4.1.2 Setting objectives
Howard Schultz is known as a micro-manager. He signs off on all changes to Starbucks business plans and personally visits stores to find out how customers are reacting to Starbucks. The result is that Starbucks is a focused and well oiled machine that operates on the objectives set by Schultz.
As mentioned earlier, Starbucks has pursued the same operational procedure over the years, relentlessly pursuing Schultz’s original ambitions. It is now about 13,000 stores strong, and still wildly profitable. While Schultz ambition was big, he had to adjust for the bigger than expected reception to Starbucks. When the 2000 by 2000 objective had been met too easily, Schultz had to readjust his stretch objectives to keep his workers challenged.
Short term objectives are set with the goal to overtake key competitors on product performance, quality and customer service. Starbucks management invested heavily in any improvements suggested by staff. By reducing the seconds it takes to fulfill a customer order, the big payoff on the short term plan has been that Starbucks now does twice the number of coffee orders than the industry average.
4.1.3 Crafting a strategy to achieve the objectives and vision
Schultz knew that rapid expansion brought about commoditisation of new stores. To maintain the image of a premium purveyor, he needed each store to have its own distinctive look, while still maintaining the Starbucks brand equity and keeping costs down. To that end, he hired corporate intrapreneurs, gave them free reign to strategise and innovate, while always keeping them apprised of the Starbucks strategy. He united the team with board members who were apprehensive about the new proposals. The outcome was that per store construction costs were cut by 20%, while each store was distinctive enough such that 2 Starbucks stores sat opposite one another in Vancouver, and both attracted different groups of consumers....