Pour Your Heart Into It (23 page)

CHAPTER 12
The Value of Dogmatism and Flexibility

The only sacred cow in an organization
should be its basic philosophy of doing business.

—T
HOMAS
J. W
ATSON
, J
R.,
“A B
USINESS AND
I
TS
B
ELIEFS”
AS QUOTED IN
BUILT TO
LAST,
BY
J
AMES
C. C
OLLINS
AND
J
ERRY
I. P
ORRAS

If you want a half pound of hazelnut-flavored coffee beans, you can’t buy it at Starbucks. But if you would like hazelnut syrup to flavor your caffè latte, no problem. That distinction may seem like splitting hairs to some people. Why be so purist about refusing to sell artificially flavored coffee beans when we’ll add flavorings to espresso drinks?

Deciding when to make compromises to please its customers is one of the trickiest questions any business faces. At Starbucks, we have two articles of faith that on the surface may seem contradictory:

We believe that every business must stand for something. At its core must be an authentic product, one that’s better than most customers realized they wanted.

We also believe we should “just say yes” to customer requests. Good retailers go out of their way to please their customers.

In our early years at Starbucks, we found ourselves always debating how far we ought to go toward reconciling these principles. On some issues, I refused to budge. One was franchising: We would not trust our quality to franchisees. Another was artificially flavored coffee beans: We would not pollute our high-quality beans with chemicals. Another was supermarket sales: We would not pour our beans into clear plastic bins, where they could get stale. And finally, we would never, never stop pursuing the perfect cup of coffee by buying the best beans and roasting them to perfection.

Those were key decisions, ones where our values and desire to create a clear brand image sometimes left us at a competitive disadvantage. By the late 1980s, the specialty coffee business had begun growing quickly, and the majority of it was in the form of whole-bean coffee sold in supermarkets. Brands like Millstone and Sarks took off, and their volume far surpassed that of Starbucks. We could have doubled or tripled volume easily by selling in supermarkets. But it was important to us that Starbucks maintain a clear distinction from grocery-store coffee. So we chose at the time not to sell our beans in supermarkets.

In that same period, about 40 percent of the increase in specialty coffee sales was the result of the new fashion for coffee beans with such flavors as vanilla, Irish cream, and mint mocha. We saw little point in buying the best beans in the world only to mask their flavor. Initially, we also refused to add flavored syrups to lattes, for the same reason.

A third choice faced us when several competitors began using franchising to expand nationwide, threatening to leave Starbucks as an also-ran. In 1991, one even surpassed us in number of stores, though not for long. Still, I insisted on company-owned stores, so we could keep our fate in our own hands.

Although I started out with a long list of these and other things Starbucks would “never” do, I gradually learned the need for compromise. What I won’t do, though, is compromise our core values. Each time a difficult decision came up, we debated long and hard, and we adopted new ways only when we were confident that we were not diluting the integrity of what we stand for.

W
HEN
I
T’S
O
KAY
TO
G
IVE
THE

C
USTOMERS
W
HAT
T
HEY
W
ANT

It was Howard Behar who forced us to shed some of our most dogmatic views. Until he arrived, most of us had an almost reverent attitude toward the coffee. But he came from a different tradition, from companies where, if you weren’t customer-driven, you went out of business.

When Howard joined Starbucks in 1989, he was already familiar with Starbucks as a consumer, but he immediately began frequenting our stores and talking to baristas and customers. By listening carefully, he heard things to which we had closed our ears, and he forced us to examine our values in light of our customer preferences.

One message he heard loud and clear: Many customers wanted us to offer nonfat (or skim) milk.

Howard had been at Starbucks less than a month when he came to me one day and asked: “Have you been reading the customer comment cards?”

“Sure,” I said, “I read them. I read them all.”

“Well,” he replied, “how come you’re not responding?”

“Responding to what?”

“Look at all the people who want nonfat milk.”

“Well,” I explained, “I did a formal tasting a number of times this year of lattes and cappuccinos made with nonfat milk and they just didn’t taste good.”

“To whom?” Howard was clearly growing impatient with my answers.

“To me, to Dave.”

“Well, read the customer comment cards. Our customers want nonfat milk! We should give it to them.”

I answered—and Howard never lets me forget it—”We will
never
offer nonfat milk. It’s not who we are.”

At that point in Starbucks’ history, even
mentioning
nonfat milk was tantamount to treason. Our goal, then as always, was to bring the authentic Italian espresso bar experience to the United States. But in fact, lattes and cappuccinos—espresso with steamed milk and foam—had quickly become our most popular drinks. Some coffee purists scoffed at them, saying that in offering warm milky drinks we were catering to people who weren’t hard-core coffee lovers. But these beverages enabled us to introduce great coffee to people who normally didn’t even drink coffee.

By 1989 several of our smaller competitors, especially in Seattle, were offering lattes with nonfat or 2 percent milk. For reasons of health and weight, more and more Americans were avoiding whole milk. But we still thought skim milk tasted thin and sharp, and altered the taste of Starbucks coffee.

