Success Brings Unintended Consequences

During a recent Auxano All-Staff call, founder Will Mancini brought up a conversation that he, Auxano Managing Officer Jim Randall, and noted church consultant George Bullard had that revolved around a book by Jim Collins – How the Mighty Falland its relevance to church and denominational settings today. This post from 2011 came to mind, so I’m reposting it.


Starbucks’ battle back from mediocrity is well documented in CEO Howard Schultz’s 2011 book Onward. Pairing it with Jim Collins’ 2009 book How the Mighty Fall gives ChurchWorld leaders a sobering lesson in how to handle success.

Collins’ 5 Stages of Decline begin with “Hubris Born of Success.” He describes it in a short paragraph:

Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline. Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. When the rhetoric of success (“We’re successful because we do the specific things”) replaces penetrating understanding and insight (“We’re successful because we understand why we do the specific things and under what condition they would no longer work”), decline will likely follow.

Here’s what Starbucks’ Schultz had to say in looking back to early 2008:

If not checked, success has a way of covering up small failures, and when many of us at Starbucks became swept up in the company’s success, it had unintended effects. We ignored, or maybe we just failed to notice, shortcomings.

We were so intent upon building more stores fast to meet each quarter’s projected sales growth that, too often, we picked bad locations or didn’t adequately train newly hired baristas. Sometimes we transferred a good store manager to oversee a new store, but filled the old post by promoting a barista before he or she was properly trained.

courtesy sodahead.com

courtesy sodahead.com

As the years passed, enthusiasm morphed into a sense of entitlement, at least from my perspective. Confidence became arrogance and, as some point, confusion as some of our people stepped back and began to scratch their heads, wondering what Starbucks stood for.

In the early years at Starbucks, I liked to say that a partner’s job at Starbucks was to “deliver on the unexpected” for customers. Now, many partners’ energies seemed to be focused on trying to deliver the expected – mostly for Wall Street.

Great organizations foster a productive tension between continuity and change. On the one hand, they adhere to the principles that produce success in the first place, yet on the other hand, they continually evolve, modifying their approach with creative improvements and intelligent adaptation.

When organizations fail to distinguish between current practices and the enduring principles of their success, and mistakenly fossilize around their practices, they’ve set themselves up for decline.

By confusing what and why, Starbucks found itself at a dangerous crossroads. Which direction would they go?

Questions for ChurchWorld Leaders:

  • Is your organization locked in on your vision, core values, purpose, and culture?
  • Or do you move in first this direction, then that, just to have “success”?

Beware the unintended consequences of success.

an updated post on a series reviewing Onward, by Howard Shultz

Onward

preparation for a new series coming soon on Leading the Starbucks Way, by Joseph Michelli

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Transformation Hurts

If you are comfortable where you are, or if things are okay as they are, you wouldn’t go through transformation.

Only when the pain of changing things overcomes the pain of status quo would you ever consider transformation.

That’s where Starbucks found itself in early 2008. Chronicled in CEO Howard Schultz’s 2011 book Onward, Starbucks – at the apparent height of its success – was declining inwardly, and on the edge of declining outwardly. Onward details the transformation Starbucks went through in 2008-2010, utilizing a Transformation Agenda developed by the senior leadership team at Starbucks as the primary guide.

The Transformation Agenda featured 7 “Big Moves” – innovations and advancements designed to return Starbucks to its core practices. The Big Moves also contained one final, painful set of actions designed to reverse sales trends and bolster stock value.

600 stores closed.

12,000 partner positions eliminated in these stores.

1,000 non-store positions eliminated.

Schultz called it the most painful decision he has ever made. Only the certainty that closing the stores would keep Starbucks operational in the long run allowed him to make the decision. He understood the reasoning, but it was impossible to take the emotion out of the equation:

For all the flak about Starbucks’ ubiquity, almost every store maintained a devoted following inside and out. A soul. With each closing, we would be erasing a fingerprint, and that was a reality I could not possibly ignore.

Fast forward to the fall of 2010: Starbucks regained a healthy balance with a culture that celebrates creativity and discipline, entrepreneurship and process, as well as rigorous innovation. Their fiscal 2010 operating margin was the highest consolidated one in their 40-year history. The transformation worked.

But according to Schultz,

…perhaps the most valuable thing that came out of the two-year transformation was the confidence we gained knowing that we could preserve our values despite the hardships we faced. Holding fast to those values steadied us throughout the tumultuous journey, and the ways in which we conduct our business will continue to bring our partners pride and fuel their engagement as we continue to grow.

