Memo on the Starbucks Howard Schultz Memo

The notorious memo Starbucks CEO Howard Schultz sent to colleagues on Wednesday, February 14, 2007 10:39 AM was something less than the typical Valentine’s Day greeting.

As most of us know by now, Schultz decried the various changes taking place in his stores and warned of the “commoditization of the Starbucks experience”. In other words, the singular Starbucks experience is becoming something less than singular.

And he’s right.

A few weeks earlier, Fast Company special projects editor Bill Breen and I sat in a Starbucks on Madison Avenue and ranted about how Starbucks—the former cult classic—is becoming mass consumerism’s most despised storefront.

Now that Starbucks has spread itself around the globe you can see their originality slowly drip away. With over 6000 stores worldwide, you can feel managers back at headquarters trying to gain incremental per-store profit by increasing merchandise and cutting per-store costs.

Starbucks stores are being overrun with merchandise from Starbucks-owned Hear Music CDs, Starbucks-owned Tazo teas, and a retail clutter of books, cup and saucer sets, seasonal designer cookies (why do all Starbucks pastries suck?), tea and coffee makers, games, puzzles, Mitch Albom inspirationals, and, oh yes, coffee beans.

The slow deterioration of quality in standard issue Starbucks gear (I have no proof, but does today’s Grande fit in my hand like yesteryear’s Tall?) is also apparent. The carrying tray that looks formed from paper pulp by woodland elves has become a flimsy notion of its former self. I noticed this as I was carrying four wobbly Grandes home to our holiday crowd.

These are all evidence of the slow deterioration of that which have come to know as the Starbucks experience. In traditional parlance, Starbucks has begun borrowing from its valuable “brand bank”.

I am reminded of a meeting I had a few years ago with former Rollerblade marketing exec and Rollerblade’s former CEO. Both had been at Rollerblade in the glory years as the first fifteen people (known as the “First 15”) at the company created a new sport and new influence. (Imagine convincing municipalities to repave their paths and sidewalks so that your customers will have a better experience with your product. Unbelievable.)

With success came growth. With growth came new hires. And that’s when the trouble started.

The new people started bringing in ideas from the companies they came from. Good packaged goods and marketing companies like Pepsi, Scott’s, Pillsbury and elsewhere. Trouble is, they didn’t have the vision of Rollerblade’s original fifteen citizens; the ideas the new team members brought forth seemed, well, like old ideas.

“Instead of new ideas,” remarks the former marketing exec, “I felt I was seeing existing ideas repurposed for Rollerblade.” Thinking that might have worked for Pillsbury or Pepsi, but not necessarily fresh thinking for a product that had launched an entirely new category.

The same thing could happen to Starbucks. (Which Howard Schultz certainly realizes and what prompts his memo.) As someone at Starbucks once whispered to me, “We don’t actually know how we got to where we are today. We just don’t want to screw it up.”

Starbucks is a primal brand. Their experience is delivered via icons, rituals, and a lexicon that beautifully surrounds that experience. Where Starbucks will succeed is by delivering java juice experiences at new, enhanced levels. Increase the energy, don’t dilute it. It isn’t enough simply to broaden your offerings. Reignite them. Our challenge as marketers is in knowing how to continually excite and re-excite our audience.

Starbucks will learn that it’s one thing to be an “instant” success. It’s quite another to have the self-awareness that provides brands the elasticity and longevity that helps them stretch over 100 years and more–like Levi’s, Ford, Wrigley’s, Abercrombie and P&G.

It will be another decade or more before Starbucks becomes as trite as (god help us) Chock Full O’Nuts. But as Howard Schultz knows, as they lurch toward ubiquity, they edge further and further toward being just like everyone else. How they prevent this is something that nobody knows for sure. Hopefully, Howard does.

4 thoughts on “Memo on the Starbucks Howard Schultz Memo

  1. I agree that Starbucks is rich in primal code, however any company growing at their pace which has reached their size is going to face issues of dilution of the brand experience. They need to slow down and re-assess their brand mission. As we all know biggest does not always mean best and it seems they have been hell bent on growth at all costs!

    Furthermore, I think Howard knows his company has gotten off track but is too vested in the growth expectation pressures of Wall Street. Whether he is the right person to get Starbucks back on track or not I am not sure. Sometimes organizations outgrow their founders. At any rate, the organization certainly needs his passion, however I think they could use some fresh( read as external/objective) ideas that would reinvigorate the brand experience.

  2. starbucks apparent changes for the worse may be as much to do with changing attitudes as with the company its self. perhaps the genre it created is tired. certain of its curent aspects could be too fad-like. the fundamental experience of buying a great coffee is what is ever-lasting, and this should surely be its guiding light for longevity.

  3. From the street view.In Belmar, New Jersey a swinging beach crowd met with a proposed Starbucks. The City shot it down and placed Dunkin Donuts instead.Not everyone appreciates the Starbucks experience that includes commercial general production coffees.While small stores like ours sell small holder micro production coffees and teas, even chocolate Starbucks might feature these but will never carry even a small inventory for less than $16.00 lb.
    What’s not on their side is feeding their need for quick mass produced products such as coffee.It simply cannot be moved around that easily and cannot change to in store roasting operations. But they have been successful somehow to impress on customers they are still roasters. If they are its a long distance from roaster to shelf and that eventually hurts by placing Starbucks in the same mass produced coffee company of Maxwell, et. al.
    So far as we can see its not whether people like the company, or their image, its just that instead of having your shot pulled its now made by the super automated espresso makers that have that image of getting vending machine coffee. And ya know it tastes like it too.

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