Starbucks as a Leadership Case Study: Efficiency, Effectiveness or Both?

Posted 08.05.2009

Starbucks1 Been to a Starbucks lately?  If so, what do you think?  If you’re a long time Starbucker, how does the experience in the stores lately compare with the way things were four or five years ago?

What do any of these questions have to do with leadership, you ask?  (After all, that’s what this blog is supposed to be about.)  Here’s where I’m coming from.

There was an interesting article in the Wall Street Journal yesterday about how Starbucks is starting a company-wide program to implement the concepts of lean manufacturing to raise the efficiency and productivity of its stores. In a tight economy, it’s understandable why Starbucks or any organization would focus on controlling its costs.

I’m reminded, however, of a point Stephen Covey made years ago in the The 7 Habits of Highly Effective People. His point was the you can be efficient with things (e.g. the design of the workspace or where to place ingredients in the production line) but you have to be effective with people (e.g. customers and baristas). As someone quoted in the WSJ article pointed out, efficiency strategies only yield profitability if you’re getting customers in the door in the first place.

That brings us to the effectiveness part of the equation. One of the original goals of Starbucks founding (and current) CEO Howard Schultz was to create a “third place” between work and home that people could use to meet, work and hang out.  For me personally, this concept worked so well that when I wrote my book, The Next Level, in 2005, I spent the better part of 12 weekends in a row at a local Starbucks writing the manuscript. For me, it was the right mix of being in a different place, being around people and still being able to work, and the endless supply of drinks, sandwiches and oatmeal raisin cookies that I needed to power through the writing process. The place was packed with customers all weekend long.

What I’ve noticed lately is that people don’t seem to be using Starbucks as that third place location as much anymore. (You’d actually thing that in a recessionary economy they might be using Starbucks more as a meeting place for networking and such but it doesn’t seem that way.)  Have you noticed the same thing?  Maybe the leadership emphasis on efficiency is out of balance with an emphasis on effectiveness.

Let’s say that you were appointed as the new “guru of effectiveness with people” for Starbucks, where would you start in returning the company’s stores to that magnetic status of being the “third place”?

From a broader leadership perceptive, what do you notice in your own organization about striking the right balance between efficiency and effectiveness? Especially in a tough economy, what are your best ideas for keeping your customers and employees engaged with your organization? Let’s get a conversation going on this and see what good ideas we have to share with each other. Who knows, we may even come up with some that our friends at Starbucks want to pick up and run with.