Onward (56 page)

In 2005 one of our partners in Seattle, Scott Heydon, who joined Starbucks as director of North American strategy in 2002 from McKinsey and Company, took it upon himself to learn about Lean and incorporate it into various corners of the company. What most captivated Scott was that Lean's philosophy hinges on involving employees by asking for their opinions about how to improve their own work and environment. Scott believes that Lean is not about
management telling employees how to do their jobs; rather, its core principle adheres to Starbucks’ culture of respect and dignity by asking partners to take more control over their working lives.

Over the years, Scott's work had yielded some small-scale but impressive results. We regularly put together a promotional workbook in Seattle and send it to every store, and Lean techniques helped reduce the book's production time from 23 weeks to 13 and cut its page count from 300 to less than 40. Even though Lean was not widely embraced as a big idea inside Starbucks, Scott continued to champion it as part of his regular job, eventually applying its principles in some stores.

Admittedly, for me, applying a manufacturing-based process seemed cold and impersonal for a business based on human interaction, which was why I had flown to Portland with Scott and a few others. I wanted to see Lean from our store partners’ perspectives.

I followed Amy into the back room where, against the backdrop of supply boxes, she talked plainly about the improvements that had taken place at her store since Scott and his team had introduced her to some basic Lean concepts and given her freedom to problem solve.

Amy explained that for years her store had followed protocols, arranging all of their products and equipment—milk, syrups, extra cups—in the exact places the company's manuals and photographs instructed. Her store had also ground all of the whole beans for the day's brewed coffee every morning because the prevailing company wisdom was that it was most efficient to grind coffee in batches.

“I knew there was a lot of waste,” Amy admitted to me, but she did not go after it until Scott and her district manager gave her permission to do so.

For a second, Amy stopped talking. “I just wanted to apologize,” she said to me. I had no idea what for. She explained. “When I started working with Lean, one of the first things I did was step back and watch my team work. Usually I'm with them behind the counter helping serve customers, but when I took the time to observe from the floor, I saw things, so many things, that were not right. Maybe someone didn't make a beverage correctly, or forgot to hand a customer a straw or shake an iced tea,” she said. “I'm sorry that, as hard as we've been working, I missed opportunities around customer service.”

I was touched by her dedication. “I like that,” I told her with a
smile. It meant a great deal to me that she cared as much as I did.

Amy's mood perked up as she described their results. The store's partners had rearranged the supply room, putting the items they replenished most often closest to the door instead of stashed in the back, so they were more accessible. At the cold beverage station, they posted color-coded preparation instructions to ensure consistency regardless of who made a drink. But the most impactful improvement was the decision to stop grinding all brewed-coffee beans in the morning and to do it instead before each new urn was brewed. “In reality it was faster to grind coffee throughout the day,” she said. “Plus, the store smells like coffee!” Customers also began complimenting the baristas on the coffee's taste.

Amy said her partners were happier and felt less stress during rush times. In the six months since they had begun piloting Lean to reconfigure their work, their customer satisfaction and quality scores had improved. The store's turnover, which historically had hovered at around 60 percent, went to zero. For six months, not one of the store's 40 partners had left!

My scheduled 20-minute visit turned into an hour as I talked to Amy and her team, peppering them with questions. “How has your job changed?” “Why are you happier?” “What else can be improved?” I was truly impressed by the physical changes they had made in the store, but even more by the pride I heard in their voices.

Amy's store was not an anomaly.

In Portland, another manager testing Lean, Josh Howell, was shocked when he decided to track how many times in a day customers requesting a decaf or a bold brewed coffee were told, “Sorry, we don't have it right now. Do you mind waiting a few minutes?” Josh knew it happened occasionally, but until he counted he had no idea just how often: anywhere from 10 to 30 times. Thirty times a day a barista had the uncomfortable task of telling a customer no. Thirty times, Starbucks disappointed someone and risked losing his or her business.

If the same shortages occurred at other stores, a fairly safe assumption, the company could be losing millions of dollars in sales every year.

For Josh and his fellow partners, fixing the problem became a puzzle they were determined to solve. First, they considered the current situation. Like other stores, they had two brewed-coffee machines and four coffee “shuttles”—each designated to hold a specific brewed
coffee throughout the day. An easy solution was to buy more shuttles and heating pads to hold more coffee for customers, but a store's budget and counter space are limited.

The team tried different work-arounds, but nothing stuck until a few of the store's partners sat down, did some creative math, and discovered a system that would eliminate coffee outages without adding costs, equipment, or a lot more work for baristas. First, they undesignated the four shuttles so each one could brew any coffee—bold, Pike Place, or decaf. Second, after some number crunching, they considered brewing a new pot of coffee every eight minutes. They experimented with the rotation and it worked! They called their system the Eight-Minute Cadence, and Josh began sharing it with partners in other stores who also suffered coffee outages. Some adopted it directly, others adapted it to their own store's patterns. Eventually, Scott asked Josh to come to Seattle to help the Lean team more formally introduce the system to all Starbucks stores as a starting place to improve customer service. For baristas, the fact that their peers had voluntarily come up with the idea and were leading its development—and were being supported by executives and engineers—seemed to make it more acceptable.

