MaximumCEO » Strategy

Starbucks’ Instant Brew for Instant Change

Alex — Fri, 27 Feb 2009 10:25:22 +0000

It’s been a little more than a year since Howard Schultz returned to the iconic Starbucks Coffee Company as CEO. The stock, which has tumbled from 19 at the beginning of 2008 to 10, hasn’t performed quite as well as analysts expected and shareholders hoped.

Now, Schultz introduces Via, its inaugural venture into the instant coffee category, to a less than enthusiastic public. Starbucks fanatic blog “Starbucks Gossip” gave sneering remarks:

“Okay, company over. Everyone go home”

If there’s one thing Schultz loves, besides growing an empire of coffeehouses, it’s a well brewed cup of coffee. Starbucks has been known for its luxury designer drinks at a high price point. The venture into instant coffee may allow Starbucks to reinvent the category, much like how it reinvented the coffee shop in the early 1990s. Via brings the cost down to encourage people to still enjoy their morning Starbucks, even if they have to wait until they arrive at the office for that first sip.

Fast Company was able to sample an early taste test. Starbucks set up a blind taste test to try competitor instant coffees, Starbucks’ brewed coffee, and Starbucks’ new instant coffee. The results? Favorable, but only if you are used to drinking Starbucks:

Most were impressed, calling the flavor “impressively rich” and noting that “the color, taste, and consistency are identical to a $2+ venti.”

Keep in mind, a few of the samplers from Fast Company didn’t like Starbucks’ original brew. And Starbucks didn’t provide cream or sugar for people to add to taste. If the sample was comprised of regular customers, it’s likely that the results would have been more positive.

Even in a recession, Starbucks has already introduced a line of instant oatmeal, which performs very well. The Via instant coffee will join the product lineup to allow any customer an affordable Starbucks breakfast, to go.

3 Ways Luxury Manufacturers Drive Sales During a Recession

Top 30 Innovations Over the Past 30 Years

Alex — Wed, 25 Feb 2009 11:29:47 +0000

The word “change” may never be the same. For some, it’s change from the previous political administration. For others, it’s global change and a new approach to each problem we encounter as a world. But looking back over the last few decades, what would be the most significant innovations that changed how we live?

PBS’ Nightly Business Report celebrated its 30th year on the air with a special on the top 30 innovations in the past 30 years. NBR solicited nominations from the public, and a panel of professors from Wharton sorted and awarded the top innovations.

From medication and technology marvels to those basic staples like LEDs found in every device, the list is not very surprising.

Internet and the Web
PC/laptop computers
Cell phones
Email
DNA testing and sequencing/Human genome mapping
Magnetic Resonance Imaging (MRI)
Microprocessors
Fiber optics
Office productivity software
Non-invasive laser/robotic surgery (laparoscopy)
Open source software and services (e.g., Linux, Wikipedia)
Light emitting diodes (LED)
Liquid crystal display (LCD)
GPS systems
Online shopping/ecommerce/auctions (e.g., eBay)
Media file compression (jpeg, mpeg, mp3)
Microfinance
Photovoltaic Solar Energy
Large scale wind turbines
Social networking via the Internet
Graphic user interface (GUI)
Digital photography/videography
RFID and applications (e.g., EZ Pass)
Genetically modified plants
Bio fuels
Bar codes and scanners
ATMs
Stents
SRAM flash memory
Anti retroviral treatment for AIDS

What’s missing from this list? And should social networking (which affects people online and who have registered for services) really score higher than genetically modified plants (which fill the shelves of every grocery store)?

The 18 Best Industries for New Businesses

The One Question Google Asks All of its Products

Alex — Fri, 20 Feb 2009 12:03:45 +0000

Take a look at some of the web services Google has grown, bought or cultivated in its web arsenal. We have their basic search, the AdWords network, YouTube, Maps and Streetview, Gmail, Documents and Calendar, just to name a few. We also see some of those little products that don’t quite appear on the main page but they still support, like Google Earth, Chrome, Goog 411, Knol, Picassa and trends.

Some products are related directly to search and finding answers to information, but others (especially products like the now defunct Lively) entered into new worlds and industries.

How could Google possibly evaluate every product and whether or not to continue to support each initiative? After all, many of Google’s products have yet to turn a profit. Services like YouTube alone are run at a lost, and YouTube is probably a few years away from entering into the black.

In an article for the New York Times, senior vice president of engineering Jeff Huber says,

“There’s no single equation that describes us, but we try to use data wherever possible [...] What products have found an audience? Which ones are growing?”

Ultimately, Huber says people at Google ask, “is there an interest in our products?” If there is—like YouTube—it’s likely they’ll continue to support the initiative, even at a financial loss. If there product hasn’t found a strong audience—like social mobile network Dodgeball—it’s unlikely they’ll continue with the service.

