BY D.L. ROGERS
I love taking examples of management success and failure right from the pages of the newspaper. This example is from the March 7th Wall Street Journal interview with Howard Schultz, CEO of Starbucks. The coffee giant had been underperforming which resulted in the closing of hundreds of stores and worker layoffs. But recently the company’s performance has improved and the Journal interviewer asked Mr. Schultz what led to the turnaround in the company’s performance. His response is below (I added the emphasis):
“Putting our feet in the shoes of our customers, understanding what they were dealing with….” “In addition to that, getting our own people to understand what was at stake and specifically asking them to be more accountable. We were growing the company with such speed and aggression that we lost sight of the customer experience.”
There are two very critical concepts in Mr. Schultz’s comments. The first is they lost sight of the customer experience. This happens a lot in business. Managers get so wrapped up in what they are doing or how they are doing it, that they forget the business only exists because a customer has chosen to buy their product or service. This often-fatal memory lapse is one of the core mistakes made in business. It really does not matter if it is ignorance or hubris that causes management to forget the customer, it impacts businesses at all levels. To Mr. Shultz’s credit, he did not allow it to continue!
His ability to correct his management error in no small part can be traced to the other critical concept in his statement wherein he specifically asked his people to understand what was at stake and to be held accountable for the outcomes. Being held accountable, in this case, means to ensure customers are getting what they expect from the Starbucks experience. Having employees understand what is at stake, which is what we call “buy-in”, is frequently the element of effective management that is missed. People perform their tasks at a higher level when the “why” is understood. It gives the employee a stake in the company’s success. They are part of the team doing good by the customer.
The Starbucks story is a remarkable one, they took a product — coffee — which was mundane and commodity-priced and convinced consumers that it was worth paying a premium price for it (and standing in line waiting to pay a premium price). You do not want to kill the goose that lays the golden eggs by failing to pay attention to customer needs!