater proof of success than if their company has had a positive impact on society or even a small segment of it. In their view, to make a difference is to succeed.

“The only limit to your impact is your imagination and commitment.” – Tony Robbins

3. Freedom

For some, starting up their own business is less about getting rich and more about gaining the freedom to conduct their business the way they want to. In this case, financial success is just a means to an end. The endgame is to be your own boss.

The fact is, some people don’t do well when they’re constantly receiving orders. They are simply hardwired to be free thinkers and they require an environment that allows them to do things in their own way.

Being in a position where you hold all the cards can be exhilarating. The knowledge that your decisions are final is very empowering, and many strive for such freedom. If a start-up can allow such people to go from being a regular employee to being in charge of making all the decisions, then it has already achieved all the success that it needs to.

4. Time for Friends and Family

As many people know all too well, a job can easily turn into the focal point of your daily life. Instead of being a way to support your lifestyle, your work dominates your time. And when that happens, the time you have to dedicate to your loved ones becomes scarce. Combating this is precisely what some have in mind when they decide to take the leap and start their own business.

Now, running your own company is no mean feat and it will require a lot of effort. But the beginning is the most time-consuming part of the process. Later on, it can be possible to create a system which leaves you with a lot more time on your hands. You can spend this time with your significant other, your children, or your friends. A start-up which gives you this opportunity is perhaps the greatest success of all.

A start-up is an extension of its founders and so are that company’s goals. Some entrepreneurs are in it for the profit, but not all of them. In the end, there is no single way to measure the success of a start-up. It all comes down to the specific aims of those who established it. But if the founders can end their day on a happy note, then the venture is a success even if it doesn’t fit some standard definition of the term.

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Startups

The Problem Is Not Your Website Or Your Product.

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spend a lot of my time talking to business owners. They focus on their product, their marketing channels and trying to make more profit.

I met one such business owner who was in the plastic surgery business. Their product (boob jobs and nose jobs) was not working. Their website sucked and people clicked off as soon as they visited it.

People would call their office, get put on hold, listen to the on hold message and hang up.

This business didn’t seem all that special. I’ve talked to many businesses and didn’t think for a microsecond that a plastic surgery clinic could ever teach me anything valuable.

I’ve been to Hollywood on holidays and the issues of body image are all too apparent to me. Anyway, this post is not about body image.

I ended up losing this business as a customer — not that I would ever have sold anything to them if it were up to me. I sat down one afternoon and thought about why we no longer did business with them.

That’s when I realized it’s not about your product or your website. All the issues with this plastic surgery clinic and a lot of other businesses I’ve dealt with stem from one thing. Let me explain in more detail.


Your Google Reviews say you’re an piece of work.

I looked up their Google Reviews and their customers said they were assholes.

They spoke down to clients, they didn’t deliver their clients what they wanted, they argued with their staff in front of customers and they treated people like they were nothing more than a dollar sign.

All I had to do was read their Google reviews to see that the problem wasn’t their product or their website.


Your clients tell you every day that you suck.

I asked the plastic surgery what their clients said.

Many of their clients told them that their services sucked and they would prefer to go to places like Thailand where they could get a better product at a much lower price.

The business owner made the mistake of thinking it was their product that was the problem and that a new website will tell clients a different message.

That wasn’t it.


You abuse your staff and they consistently leave.

I spoke with many staff that worked for this business.

Every single one of them hated the company and were not afraid to say what they thought of the business owner.

The business owner would sit outside on a nice sunny day and look across the street at all the yachts and the people boarding them.

They’d sit there and think that every lead they got was going to take them one step closer to owning their very own yacht.

“If only I could deliver more boob jobs, maybe I could have one of those,” they thought quietly to themselves hoping that no one else could hear how ridiculous this sounded.

I can remember multiple times being on the phone to the business owner and having one of their staff burst into tears halfway through the call.

The first time it happened I didn’t think much. After the third time, I got the message. During the short time I dealt with this business, people consistently left. If you made it to the six-month mark, you were some sort of hero and would probably be given a free surgery to say thank you for your work and make you feel worse about your own body at the same time.

It was free noses and boobs in return for daily abuse.

The problem still wasn’t the website all the product.


You don’t solve real problems; you solve your own problem.

A good business solves a problem.

That problem typically affects human beings and solving it is how you make money in business. Solving problems can start out with a problem that affects you, but at some point, you’ve got to start solving that same problem for other people/businesses.

This owner of this plastic surgery clinic was only trying to solve their own problem which was making more money to buy fancy items like yachts.

Only solving your own problem is not just selfish but bad business.

Good business is solving a big problem or lots of small problems for entire strangers who you don’t know thus doing something valuable for the human race.

Solving only your problem will make you poor.

The problem still wasn’t their website or product.


Creating more problems.

Everything this business owner sold created more problems.

They’d film videos to purposely make people feel like their body wasn’t perfect.

They’d write articles suggesting that everyone needs botox to feel young.

They’d take photos of men and women who were supposed to be perfect so that young people would dream of looking like them.

Not only was their business not solving a real problem; it was also creating more problems every day that it existed.

If your business creates more problems than it solves, you’re in real trouble.You need to take a long hard look at the business and become obsessed with doing everything you can to change it — and do so damn fast to limit the whirlwind of problems you’re creating behind you.


The heart of the problem.

It’s the business owner.

The business I mentioned will fail. That part is certain. The problem with the business is not the website or the product.

The problem is the business has no heart because the business owner has no heart.

You cannot focus on your own selfish desires, create really bad problems in the world, treat other human beings like garbage and expect to go buy a yacht and live happily ever after. It just doesn’t happen like that.

Whether you are a plastic surgery clinic like the one I described or a solo entrepreneur, the problem with your business is you.

Fix the problem of YOU. You can’t get away with being horrible forever.
Being horrible is bad business.

Being respectful, kind and valuable is the final answer to the problem with your business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Entrepreneurs

18 Must Read Business Books for Emerging Entrepreneurs and Startups

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business books

Reading is both relaxation and training for the mind. Who reads, dives into another world. Learning, entertaining and breaking out of everyday life for a short moment. One could go even so far as to say reading is the second most beautiful thing in the world! Whether it is non-fiction or a novel of all the world’s man has created, the book is the most powerful tool. That is also, why we wanted to find out which business book you should undertake in the new year. (more…)

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