Many global brands came from a very small operation, with some even starting from an old garage. Microsoft and Amazon are good examples of such companies that seemed destined for failure but were pole-vaulted to success by a single decision. That pivotal point is often related to technology—business leverage that has changed the course of many businesses across different industries.
For example, many small farms in rural America once struggled with supply chains and how they marketed their harvests to distributors and direct end-users. After having come across technology-based solutions like ServiceNow implementation platforms, these farms reaped outstanding success. Information technology (IT) has revolutionized how people built businesses and how they took care of customers.
Even selling cups of java benefited from IT solutions. One would think that the coffee business was just about having good beans, a reliable coffee grinder, and a few cups and tables. Even the beverage industry needed computers, networks, and software for its everyday operation.
A good example is Starbucks, which is easily one of the most recognizable brands across the globe. Today, it dominates 76 different markets with more than 30,000 stores across the continents. In the United States alone, it has almost 9,000 company-owned outlets and 6,250 licensed stores. It is one of the most successful brands ever in history.
How did it achieve such monumental success? What challenges did it encounter along the way? How does it plan to continue its market domination amid global pandemic and beyond? First, let us look at the origins of the brand and how it gradually grew strong into a global icon for business success.
Starbucks and Its Humble Beginnings
The business began 49 years ago, in a small corner of Pike Place Market in Seattle, Washington. There, a few enterprising people dreamt of bringing the adventure of sailing the high seas into each cup of java. In their minds, they wanted customers to feel the exhilaration of Old World ocean travel, carrying bags of coffee beans in wooden galleons. Starbuck is actually the first-mate on the whaling ship Pequod commanded by Captain Ahab. The captain, of course, is the main character in the fictional novel, Moby Dick. Its mermaid company logo symbolized the seductive nature of seafaring life since, according to legend, these mythical sea creatures also made sailors fall in love.
In 1981, Howard Schultz walked into a Starbucks store and saw its potential. After joining the company, he went on his own for a while to establish his own brand. After seeing the coffee pubs in Italy, he was inspired and began to develop a new vision for Starbucks. With some investor-friends, he came back to buy the company and became its chairman. He brought with him a desire for each coffee cup to have a genuine “connection” with customers.
Challenges in the Coffee Business
One of the main challenges of the coffee business, or any business for that matter, is the constant change in consumer preferences. Whether product or service, customers and clients will always want and ask for more. Starbucks, like any other enterprise, needs to be on top of the situation by always knowing what customers need and demand.
Another challenge is the fluctuating price of commodities, including the key ingredients that go into each cup of Starbucks. Whether it is the bag of coffee beans from Colombia or the biodegradable paper cups, wooden stirrer, or even the delicious cakes and pastries delivered by suppliers—all these change prices due to many factors. Weather changes, logistical backlogs, delivery turnaround, and economic volatility affect each item in a Starbucks store.
Turning Corner with IT.
To address these challenges, Starbucks has leveraged technology to manage its inventory control. Mobile apps now also interface with their customers, enabling them to build a solid database to store, analyze, and use as input to product design, including menu variety, presentation, and pricing.
Today, customers can now receive personalized recommendations on their Starbucks app. This makes them feel more special and adds to the unique “Starbucks experience.” As the company has envisioned since it began in 1971, it wants to have a special connection between each cup of coffee and customer.
The company also recently introduced IoT-enabled coffee machines that are expected to further enhance business operations across the globe. Internet of Things or IoT technology will help the company monitor each coffee grinder and machine, heating and cooling systems, food display equipment, and other items used for everyday business operations.
By doing so, they can reduce downtimes due to repair and corrective action. The company would predict which equipment and what store needs immediate attention from technical support teams. Overall, the operation will be smoother and more efficient than ever before.
How IT is Changing the Game
Indeed, IT is changing the game of business for Starbucks and other companies. Technology has helped bring the company closer to customers while improving their business systems and market reach. The main lesson from Starbucks is to always start with a vision of what the company is, the service or benefit its product or service aims to bring, and how to constantly develop and leverage new technology to expand the business. Learning from this valuable lesson will surely benefit both start-up and veteran companies as they climb out from a small garage or office to the world’s business stage.