When one thinks of high growth, innovation and a new corporate model, one of the first names that comes to mind is Starbucks. In recent days, Starbucks has been in the news as its CEO has announced layoffs, store closings and a slower pace of growth. A corner without a Starbucks coffee shop? The reorganization of Starbucks can serve as a lesson for any company or organization.
Increase
The more a company or organization grows, the more difficult it is to stay true to its roots. Even if quality and image are strictly controlled, as is the case with Starbucks (like McDonalds), the mindset, vision, and passion of the new company on the corner are difficult to maintain. Having a clear mission and staying true to that mission is essential for every location and every employee.
main business
When I think of Starbucks I think of coffee, maybe a snack with coffee and a place to work, meet customers or read the WALL STREET JOURNAL or the NEW YORK TIMES. While some people may think of it as a place to buy CDs, coffee mugs, calendars, or other items, I don’t. And it seems that Starbucks has begun to move further away from its basics. The point is to stick to your fabric (your core business).
People
Starbucks isn’t about coffee, it’s about people. People take orders, people make coffee, people keep places clean, and people manage what could be chaos during busy times. There, the people are the face of Starbucks, not the CEO or the headquarters staff. While Starbucks has been very public about its people orientation (benefits, training, respect for employees), layoffs will create a slippery slope. A people-oriented business that lays people off and closes stores can soon become like any other fast-food outlet or mass retail chain—in other words, cold, impersonal, and full of vigilantes.
General expenses
Organizations that love to create new positions, new rules, new bureaucracies, and new titles (each requiring its own staff for so-called support). This is not unique to Starbucks. But every dollar spent on overhead steals a dollar from customer-facing resources and also from company profitability. Headquarters, regions, areas evolve with their own functions, executives and support staff exhaust any business instead of energizing it. As a business grows, unless each function can demonstrate in some way that it is generating revenue or creating value, I recommend that the function be outsourced to support the business with that core competency or increased to line or responsibilities focused on the earnings.
Downsizing people and locations will not be the death of Starbucks. But any business or organization can learn from the downside of rapid growth, as Starbucks demonstrates. The tendency to grow rapidly, lose focus, treat employees like overhead, create staff that is not customer-oriented is not unique to Starbucks. But any entrepreneur or executive with a growing business would do well to avoid the same pitfalls.
