Starbucks has been leading digital transformation programs for the past decade, but it’s undergoing a complete reinvention. What is the underlying message? No goals. It just needs to adapt to growth.
Former CEO Howard Schultz, who overhauled the company with his belief in investing in digital technology, returned to the pinnacle of a new revolution, taking on the role of interim CEO while he was tasked with leading the entire team. I noticed that sauce. He is confident that the management team he leads has decoupled what needs to be done.
After returning home, I was able to pinpoint the causes of each of the problems and challenges facing the company. Some undoubtedly related to his COVID, some due to his long-term unfocused features, and unfortunately many due to self-induction. More importantly, we now have a clearer vision of what we need to do to completely reinvent the company and accelerate profitable growth around the world.
At this stage, it should be pointed out that Starbucks doesn’t show many signs of external pain. Schultz said:
While we are sensitive to the impact of inflation and economic uncertainty on consumers, there is currently no evidence of a measurable decline in customer spending or a decline in customer transactions, reflecting the strength of the Starbucks brand. It is very important to understand what is not seen: deep customer engagement and loyalty, pricing power and the premium nature of our beverages and food products.
reward
He claims it’s the rewards program that’s driving the traffic growth and strength of the business. In the most recent quarter, active Starbucks Rewards members totaled 27.4 million, an increase of 3.2 million, or 13%, year-over-year, and Starbucks Rewards members accounted for his 53% of U.S. corporate operating revenues. did. Mobile order & pay and drive-thru delivery (two of Starbucks’ other digital-enabled services) drove 72% of his overall U.S. revenue.
But there is work that needs to be done internally with employees or partners, as Starbucks calls it. Despite the negative headlines around resistance to organizing, Mr. Schultz claims that the following large-scale reinvention plan has been shaped in consultation with workers:
What started as an informal partner meeting quickly evolved into a focused co-creation session where Starbucks partners and leaders collaborated on how best to reimagine the next Starbucks. Since then, we have held more than 100 co-creation sessions. And from these sessions our reinvention plan took shape. More than 30 cross-functional teams are now dedicated to executing the US reinvention plan that will take shape over the next few quarters. Over time, you’ll see best practices shared around the world.
mix
OK, that’s the pitch. But what’s in the cup? Digital will inevitably become a major plank, Schultz confirms, again inevitably from his NFT angle:
We are working on a very exciting new digital initiative that builds on our existing industry-leading digital platform in a revolutionary new way, all centered around coffee and most importantly loyalty.
This new digital Web3-enabled initiative builds on the current Starbucks Rewards engagement model with a powerful spend-and-star approach, while introducing new ways to emotionally engage customers and promote digital third-party engagement. A wider set of rewards to expand your Places community and include unique experiences you won’t find anywhere else.
Integrating the Digital Starbucks Rewards Ecosystem as both Starbucks-branded digital collectibles and rewards and community-building elements will create an entirely new set of digital network effects to attract new customers and increase existing customers at core retailers. can do.
Chief Strategy Officer Frank Bullitt said there are “five major strategic shifts to reorient U.S. business.” These details are expected to be revealed in September, but for now, the company is determined to “operate truly as his one global enterprise, enabled by new ways of working and a range of modern practices and tools.” He says there is a push to “bring more together”.
He acknowledges that the in-store partner experience needs improvement. The first signs of this can be seen in activities such as increasing wages, investing in new training and implementing a new digital his partner engagement platform.
The store itself needs to be rethought, he continues.
This starts with the core engine of production, which must be better aligned with today’s customer habits and deliver superior experiences through personalization across every format and every channel. Innovations such as new bar configurations, patented coffee technology, and novel store prototypes are the pinnacle of plans designed to improve throughput and significantly customized beverages, along with experiences for both customers and partners. Priority.
he adds:
Keeping in mind that each consumer needs to have a unique and personal experience that is unified across channels, we will further evolve how we reconnect with our customers. Building on a strong track record of outstanding customer engagement, leading initiatives in the space include a reimagined approach to customer-facing products and platforms, a new model for effortless digital ordering, and a fresh new Includes further expansion of the loyalty program value proposition. strategic partnership.
my view
We’ll have to wait until next month’s Starbucks Investor’s Day to flesh out more of the bones of all this, but for now, we’re doing more of what we’ve been doing and combining some new digital ideas. It looks like A commitment to doing better when it comes to employee experience.
The immediate question, of course, is whether all of this can survive the transition to a new CEO. The answer is yes, says Schultz. His replacement will be chosen based on their approval of the reinvention plan. While that may seem to put one hand behind the CEO candidate, Schultz insists:
There is absolutely no risk in the reinvention and modernization plan you have outlined regarding CEO succession…. There are, in my view, an extraordinary number of candidates who are very interested in the job. We’ve narrowed it down to a select few. The biggest piece of this puzzle, in addition to experience, domain understanding of the market, and global persona, is understanding the company’s culture, values, and guiding principles—having a real conscience about Starbucks humanity. It’s a person. .
All the candidates we are talking about parallel the plans for reinvention and modernization, so there is no misunderstanding. And the candidates are very excited, forward-thinking, and what we’re looking for in terms of investing ahead of the growth curve, reinventing the customer and store experience for our partners, and reinventing brand equity and power. I can say that I agree with what you are doing. Appearance. No one should think that there is a risk that this plan will not be implemented.
I hope he got the plan right then…
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