Success is not sustainable if it’s defined by how big you become. Large numbers are not what matter. The only number that matters is “one.”

brewed coffee in cup

One cup.

SB customer

One customer.

barista handing drink over counter

One partner.

SB interior

One experience at a time.

 

Question for ChurchWorld leaders:

What’s your “one”?

an updated post from a series reviewing Onward, by Howard Shultz

Onward

preparation for a new series coming soon on Leading the Starbucks Way, by Joseph Michelli

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Transformation Initiatives at Starbucks

A previous post was a brief look at the bold Transformation Agenda that Starbucks put into place early in 2008 to overcome their decline. The Agenda contained a mission statement and 7 Big Moves designed to return Starbucks to success.

Within a few months, at their April 2008 shareholders meeting, Starbucks rolled out the following six transformation initiatives:

  • The Mastrena – a finely crafted, Swiss made espresso machine that would provide baristas with the ability to give customers a high-quality consistent shot of espresso second to none, transforming the espresso experience in their stores. By the end of 2008 the machine was in 30% of stores, and by 2010 a majority of Starbucks had the Mastrena.
  • Conservation International – a partnership with CI, begun in 1998, was expanded so that Starbucks could buy fair-trade coffee, produced in shade-grown conditions with fair compensation and safe working conditions for coffee farm workers. By 2009, all Starbucks espresso beans and espresso-based products would qualify for a new marking designed to articulate their practices: Responsibly Grown. Ethically Traded. Proudly Served.
  • The Rewards Card – designed to recognize their most loyal customers with freebies, the Card addressed an emerging need for value. Existing Starbucks Card holders could register their cards online, instantly turning it into a Rewards Card.
  • MyStarbucksIdea.com – an interactive website designed to listen to customers suggestions, rants, and comments. Moderated by 50 veteran Starbucks employees, the website was launched live by uploading ideas submitted by shareholders that morning. Within minutes, more ideas came streaming in from people listening to the meeting’s broadcast or following rolling blog posts. In the next 24 hours, over 7,000 ideas were posted.
  • Pike Place Roast – announcing that Starbucks would once again grind whole beans in their stores, two master baristas introduced Pike Place Roast, a smooth, well-balanced, lighter blend of coffee, designed to give full flavor while not being as bold as traditional blends.
  • Clover – a commercially viable way to replicate the benefits of the French Press method of brewed coffee, Clover was a local invention acquired by Starbucks early in 2008. It created a fantastic cup of coffee at a pace designed to keep up with the demand of most Starbucks stores.

SB turnaround menu fastcompany.com

Seven Big Moves.

Six Transformation Initiatives.

All of these engaging tools that helped Starbucks navigate through a very unpredictable journey, one milestone at a time.

The initiatives introduced at that meeting each heralded a return to the core values of Starbucks – coffee, customers, innovation, and values – but they weren’t enough by themselves to bring the company back from the brink.

Painfully personal decisions were the final step in the transformation.

Lessons for ChurchWorld

  • Take a look at the initiatives above, and translate them into your world. What actions can you dream up – and then put into action – that would help you accomplish your transformation agenda?
  • Are you secure enough in your core values to put anything – and everything – on the table?
  • Transformation is not just about nuts and bolts, about systems and processes. Is your vision lived out in the lives of your people?

an updated post from a series reviewing Onward, by Howard Shultz

Onward

preparation for a new series coming soon on Leading the Starbucks Way, by Joseph Michelli

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Ones Add Up

Starbucks’ CEO Howard Schultz’s 2011 book Onward details the amazing comeback story of Starbucks: after more than three decades of success, in 2008 they found themselves with sales sliding at a distressing rate, a falling stock value, and relentless competition. Compounding the problem, the world’s economy was in a tailspin.

With aggressive, sometimes painful moves and a powerful transformation agenda to guide them, they were able to reverse their decline, and by the end of 2010 were once again on top of their game.

What happened?

Here’s an excerpt from the book that gives you a big clue:

Like a doctor who measures a patient’s height and weight every year without checking blood pressure or heart rate, Starbucks was not diagnosing itself at a level of detail that would help ensure its long-term health. We predicated future success on how many stores we opened during a quarter instead of taking the time to determine whether each of those stores, would, in fact, be profitable. We though in terms of millions of customers and thousands of stores instead of one customer, one partner, and one cup of coffee at a time.