Still, Howard had found a crusade, and he started figuring out ways we could give our customers what they wanted—however unpopular the idea was with coffee purists. One day one of our most dogmatic coffee defenders confronted Howard in the narrow hallway outside his office. Standing nose-to-nose, he told him, “That’s not in keeping with the quality of our coffee. That is bastardizing it. It’s getting to the point that we’ll do anything the customers want us to.”

“Are you nuts?” Howard Behar remembers responding. “Of
course
we’ll do what they want us to!”

Believe it or not, the issue of nonfat milk led to one of the biggest debates in Starbucks’ history. I fought it. Dave Olsen fought it. The store managers were scandalized. What kind of person is this Howard Behar, they wanted to know, and does he really want us to introduce nonfat milk?

Some store managers went to Howard and argued: “We will never be able do it operationally. It’s impossible to handle more than one kind of milk. If we offer two kinds of milk, it will ruin the business.”

But Howard was adamant, and he insisted that we at least test the idea.

The controversy forced me to do some soul-searching. It might seem inconsequential, but it struck at the very heart of our fundamental commitment to quality. If we stuck to our conviction that “everything matters,” how could we serve espresso drinks that didn’t taste right to us?

One morning I woke up early, still wrestling with the idea after a restless night. I got dressed and drove to one of our Starbucks stores in a residential neighborhood of Seattle. I paid for a double espresso and took a seat at a table. Even though it was early, there was already a long line. I was reading the newspaper but also keeping my ears alert to hear what people ordered. The atmosphere felt good, with a smooth, steady coordination between the two baristas, one taking orders, the other making drinks. I noticed one customer, a young woman in her late twenties, dressed in sweats and sneakers and slowly nodding her head to the music on her Walkman. It looked as if she had just finished her morning run. When she got to the counter, I could hear her say the words I’d been waiting for:

“I’ll have a double tall latte, with nonfat milk.”

“Sorry, we don’t have nonfat,” the barista replied politely but firmly. “We only have whole milk.”

I could hear her sigh in frustration and then ask, “Why not? I always get it at the place down the street.”

The barista apologized, but she strode out of the store, apparently headed for a competitor.

A lost customer is the most powerful argument you can make to a retailer.

I went in to the office that morning and told Howard Behar to go ahead with his test, and to make sure to include that store.

We had only about thirty stores then, and Howard convinced half a dozen store managers to volunteer to try nonfat milk. Despite all the concern beforehand, they managed to work out the operational issues pretty quickly. They even figured a way to offer 2 percent milk by blending whole and nonfat. Seeing how pleased their customers were with the option, those first store managers became advocates and eventually won over the others. Within six months, all our stores offered it. Today, almost half of the lattes and cappuccinos we sell are made with nonfat milk.

In hindsight, that decision looks like a no-brainer. But at the time, we weren’t sure what impact it would have on our brand and our identity. When a caffè latte is made with nonfat milk, is it still an authentic Italian drink? Most Italians wouldn’t recognize it. But an Italian can still come to a Starbucks store and order a cappuccino that
is
truly authentic, just as another customer can request a nonfat vanilla mocha.

How did we deal with our consciences? We had to recognize that the customer was right. It was our responsibility to give people a choice.

Howard Behar had made the right call. The way we resolved the nonfat milk controversy also is a great example of the autonomy of decision-making we encourage within Starbucks. Although he had been with the company only a few months, his retail acumen and experience gave him the credibility and authority to persuade us to do the right thing.

In subsequent years, we have moved farther and farther from our initial dogmatic stance. In addition to nonfat milk, customers can have vanilla or raspberry syrup mixed into their espresso drink if they request it. We have used our coffee to flavor ice cream and beer and icy blended drinks. But we deliberated long hours before taking each of these steps. And when we did move forward, we did so very tactically, clear about what we hoped to accomplish.

Does that mean we’ve sold out? Does “never” ever really mean “never”?

Here’s how I see it:

Our customers have the right to enjoy their cup of coffee however they prefer it. Milk and sugar are always available at our condiments counters, and baristas will mix in certain flavored syrups if customers ask for it.

What we won’t do, however, is mess with the real stuff in a way that violates its integrity. The real stuff is the coffee, roasted dark, fresh and full-flavored. It is our touchstone, part of our lifeblood, our legacy. Our customers have to be able to count on Starbucks to provide it. Whatever else we do, we won’t buy cheaper coffees. We won’t stop roasting dark. We won’t pollute our coffee beans with artificial flavors and chemicals.

We want Starbucks people to go out of their way to please customers, but we won’t allow them to pass flavored beans through our grinders. Some portion of the chemicals used to treat them would remain behind and alter the flavor of beans ground in that machine afterward. Artificially flavored beans also have a chemical smell that would pollute the air of our store and be absorbed by other coffee beans.

Dave Olsen and his coffee-department colleagues represent the purists at Starbucks, our collective conscience. Dave has a great analogy:

Think of coffee as a music CD. You can listen to it in a special listening room that you designed especially for the purpose in the basement of your home, where there are no distractions, where you can put the headphones on and really listen for the string section or the oboes or try to hear every little click of every fingernail on Eric Clapton’s guitar. Or you could put it in the stereo of a car, roll all the windows down, and scream and shout. The music is the same; the application is different.