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Secrets behind the 'retail revolution'
Published on Friday, 13 Aug 2010
Joseph Michelli will discuss The Starbucks Experience in Hong Kong on August 30.

Well before deciding to write about Starbucks, Joseph Michelli knew there was something different about the company. He was familiar with the business basics: its phenomenal expansion, brand recognition, focus on quality, and its post-listing surge in the stock price.

But his interest lay not so much in the trading multiples or the marketing narrative. What intrigued him was the "how". He wanted to understand the policies and principles that made it possible for a neighbourhood coffee house in Seattle to spark a "retail revolution" - opening 11,000-plus stores worldwide, while rewriting many conventional rules of management.

His answers can be found in The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary. The book is the result of nearly two years of studying the company, during which Michelli had access to everyone from senior executives to baristas, coffee growers and customers.

It will also be the subject of a Classified Post and Speakers Connect public leadership workshop on August 30, at which Michelli will elaborate on the lessons other organisations can learn from Starbucks. Approaching the task as an academic and business consultant, his aim was to identify what worked and why.

Consistent themes soon emerged, later distilled into the five principles of the title. All can be adapted and applied to other industries. What we see is that people-driven philosophies can enhance profitability, and that listening to customers and the community really is the key to building a better business. In illustrating the first principle - "make it your own" - Michelli explains that good man-management is all about encouraging individuality within clear guidelines. It is a question of making clear to employees how their efforts help an organisation succeed, and then letting them "pour their creative energy" into whatever they do.

For Starbucks, those ideas are encapsulated in the "five ways of being". Staff and management must be welcoming, genuine, considerate, knowledgeable and involved. That checklist forms the basis for everything that follows in terms of exceeding expectations, formal training, involvement in community projects, and contact with something like 35 million customers per week.

"In many businesses, connections never happen. It's simply a matter of transactions," Michelli says. "By connecting on a personal level, customers and employees find enhanced meaning in ordinary moments."

He shows how a small but thoughtful action, or a few well-chosen words, can make the difference between routine and memorable. It might start out as nothing more than learning the names of regular customers.

From there, a whole corporate culture can take root, based on wanting to create a special experience for each customer, and staff understanding they are a vital part of the process.

The message is that if you get the fundamentals right - and many businesses still have problems mastering the basics of courtesy, fairness and respect - then "good things seem to come your way".

Taking each of his principles in turn - the others are everything matters, surprise and delight, embrace resistance, and leave your mark - Michelli moves between the general and the specific, meaning there are insights for everyone.

Some readers might take inspiration from a story of the company's joint venture partnership to bring jobs to "financially challenged" neighbourhoods. Others may be impressed to see that efforts to provide a fair income for coffee pickers and improve conditions for their families have really paid off.

The book's strength is that there are "transferable lessons" for every area with which today's businesses concern themselves - marketing to management, adverse publicity to environmental responsibility.

What stands out is that a company can have a positive impact on every community. Michelli does not pretend that Starbucks is perfect. He studied it enough to know that some product launches flop, service isn't always great, and growing too fast brings its own hazards.

To get a free copy of the book, or the author's latest work, The Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of the Ritz-Carlton Hotel Company, please tell us what you think is the most important aspect of customer service. Send your answer to editor@classifiedpost.com by August 20. The 10 best entries will win a free copy.

 


Event details  

Date August 30

Time 9am-1pm

Venue Hong Kong Jockey Club, Happy Valley

Fee HK$3,000 standard rate, membership and group tickets are available at a discount

Register www.classifiedpost.com/workshop


Employees attracted to caring companies

One question Joseph Michelli looks to address in The Starbucks Experience - the book and the workshops - is "what can I learn from a company like that"? The answer, in most cases, is some variant of "quite a lot", whether the people concerned are at the top of their organisation, somewhere else in the hierarchy, or simply hoping to make a mark in their community.

It is definitely so in the specific area of corporate social responsibility. Here, Starbucks has taken on board the fact that most of us, the world's workforce, want to be involved with organisations that care about something more than just money.

"Leaders are well advised to lift their eyes from the bottom line and consider their communities," Michelli says. "Businesses that thrive today are led by managers who understand the importance of investing in their people [beyond a competitive salary] and in their neighbourhoods [both proactively and responsively]."

With this in mind, he outlines the concept of the "triple bottom line". Basically, it requires companies to report not just financial results, but also to measure their social impact and environmental performance against pre-set targets.

Accepting the need to do this is a big step towards creating a business model and style of management that is in tune with the times. It also brings tangible, though not easily measurable, benefits in terms of higher employee morale, top-quality applicants attracted by the company's values, better teamwork and a stronger corporate identity. "In truth, the size of a company only partly explains the magnitude of its social impact," Michelli says. "The scale of any leadership's conscience and the size of its heart also play a big role. Small and mid-sized companies can do amazing things for the people who work for them and for their neighbours. They can make a big splash in a smaller pond." 

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