The Starbucks Story (11 page)

The problems facing Starbucks as it grew were typical of many businesses.

The questions it asked itself can usefully be asked by other businesses too.

“The issues became far more complex. Can a company double and even triple its size but stay true to its values? How far can you extend a brand before you dilute it? How do you innovate without compromising your legacy? How do you create widespread trial and awareness without losing control? How do you stay entrepreneurial even as you develop professional management? How do you keep pushing through on long-term initiatives when short-term problems demand immediate attention? How do you continue to provide customers with a sense of discovery when you’re growing at the speed of light? How do you maintain your company’s soul when you also need systems and processes?”

These were the questions Starbucks was having to ask itself, and sometimes it struggled with the answers. Howard’s concerns could serve as a checklist for any young, dynamic company to use. Any manager of a growing brand needs to find the answers. A marketing director would be best placed to answer them, but Starbucks had no marketing director. Indeed it had done very little marketing in the conventional sense of the word, although it had carried out an enormous amount of brand building. Conventional marketing does not drive Starbucks in the way that it drives, say, Coca-Cola. Starbucks has always operated on minuscule advertising budgets. In advertising terms, if Coca-Cola’s budget makes it American through and through, Starbucks’ is the spending equivalent of a third-world country. But Starbucks has never needed to advertise heavily. The brand has spread through word of mouth, PR and community activities. Why advertise to lure people to a new store when people are already queueing for a coffee? In 10 years Starbucks spent $10 million on advertising; Coca-Cola spends that in less than a day.

But by 1995, there were some worrying signs. The company had grown at an astronomical rate, but independent research and observations suggested that Starbucks was starting to be seen as corporate and predictable, inaccessible and irrelevant. This was a shock to Howard Schultz, who has a highly personal identification with the Starbucks brand. Because he believes so passionately that Starbucks is based on individuality and diversity, and on its ability to create communities, any criticism of Starbucks becomes a personal slight. The research findings reinforced the need to have a senior marketing executive on board.

Scott Bedbury was identified as the person for the job. Having made his name at Nike, he came to Starbucks after a lot of persuasion from Howard Schultz. He had helped Nike grow through a clear concentration on what the brand was really about, combined with innovative marketing campaigns and hefty advertising programs. From his time there (1987–94) came the internal brand mantra “Authentic athletic performance” to act as a touchstone for judging activities as true or false to the brand. The external expression of this single-mindedness was the line “Just do it’” which has since become inseparable from Nike. It serves as a good example of the need for brands to be consistent and committed to their core ideas. The truth is, more or less any company in the 1980s could have come up with “Just do it” and fitted it to their brand. But only Nike did it and kept just doing it; and, as in sport, the more they practiced, the luckier they got.

Scott Bedbury left Nike in 1994 with the intention of writing a book about brands based on his own experiences. He was using a log cabin as a writer’s retreat when Howard Schultz rang him. He was invited to Seattle and eventually agreed to become chief marketing executive for Starbucks at the beginning of 1995. He stayed for three years before independent consultancy, and that shelved project to write a book, lured him away again. But in that time he helped Starbucks to raise its game to a new level.

Scott found Starbucks a completely different animal from Nike. He was given a marketing budget of just $5 million, the sort of figure that would see Nike through a few days of advertising in a quiet period. So he needed to husband his resources and spend his money wisely.

The first thing he needed was more information, so he embarked on a process he called The Big Dig. He recruited an ex-colleague, Jerome Conlon, who had been Nike’s head of consumer insights. For the next nine months they carried out – in a very hands-on way because there was no budget – a comprehensive research study into the way customers and potential customers regarded Starbucks. They discovered many things, some worrying, some reassuring, and started to get a feel for who made up the Starbucks audience. It seemed that Starbucks was meeting the needs of 30- and 40-year-olds, but not really reaching out to younger groups, in particular college students. Above all, it was not getting its story across well: people became interested or even converted once they heard more.

The most important insight from the research was that coffee is always much more than just a drink. It’s surrounded by emotion. It comes with an experience and an expectation of its own: partly to do with the kind of coffee house where you now expect to drink it, partly to do with the long tradition of European coffee houses.

The conclusion reached was that the core of the Starbucks brand was less about making a great cup of coffee than with providing a great experience accompanied by coffee. This was a conclusion that the original founders of Starbucks might have felt uncomfortable with. For them it was all about supplying a product and educating customers in the ways of choosing and making the best coffee. The message for Starbucks in 1995 was different. Of course, the coffee itself still mattered: the fact that the beans were carefully grown, selected, roasted, brewed with good water and not allowed to stew in the style of the traditional US diner. But all this seemed pretty obvious to customers: Starbucks sells coffee. We know it’s good coffee. What about everything else? This is in no way to deny the importance of the product. Getting the coffee right is the basis of establishing trust, which then gives your brand permission to connect people to other possibilities and establish deeper relationships. But the product is not the brand; it is simply an important part of the brand experience.

