11 more people to Starbucks
The power of tangible goals
I highly recommend this Acquired episode about Starbucks with Howard Schultz, the founder and longtime CEO. It’s got lots of fun stories and insights about how the company grew from a few stores selling coffee beans in Seattle into a global juggernaut with as much customer money loaded into its mobile app as most banks have in deposits.
The most insightful story to me was about Schultz returning as CEO to turn the company around during the financial crisis in 2008. The company’s same-store-sales, its most important metric, were declining for the first time ever. The economy was melting down and Starbucks had 7 months of cash left.
Schultz closed all the stores for a day and flew 10,000 store managers to a meeting. He told them the dire truth about the company’s financials and conveyed the urgency with which they needed to bring back same-store-sales growth. He told them that at most Starbucks locations, the difference between growth and decline was 11 customers or fewer per day.
That meant that if the managers in the crowd could figure out a way to make the experience so good for a few people per day that they would return an extra time each month, they could collectively save the company.
That is much more motivating to me than simply saying “we need to grow same-store-sales by 4 percentage points.”
I can understand how a store manager would hear Schultz’s speech and think, “I can smile at a few more people, learn a few more people’s names, make sure the bathrooms are extra clean and that will impact the business” It is inspiring because it is easy to connect tangible action to the goal.
It worked: the share price bottomed out in ‘08 / ‘09 and then went on a huge run.
I think this lesson can be applied to all types of goal-setting. Communicating what needs to change at the most fundamental level makes goals more concrete and motivating.
For example, right now Google is bleeding search traffic to ChatGPT and other AI applications. Google’s management could tell employees that they need to grow year-over-year search queries 3%. That is a high level goal and not very tangible.
But perhaps this goal can be decomposed to something like “we need each person with a smartphone to make two more queries per week.” That becomes a lot more understandable and direct and in my view it is more motivating because it is more connected to the human experience of searching Google that everyone can relate to.
Give the episode a listen, Acquired is one of the highest quality podcasts out there and this is a great episode.
P.S. listening to Schultz talk about the Starbucks Reserve Roasteries (pictured above) made me want to go to one — he cited Willy Wonka as inspiration in their creation. I’m going to check out the one in New York.
My first thought was -- "11 people? How the hell did he get that number. He must've made some gross generalizations and skipped a lot of nuance!"
That voice is the Data Scientist voice in my head.
I think the hard part about working in Business Data Science is making decisions like Schultz made here. I'm sure there was some individual or team that spent hours constructing a detailed report that showed how for each store size/geography this "11 people" metric varied quite widely and differently. Modern analytics discussions seem to push us towards understanding all the details and nuances we can, claiming that they are the secret key to success.
I feel like a modern CEO might make the mistake of trying to "customize" the X customer goal for each store. Or at least have groupings of stores, saying group A needs to have 15 customers, group B 7 customers.
But I think was Schultz did here was powerful for two reasons:
(1) Closing the stores for entire day must've been quite an emotional and mental shock to the day-to-day autopilot that many of us fall into. The store managers were surely in a different mindset than they normally would be, and their openness to new ways of doing things was probably the highest since they started their careers with Starbucks.
(2) The data point was SIMPLE. Dummy simple, one data point! Modern data teams could never live with themselves without a supporting ChatGPT powered LLM, Tableau dashboard, and 20 slide Powerpoint to accompany this insight.
Great write-up. Saving this Acquired Episode to my queue.
YES YES YES! Tangible goals are essential. Ideally the tangible goal connects to a purpose that the troops believe in. In this case, the troops were store managers with big personal stakes in the success of the company.
A thought: As an organization grows and adds complexity to its operations, the single tangible goal may become elusive. Is there such a beautiful tangible goal for the US Congress, Southwest Airlines, Apple?