With such a mind-set, many little things dangerously slipped by unnoticed, or at least went unacknowledged. How could one imperfect cup of coffee, one unqualified manager, or one poorly located store matter when millions of cups of coffee were being served in tens of thousands of stores?

We forgot that “ones” add up.

courtesy freemarketmediagroup.com

courtesy freemarketmediagroup.com

Lessons for ChurchWorld:

  1. What “business” are you in?
  2. What are the roots of that business?
  3. It’s okay to have a 30,000 foot view, but eventually you’ve got to land the plane.
  4. You’ve got to produce results.
  5. You may see the crowds, but never forget the “ones“.

an updated post from a series reviewing Onward, by Howard Shultz

Onward

preparation for a new series coming soon on Leading the Starbucks Way, by Joseph Michelli

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It’s Time to Change the Way We Change

We’re going through a great new series at my church, Elevation Church in Charlotte, NC, called “The New Rules of Resolution – Changing the Way We Change.” The first rule: It’s not a project, it’s a process. The second rule: It’s not achieving, it’s receiving. To listen to the current message, go here.

It’s a great topic for the new year, and it’s brought to mind a blog series I did last year on “Change.” The message yesterday reminded me of this particular post – I hope you find it helpful.

 

In our generation the rate of change has gone hypercritical.

Change has changed.

Other centuries were convulsed by famine, disease, and war, but never before have so many things been changing so rapidly. We live in a world that seems to be all punctuation and no equilibrium, where the future is less and less and extrapolation of the past. Change is multifaceted, relentless, seditious, and occasionally shocking. In this maelstrom, long-lived political dynasties, venerable institutions, and hundred year old business models are all at risk.

Today the most important question for any organization is this: Are we changing as fast as the world around us? In industry after industry, it’s the insurgents, not the incumbents, who’ve been surfing the waves of change. But they, too, are just as vulnerable to change as their victims. Success has never been more fleeting.

Given all this, the only thing that can be safely predicted is that sometime soon your organization will be challenged to change in ways for which it has no precedent. Your organization will either adapt or falter, rethink its core assumptions or fumble the future – and to be honest, a fumble is the most likely outcome.

Of course, change brings both promise and peril, but the proportion facing any particular organization depends on its capacity to adapt. And therein lies the problem: our organizations were never built to be adaptable.

Especially the church.

Honest leaders will look at the Church, and more importantly their church, and see the words above lived out all too often. Churches are built as organizations of discipline, not resiliency. Efficient ministry comes from routinizing the nonroutine, adapting a management philosophy to the real life of people. As the old saying goes, the 7 words of a dying church are “We’ve always done it that way before.”

Adaptability, on the other hand, requires a willingness to occasionally abandon those routines – but in the church, there are precious few incentives to do so. So especially in ChurchWorld, change tends to come in only two varieties: the trivial and the traumatic. A review of the average church’s history will produce long periods of incremental fiddling punctuated by occasional bouts of frantic, crisis-driven change.

It’s time to change the way we change.

Inspired by Gary Hamel’s What Matters Now as part of my research for a presentation at WFX Atlanta 9/19/12

It’s Time for Vuja De’

We’ve all experienced deja vu – looking at an unfamiliar situation and feeling – almost knowing – that you’ve seen it before.

It’s time to flip that phrase.

William Taylor, cofounder of Fast Company magazine and author of Practically Radical, writes that it’s time for the best leaders to demonstrate a capacity for vuja de’. It’s looking at a familiar situation (say, being a leader in ChurchWorld for decades, or designing and delivering a weekly worship experience for years) as if you’ve never seen it before, and with that fresh line of sight, developing a distinctive point of view on the future.

You can’t do big things anymore if you are content with doing things a little better than everyone else, or a little differently from how you’ve done them in the past.

It’s time to look at your organization and your calling as if you are seeing them for the first time.

 

Favorite Post, January 2012

Change is…

Healthy.

Organizations are not alive in a literal sense – but they have to change and adapt in order to stay alive.

Nancy Duarte, writing in “Resonate,” talks about the life cycle of organizations – start-up, growth, maturity, and eventually decline. But it doesn’t have to be that way.

An organization should make continual shifts and improvements to stay healthy.

In order to do that well, leaders must excel at persuasion.

Movements are started, products are purchased, philosophies are adopted, subject matter is mastered – all with the help of persuasive presentations.

Presentations create a catalyst for meaningful change by using human contact in a way that no other medium can.

Go ahead – change the world.