What Radio can learn from Starbucks today…

The bloom may have been shed from the 'bucks, but can the bucks return in a boom?  And what takeaways are there for the radio biz?

Check out how Starbucks CEO Howard Schultz assesses what his company did wrong and what they're doing to make it right:

Every brand experiences growing pains, and Starbucks, which opened new locations at an arguably pathological rate, was no exception.  Speaking at Thursday’s Ernst & Young Strategic Growth Forum, Schultz felt his brand lost its focus after 15 years of infallibility: “Somehow, along the way, the level of that feeling” – the love inspired by a people-based business – “got somewhat blurred by success.”  Schultz made some difficult decisions, but they were essential for the brand’s survival. If your brand is in trouble, or isn’t as successful as it once was, you can learn a lesson or two from Schultz’s boldness.  In February 2008, shortly after returning to the company, Schultz ordered all stores closed for three hours to focus on barista training, a move that subjected the brand to ridicule from its competitors. He shuttered some 900 stores, a very public admission that “we had stretched the brand beyond its demography,” as he told the forum.  He insisted that the company focus on its core principles, cut waste, and innovate, and when a certain fast-food franchise with even more locations than Starbucks decided to hone in on its core business, Schultz claims it was a blessing in disguise. “McDonald's made us better,” he said, not quite elaborating. The McDonald’s competition and what Schultz called “a death march of people saying Starbucks’ days were over” forced the brand to execute drastic decisions that made it a leaner (by comparison), profitable company again.

So what can radio learn from this?


That cost-cutting without innovation is like sucking out your life force and with it the very reason you deserve to live.

That you exist by the good graces of your advertisers and your consumers and both groups are looking to you for what's next and what's new.

That being ubiquitous – whether its on every street-corner or on every radio dial – does not guarantee you success when conditions change.

That high margins must be earned.  Forever.

That "success" itself is a journey, not a destination.

That radio is, ultimately, about people, not about efficiencies.  It's about connecting one-on-one at the point of purchase.  It's about people connecting with other people.

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