Starbucks’ Transformation Agenda: An Audit of Key Insights
Successful implementation of planned change proceeds best from a combination of clear purpose with insightful understanding of the factors involved in the process of change. However, as Campbell and Alexander (1997) warn, “Defining purpose, discovering insights, and combining the two into a strategy is not easy” (“Purpose and Insights”, para. 11). To gain a deeper appreciation for the challenge of leading change, this paper examines key insights gleaned from an analysis of Starbucks’ approach to change before and during implementation of six change initiatives that spearheaded the firm’s Transformation Agenda for strategic renewal.
The bright halo of success that had long hovered above Starbucks’ illustrious history of record-setting growth and profits dramatically dimmed toward the end of 2006 (Koehn, Besharov, & Miller, 2008). Over time, a combination of worsening economic conditions and an accumulation of self-inflicted wounds from poor decision making and ineffective leadership had put the company’s future in jeopardy (Schultz, 2011). By the end of 2007, the precipitous deterioration in growth and comparative year-over-year store sales (comps) had convinced Howard Schultz to return as CEO. Shortly after, Schultz launched a comprehensive Transformation Agenda to guide the company’s strategic renewal (Schultz, 2011).
Historical Insights: Starbucks’ Experience with Change
Starbucks’s original business model had evolved from Schultz’s passionate desire to recreate the personally gratifying and uniquely warming environment of “social community” he had experienced while visiting a local Italian coffee shop as a young business man (Schultz, 2011). Propelled by his passionate entrepreneurial spirit, the Starbucks model had quickly gained traction from a rapid succession of refinements that had tuned the “Starbucks’ experience” into a consumer favorite. Historically, Starbucks’ approach to change had relied on diligent scanning of the “coffee shop” environment for new ideas followed by an intense attention to detail in adopting changes to processes critical for the procurement, brewing, and serving of superior quality beverages (Schultz, 2011). The entrepreneurial formula for change had worked well.
Then, swept along by a “hubris born of a sense of invincibility” (Schultz, 2011, p. 21) perpetuated by unchallenged success, Starbucks had expanded beyond its meager beginnings as a neighborhood coffee shop into a rapidly growing, highly successful global coffee company. Prodded by Wall Street expectations of continual double-digit growth, Starbucks had pursued increasingly ambitious targets for expansion, opening new stores at a dizzying pace. In response, the company’s strategies for managing change had become preoccupied with the challenge of scaling the Starbucks’ business model to feed the company’s insatiable appetite for growth.
Consequently, Starbucks’ innovative...