Scott Bedbury was able to use the knowledge gained from The Big Dig to add richness and clarity to the Starbucks brand. The research supported the brand’s values but suggested that Starbucks was not being particularly effective in communicating them. Starbucks should be able to develop a style of advertising, even if not a scale of advertising, that would attract more notice and affection. The Big Dig also provided a foundation of information on which Starbucks could now start to design the store of the future. The architectural and design team played creatively with the possibilities, coming up with color palettes, stories about the sea and myths about sirens, illustrations and photographs, textures and textiles, furniture and accessories. As they did so they started to create mood boards, sticking fragments of words and images down until they evolved into the mural styles that are still current in Starbucks stores today.

The design exploration was given guidance and parameters. First, to delve deep into the brand, building on knowledge from The Big Dig. Second, to learn from fast-food outlets but to discard most of that learning, keeping only what would sit with Starbucks values. Third, to create a more expansive palette of colors and imagery. Finally, as if in total contradiction, to reduce costs by 25 percent. Tough and contradictory as it looked, the brief hung together with the findings from research: that, for example, students wanted Starbucks to be funkier, a freer spirit, a place where they could hang out without feeling the pressure of a fast-food outlet’s speed, high-tech efficiency and glaring lighting. They wanted a place for people, not a place to be processed as a customer unit.

The question being asked was challenging. How do you open 300 stores a year, each one of them distinctive and designed to fit the tone of the local neighborhood? It was a heartfelt and increasingly urgent question as the pace of store openings quickened and international openings added a further complication to the mix. Store design changed more radically than might have been expected, given the pressures on time and cost. Rather than moving towards greater uniformity – neat solutions that could be packaged and rolled out – design generated a new sense of creativity and adventure, influenced by and influencing the kinds of space being acquired. There was movement towards grand cafés, flagship stores with fireplaces and architectural features, mixing high ceilings with comfortable alcoves. Into these spaces were introduced leather chairs, fabric-covered sofas, newspapers and an attitude of non-conformity.

Structure and discipline were needed, however. These were provided by the brand itself. Difficult decisions were referred to the brand’s principles and values. For example, what kind of cups should coffee be served from? Though polystyrene was much cheaper, recyclable paper cups with a paper sleeve were chosen; they looked nicer and were better for the environment. Customers drinking coffee in the store would still be given porcelain cups because they added pleasure to the experience. Other companies would take different decisions – to cut costs, to ignore the environmental impact – but that way you end up in a business without soul and one that is not really sustainable in the long term. The expedient decisions you make undermine all sense of differentiation and personality, and give people little reason to like you and stay loyal. A brand is a hard taskmaster, forcing companies to live up to their principles or forfeit the trust on which they depend.

Graphic design imposed its own disciplines that also derived from the brand. Grasping the need to embrace diversity and respect individuality, the Starbucks design team rejected the sterile option of a single look for all the stores. They explored and developed variations drawing on the four elements of earth, fire, water and air, which were then related to four stages of coffee-making: grow, roast, brew and aroma. This provides an intellectual and aesthetic elegance, but is it too neat? Why is “aroma” a stage of coffee making rather than, say, “serve”? The answer is that Starbucks is interested in the senses so that it can create a true coffee experience. Aroma is integral to the coffee itself.

Does it work in practice? It does, because it provides a rich matrix of possibilities, all anchored to core ideas in the Starbucks brand. For example, the color palettes offer consistency within variety. The “grow” design scheme is predominantly green. “Roast” is shades of red and brown. “Brew” brings in more blue for water. And “aroma” is lighter pastels, with yellows, greens and whites. But the idea is for each scheme to work harmoniously with the others, so in many ways the quintessential Starbucks design is for a shop that is spacious and separated into different compartments, rich in the diversity of the design but deep in its sources. Other design disciplines follow this lead. Different materials can be specified for furniture within each of the themes, but these are not a set list. You can vary them, adding or discarding elements to make a store idiosyncratic.

Even within Seattle the contrast the design achieves while maintaining a clear Starbucks feel is impressive. The store on 23rd and Jackson, in a predominantly African-American area famous for its jazz history, has a community-painted mural on one wall with black and white photographs from the 1940s all around. The photos – stylish shots by Al Smith of Quincy Jones, Ray Charles and other jazz greats who played in the area – provide a backdrop for new musical activity from the students of the neighboring arts college.

Just a few miles down the road, the neighborhood of Belltown is completely different, and so is the store. Belltown is like New York’s SoHo: bohemian, arty and laid back. The Art Institute of Seattle is nearby and its students hang their works on one wall of the store, creating exhibitions that change every two months. If paintings are sold, the money goes direct to the student artists. The collegiate, artistic feel continues with the furniture, old if not antique, with another wall featuring individual mirrors in ornate frames. The whole is designed like the extension of a living room inhabited by Armistead Maupin’s Mrs Madrigal.