Thinking Outside The Cup

By: Alison OverholtJuly 1, 2004

Surprise! Starbucks barista-in-chief Howard Schultz is making a big, bold push into the music business. He aims to transform the record industry -- and turn Starbucks into the world's biggest brand, period.

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Page 4 of "Thinking Outside The Cup"

Fast Take: Redefining your Business

To Howard Schultz, Starbucks isn't in the coffee business. It's in the people business. Once you start looking at things that way, the horizons get a lot wider. Here's Schultz's guide to contemplating life beyond the cup.

Think like an athlete.

Whenever you reach a plateau, it's time to rethink. If you're number one or number two in your category, maybe it's time to reconsider the category in which you compete: Create a broader definition of the industry, and develop a new plan to conquer it.

Team up with like-minded partners.

Hear Music and Don MacKinnon approach their business the same way Starbucks does: Customer interaction is vital, intimacy is important, and the shopping experience is everything. That's what made launching a music service together smart, not crazy.

Dream big.

A corollary to finding a new industry definition: Make its boundaries as wide as possible. "We have the potential to become the most recognizable and respected brand in the world," Schultz says. Not the biggest coffee company but the biggest brand, period. "When you're building a business, you have to dream as big as you can possibly imagine -- otherwise, what's the point?"

Stay small.

Everyone loves the convenience of a widely available product or service; no one likes to feel anonymous. Even as Starbucks goes global, adding new products and new businesses, Schultz and his team strive to maintain the intimacy and personalized feel of every single Starbucks encounter. "Our biggest challenge is to get big but stay small," he says.

Fast Take: A Coffee-Klatsch with Mr. Schultz

Words of wisdom from the architect of Starbucks' phenomenal success:

"Customer loyalty is not an entitlement."

Whether you have 30 customers or 30 million (like Starbucks), customers are fickle. They're bombarded with newer products and snazzier messages every day. Companies must continue to prove their worth -- or lose it. Says Schultz: "We know we need to win back our customers' loyalty every day. Our success is based on their continued trust in our people and our environment over long periods of time."

"Great brands aren't built on ads or promotions."

Redefining the industry you're playing in doesn't just mean hiring an agency to think up a fancy new slogan. To make it work, you have to offer high-quality new products and services that customers actually want, and that will reinforce the value offered by your core brand and expand the emotional connection your customers feel with it.

"It's no fun being a pioneer."

When launching a new product, service, or business unit, remember that experience still counts. Even though the Hear Music Coffeehouse experience is unique, developing it with folks familiar with the music business was vital. "It's always best to surround yourself with people who've done it before, in some form or another," Schultz says.

"Stay humble. There is no room for arrogance."

Customers can tell when a new product or service is an authentic outgrowth of the company's mission, and when it's an overblown gimmick designed to feed the buzz machine. Be aggressive with your business performance goals -- not your ego.