Cliff, who recognized Lean's potential, had asked Scott to focus on it full-time in the summer of 2008.

Lean was not an easy sell, and many of us in Seattle were on a learning curve as we figured out how to relinquish some of our control by inviting store partners to problem solve as well as adopt new routines. The proposed changes in workflow and thinking could frustrate and intimidate people in the field, but experiencing Lean's effects firsthand could turn skeptics like me into believers. The more our managers and baristas were asked to pay closer attention to the details of their daily activities, the more shortcomings they noticed, voiced, and solved, and the more customer service improved. Their stories found their way to me.

In Chicago, regional director Kristen Driscoll integrated Lean thinking into her coaching and watched, somewhat amazed, as her managers begin tackling various problems. At one store, America-nos were taking longer than necessary to make. At others, carafes of milk at the self-serve condiment bar were going unused and being thrown out. Floors looked dirty no matter how many times partners cleaned them. When pouring brewed coffee, partners turned
their backs on customers. People manning the register repeatedly walked away from the machine for any number of reasons, prolonging checkout time. And, in almost every store, pounds of unused ground coffee were being thrown out. Each of these issues was eventually addressed thanks to the persistence and ingenuity of individual store partners.

Kristen summed up Lean's benefit well: “We were spending so much of our time fixing moments, but not actually solving problems. But fixing moments, like mopping a dirty floor, only provides short-term satisfaction. But take the time to understand the cause of the problem—like how to keep a floor from getting so dirty in the first place—solves, and maybe eliminates, a problem for the long run.”

In store after store, Lean thinking was producing better ways of doing business, and customer satisfaction began to rise. Not all the so-called repeatable routines, like the Eight-Minute Cadence, were right for every store, but by asking our partners to proactively rethink how they work and to have a hand in improving their own environment, instead of simply coming in and doing their work, we were essentially asking them to act like owners and entrepreneurs. Like independent merchants.

The challenge our leadership faced in formally rolling out Lean was finding a balance between encouraging it and pushing it, between ceding partners more independence while ensuring that they maintained the high standards our customers expect and the performance our shareholders deserve.

For my part, I began posing my own question to partners at open forums around the world: “If this was
your
store, what would you do differently?” If an answer is within the guardrails of Starbucks’ values, mission, and quality standards, I encourage them to do it. Inside Starbucks, Lean has become a very big idea.

What a difference six months can make.

By June 2009, tangible signs that the transformation was taking hold began to emerge:

Our new store designs were being rolled out and lauded.

More of our store partners were embracing Lean principles—though we all still had much to learn—and customer surveys were measuring statistically significant improvements in service and satisfaction. Partner
friendliness was up six percentage points, speed of service was up by 10 points, and overall customer satisfaction was up eight points since their recent lows.

In our test markets, VIA was exceeding expectations, and its small team was laser-focused on its nationwide fall launch.

Online, Starbucks had been ranked the number-one most engaging social media brand thanks to our presence on Facebook, Twitter, and nine other outlets.

Our Plan B cost savings were exceeding our quarterly targets and expanding our operating margins.

Monthly comps continued their uptick, from negative 7 percent in April to negative 4 percent in June. At the end of the month, our share price closed at $13.89, up 41 percent from the beginning of the year.

And, much to our pleasure, when the Zagat ratings for best-tasting coffee in our category came out, Starbucks was rated number one.

Despite the fact that many analysts and pundits were still counting Starbucks out, my mood began to shift, and for the first time in a year and a half, I looked forward to hosting our upcoming earnings call. In many ways, July 2009 was looking to be a momentous month for Starbucks, likely full of many pleasant surprises.

It was a late June morning in Rwanda, the beginning of the dry season, but the coffee farms nestled in the hills outside the capital city of Kigali still looked lush. On the ground, thousands of farmers and their families were waiting to greet us.

This was my third trip to Rwanda since Starbucks had begun sourcing coffee beans from the African country in 2004, and as I walked into the sea of people, returning smile after smile that welcomed us to the coffee-farming cooperative, it was hard to imagine, although impossible to forget, that only 15 years earlier Rwandans had suffered horrific acts of ethnic violence and murder in a genocide that turned neighbor against neighbor, ravaged communities, destroyed families, and stole the lives of an estimated 800,000 men, women, and children in barely 100 days. I'd read books about Rwanda's tragic history and had come to know its current leader, president Paul Kagame, whose fight to end the genocide and commitment to healing the country are among the most inspiring acts of rebirth in human history.

I've been to other African nations, and inevitably each has touched me in its own way. But there was something about Rwanda. Something I saw in people's faces, especially in the eyes of the children and their mothers, that grabbed my heart. Their will to move on and rebuild, even to try to forgive instead of dwelling in hate, were incomprehensible yet a testament to the inner strength human beings are capable of. I felt that being in their presence and conducting business together was an honor, especially because coffee was playing an important role in the country's economic and emotional recovery.