The Starbucks Trap

The Starbucks juggernaut has flipped its lid in recent months, experiencing a downturn most never expected. Over the years, Starbucks had emerged as a new social icon, a reflection of a brilliant business strategy rooted in a keen knowledge of people's yearnings for connection. But somehow Starbucks got burned when it tried to occupy too much space. Any of us can fall into this trap.The story is a familiar one: a great idea, terrific execution, rising demand, and then expansion, expansion, expansion! Starbucks coffee can now be seen virtually everywhere. Not only did stores pop up on nearly every corner, they embedded their beans and brand in grocery stores, hotels, even in the air.

Originally, Starbucks was about intimate coffee houses where people could meet, chat, read ... in essence, be in public. Company leaders often talked about carving out "third spaces" in communities -- neither yours nor mine, but "ours." But things started to unravel, and on Valentine's Day 2007, Chairman Howard Shultz sent out a memo entitled, "The Commoditization of the Starbucks Experience." Starbucks had morphed from being an experience to selling a cup of coffee.

To get back to basics, the company plans to shutter 5% of their stores nationwide, with as many as 12,000 much-heralded workers losing their jobs. Ouch!

What happened to "The Starbucks Experience?" This raises a key question I often ask people in their work: What space do you want to occupy? Earlier Starbucks enjoyed clarity on this question, but eventually their success and scale led them to believe they could be ubiquitous. That is, they could occupy virtually any and all spaces available.

My concern is not with their business strategy -- spreadsheets, numbers, coffee beans, and other related matters. That's really not my business.

Rather, my focus is on how an organization (whether a for-profit or non-profit) positions itself in public life, how it thinks about the very space it chooses to occupy. The Starbucks phenomenon has many of the same markings I see with non-profit groups that get caught up in their own success, when they wish to occupy any and all spaces.  For instance:

    • A successful local organization that confuses the fact that people value its role in their lives, with the belief that the organization should take a higher profile in the community. When does the promise of a broader profile take your eye off the real target?
    • A national organization that decides to scale up in dozens upon dozens of communities, but loses sight of what it means to create the very conditions in communities that brought about its initial success. When does the lure of expansion undermine our true objectives?
    • A civic engagement effort that started with a clear focus, now believes it should go into every nook and cranny of a community to listen to people, even tackle a whole host of issues. Will the numbers add up to anything meaningful?

I said earlier, the problem I see here is not first and foremost about a group's business or strategic plan. Starbucks, like many organizations, lost its soul, becoming more about coffee than the "experience." For nonprofits, the lure of occupying more and more space can cloud the realities of who you are and what you are truly trying to achieve. It can diminish the opportunity for producing real change, even if in smaller steps. It can blur one's thinking about what sits at the essence of the work you actually do. At issue is, "Are you clear on the space you want to occupy?"

My own hope is that good programs and initiatives will expand and even go to scale. But I also know that those that do must be clear on the space they should occupy. Otherwise, it is too easy to get burned.

It's good to wake up and smell the coffee.