Blinded By Your Own Product

Starbucks was founded with a clear sense of Why - that purpose, cause or belief that goes beyond the products we make or the services we offer. At its founding, it was all about the "third space," that space between work and home. When Americans chose to hang-out outside of home or work, Starbucks wanted to be that place where they hang-out.  And for many years, they were.

But, like so many companies that make it big, Starbucks forgot the reason it was founded and started to think it was their product that made them successful. Put simply, Starbucks has lost its Why.

This is significant, because it is the Why that is the source of great innovation in a company.  It is that founding purpose that gives a company a filter -  clarity about the things they should do and the things they shouldn't do.  If the filter gets fuzzy, then the ability to see clearly goes away.  And if the ability to see clearly goes away, then how will a company know if they are traveling in the right direction? Without a clear sense of direction, there is increased focus on product tactics and product strategy and the blinding effect takes hold. Unable to see beyond product will cause the results to falter.  As the results falter, the focus on the the product becomes more intense...and so the vicious cycle begins.

Starbucks was founded around the experience and the environment of their stores. Starbucks was about a space with comfortable chairs, lots of power outlets, tables and desks at which we could work and the option to spend as much time in their stores as we wanted without any pressure to buy. The coffee was incidental.

With that clear filter, it's easy to see the things Starbucks should and shouldn't do. It's easy to see opportunities to enhance the experience that have nothing to do with coffee. With a clear sense of Why, it makes perfect sense that Starbucks should offer free WiFi to their "guests." But the haze over Starbuck's filter has created product blindness and, these days, Starbucks misses the obvious; they didn't offer their guests free WiFi...McDonald's did.

In January of 2010 McDonald's, just one of the many companies that has capitalized on Starbucks fuzzy Why, started offering free WiFi in their all their stores. Feeling the pressure, Starbucks was forced to follow suit six months later.

That a burger joint credited with pioneering the fast-food industry -- an industry focused on getting customers in and out as quickly as possible -- forced Starbucks to adjust their store experience is a big deal. Just as Apple doesn't compete with any other computer companies or Harley-Davidson isn't just another motorcycle, Starbucks shouldn't be lumped in with everyone that sells coffee. But these days they are, and they have themselves to blame for it.

Starbucks has forgotten about the third space.  It has become obsessed with coffee and brushed aside Why they were selling coffee in the first place. Blinded by their own product and distracted from their founding purpose, it was Starbucks who invited lots of other players to the table and reduced their own value in the lives of Americans. We can get coffee anywhere, but not everywhere makes a good third space.  If Starbucks wants to make it about the product and not the experience, then they open themselves up to even more competition and even more attacks. At the end of the day, coffee isn't worth $4...but an experience and a comfortable environment is.

Product blindness and missing the obvious is just one symptom of a fuzzy Why. Another is when a company gets distracted by the actions of the competition. Though I haven't talked to anyone from Starbucks about this, I'll bet good money that they have become increasingly interested in what McDonald's or Dunkin' Donuts is doing these days.  Obsessing about what everyone else is doing over what you are doing is like driving down the highway watching the drivers to the left and right of you. Sure you'll be able to see how fast they are driving and in what direction...the problem is you won't see where you're going.

Companies with a clear sense of Why set the tone and direction in their respective industries. They lead and others look to follow them.  Suffering severe product blindness, however, these days Starbucks is looking for others to follow.

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Comments

[640-802]

fee, and that's why Starbucks has that crazy variety. Maybe he cares more about the product, and why should he negle

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Free WIFI is definitely a turn on as far the ratio of third place and a cup of coffee quality while its subjective to what the user demands. There are many independent coffee shops competing with starbucks, of course some indy's are just as bad even if they produce a great cup of joe, they have bad customer service or don't understand certain amenities or pricing that they should have.

For that reason, starbucks still seems to survive even with a bad cup of coffee as a third place aka a hang out and talk environment. Mcdonalds does have great competition and is probably trying to compete for the more budget minded consumer who make want a splurge but not as much as starbucks. They probably in my opinion won't take a lot away from starbucks compared to the indy's but may make folks think twice especially in that there are more mcdonalds than starbucks even in areas without a starbucks.

[Anthony]

I disagree with Jim's post - Starbucks success wasn't because of the "great" cup of coffee. There were lots of companies offering high end cups of coffee but Starbucks created an experience beyond the cup - they offered a third space that no one else was offering and that was the first of its kind. This is what took starbucks to the top. Think about Starbucks and what comes to your mind first. It's not the cup of coffee. It's not the fancy high end names. It's the dim lighting with the cozy work spaces. It's the lamps on the table and the comfortable seats. It's the third space - and they forgot their why. If they had improved the quality of their third space, if they had added even more comfortable seats and more technologically advanced work spaces AND FREE WIFI - they wouldn't be worrying about McDonald's "better" coffee offered at lower prices.

[Jim]

I like articles like this. They provide a different perspective I never would have considered. But,..

Agreed, "Why" defines product strategies and helps to prevent companies from fighting the wrong fight. It's far too easy to chase the wrong tail, rather than extend their core strengths. Particularly in this economy / job market.

But as I recall, Starbucks was about a great cup of coffee at a time when high disposable income fueled a consumer thirst for something better than 7-11 and AmPm coffee. "Espresso ? Dry non-fat cap ? Sure, its only money. Ill take three."

The "third space" developed much later, and in my opinion hurt the brand. When Starbucks was the only game in town, their coffee was the Why for their business and my patronage. Faced with growing competition they reached for "lifestyle marketing" to justify a $5 latte, and lost their Why. It was distracting, took focus off of a great cup of coffee. Any one else remember when their espresso was handmade ?

Silly me, I thought free ATT WiFi was the result of cost analysis on a load reduction of their 3G network vs. a loss of WiFi revenue. Is free WiFi a value add ? Sure it is. But just as mints on the pillow dont matter if the sheets are dirty, free WiFi only goes so far if your coffee is crap.

I feel you may have over analyzed this.

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[Joeovip]

Well sure the kind of lost their Why. But how can you leave your Why untouched when you are worrying about shareholders value? I mean, there is a constant pressure for public companies to evolve, to come up with new ideas, to be different, to maximize return on investment..

I think that finding that balance is the real deal.

[Mike Johnson]

I can think of a dozen other companies like this off the top of my head. Once you hit a certain point, it is all about the money. . .but that is why we are a capitalistic country some would say. . .and they all have huge lobbyists in Washington DC that influence our politicians with their votes. It is very depressing.

Personally, I would never want to be a part of something that big. I think that if I saw that coming I would sell it and start over with the intentions of what my company business model is.

[Jason Cohen]

You say Starbucks lost their way, but couldn't you instead say they evolved?

Sometimes your original assumptions or values hold you back and change is good. How can you tell the difference?

[Patrick Wallace]

Wow, what a great post. I guess sometimes we all need to remember that to soar with the eagles, we need to stop trotting with the turkeys.

[Jerry Kennedy]

Simon:

Great post! I used to love going to Starbucks, but when every other mom & pop coffee shop started offering free WiFi and Starbucks was the only hold-out, I shifted my habit. Of course, I get a lot of funny looks when I order a "venti" coffee at the other places, but they eventually figure out what I mean. :)

Jerry

[Mars Dorian]

Hey Simon, I understand your opinion. But Howard Schultz is obsessed with coffee, and that's why Starbucks has that crazy variety. Maybe he cares more about the product, and why should he neglect that ?

Sure, the company is playing it safe now (like most big companies that were once innovative ), but that's because they are not pushing their edges anymore.