Secondary questions come in to play as well, such as “does this service solve a substantial problem?” or “did this product have trouble attracting Google employees for development?”

How anyone can use this question

Modern executives, bloggers and entrepreneurs can use the question of “is there an interest in my product?” for almost every new venture.

For online entrepreneurs: Let’s say you took the initiative to launch your own social network in your free time a few months back. Take a look at the people using the network. Are people relying on your service and using it regularly? Do you see consistently more account registrations than when you began?
For modern executives: Let’s say you developed a new process within your organization to reduce the amount of reports people are creating and, thus, reducing the amount of time people on your team spend crunching numbers. Are people using your process? Does your process actually address the problem you created it for, and does it do it well?
For bloggers: Let’s say you launched a new type of section on your blog, such as a fresh back of links every Friday. Do you find your readers, through stat tracking software, reading those links?

Moving forward

Make a list of each initiative/project that you are supporting. Is there interest? If not, what steps can you take to get more people involved? Are you willing to wait a few additional months to see if there will be any interest?

Renegade Goals

Alex — Mon, 16 Feb 2009 12:51:04 +0000

The first quarter of every year sends executives scrambling for a set of annual goals to submit to their managers. Goals have been shown to improve company performance in just about any organization in any industry. The problem arises, however, when executives are blinded by the benefits of goals to see how they may fail to fulfill the objectives of a company. In the worst situations, poorly conceived and executed goals are detrimental to an organization.

Harvard Business School released a working paper on developing goals likely to cause positive results. The paper gives an examples of how choosing goals that conflict with objectives affect the organization, and they use everyone’s favorite American automotive narrative to illustrate their point:

In the late 1960s, the Ford Motor Company was losing market share to foreign competitors that were selling small, fuel-efficient cars. CEO Lee Iacocca announced the specific, challenging goal of producing a new car that would be “under 2000 pounds and under $2,000” and would be available for purchase in 1970. This goal, coupled with a tight deadline, meant that many levels of management signed off on unperformed safety checks to expedite the development of the car—the Ford Pinto. One omitted safety check concerned the fuel tank, which was located behind the real axle in less than 10 inches of crush space. Lawsuits later revealed what Ford should have corrected in its design process: the Pinto could ignite upon impact. Investigations revealed that after Ford finally discovered the hazard, executives remained committed to their goal and instead of repairing the faulty design, calculated that the costs of lawsuits associated with Pinto fires (which involved 53 deaths and many injuries) would be less than the cost of fixing the design. In this case, the specific, challenging goals were met (speed to market, fuel efficiency, and cost) at the expense of other important features that were not specified (safety, ethical behavior, and company reputation).

The paper ends with a checklist of how to assign goals properly:

Are the goals to narrow/specific?
Are the goals too challenging to achieve within a time frame?
Do short-term goals harm long-term objectives?
Will any goal increase the likelihood for an employee to take a risk, and is your organization comfortable and prepared with a risk management strategy?
Could any goal encourage unethical behavior?
Are goals established on common standards so they can be tailored to individuals while still remaining fair to others?
Will goals positively influence the organization’s culture?
Are employees intrinsically motivated?
Considering your organization and industry, is learning or achieving a level of performance more important?

Establishing goals for an organization is not as simple as turning objectives into actionable statements. Modern executives should view goals from multiple perspectives to check for clarity in how employees may interpret or act on a goal. Above all, goals should push management’s strategy for moving forward while enforcing the organization’s guiding principles in the process.

The 18 Best Industries for New Businesses

Poaching Innovators From Your Customer Base

Alex — Fri, 13 Feb 2009 18:07:50 +0000

Media and tech companies may not need to look much further than their own customers for adding value to their product lines. According to a recent article in the Financial Times, companies like the BBC and Last.fm, an online music service owned by CBS, have held events to gather independent developers for a day of invention and creation. People are encouraged to use the companies’ online services to develop a new program or feature. The best creations are awarded with a cash prize, and companies are able to quickly and cheaply get ahold of creative enhancements for their products.

From the article:

Organisations as diverse as the Guardian newspaper, WPP advertising agency, travel site Lastminute.com and O2, the mobile operator, have all hosted unconferences in recent months. These low-cost events are for enthusiasts as well as professionals, who are all required to present as well as listen. Developers compete for prizes, including the possibility of their product being commercialised, while the host organisations can tap into a new pool of talent.

Young and small, old and large; companies across industries are investigating this trend and how it can affect their business. From a talent acquisition perspective, companies have the opportunity to pull a developer aside and discuss a potential position within the company.

These conferences, or barcamps as they are sometimes referred, or barcamps as they are sometimes referenced, will continue to become more popular as technology becomes more social and companies realize constant innovation is imperative to their survival.