Imagine for a second you’re an entrepreneur starting a small deli shop in downtown Manhattan. Your identity as a business is based upon using the freshest ingredients picked up daily from local butchers, and farmers markets.

Now imagine you’re a website dedicated to providing users with search results and serving up advertising alongside results. Your mantra is results, results, nothing but search results; ads are required by nature to be non-invasive.

Now the problem these two businesses face are run-away success. How do you scale out these models? How do you keep growing earnings while sticking to the same principles that the company was founded on.

These two companies are in the process of figuring out that the dream has changed for them, and now they need to find a way to grow their brand & offering to account for the new reality.

 

Ubiquitous Coffee

 

The Starbucks Example

When Starbucks started out it was nothing more than a whole bean coffee experience. Their focus was around finding the best beans in the world from all different locations transporting them to Seattle and roasting them to perfection.

A funny thing happened though, a man named Howard Schultz who worked for a maker of espresso machines (if I recall correctly), saw that this little coffee store operation was selling more of his product than Macys a large department store. He bought a ticket out to Seattle to figure out why, and fell in love with Starbucks and the rest is history.

If you really enjoyed this synopsis I strongly encourage you to read Pour Your Heart Into it by Howard Schultz, it is probably the most interesting and thought provoking business book I’ve read. Hands down it’s a must for anyone interested in product management, starting their own business, or is focused on brand identity.

The Starbucks shifts

Prepared drinks: The first shift Howard Schultz wanted to introduce was the latte and other prepared drinks to the US market. This idea came from Howard’s experience in Italy seeing cafés that remained packed throughout all hours of the day, coffee he found was more than a drink it was an experience in life.

Syrups: Another shift was the introduction of flavored syrups, likely installed to disrupt competitors who used this as a differentiator. At first glance it doesn’t appear to mix with Starbucks mission to brew and sell the best coffee bean but we’ll look into that later.

Cold coffee: This shift was just a necessity of driving business during different seasons, and in different regions. When investors are demanding returns for their hard earned money you simply cannot ignore these sorts of opportunities.

Bottled products: Starbucks partnered with Pepsi to create the Frappuccino this created a product to rival soft drinks and take advantage of a different sales channel than Starbucks typically managed.

Packaged Coffee available at Supermarkets: Not everyone had a Starbucks close to them once, not everyone wanted to mail order. Once Starbucks had discovered a technology to keep the coffee fresher longer this was an obvious move.

Franchising: In order to scale further Starbucks franchised into grocery stores, Target, and many other businesses. The key to this expansion was giving franchisees the same level of training as Starbucks employees.

Private label: When Starbucks acquired Seattle’s Best Coffee they utilized is as a sort of private label with which they could attack markets that would otherwise dilute their brand, this led to being able to serve SBC lattes out of McDonalds.

White Label: Similar to private label but the intent here is to use someone else’s premium brand like “Jumping Joe’s Espresso” to sell Starbucks beans without anyone ever knowing the origin of the beans.

Starbucks take-aways:

I’m blown away, and exhausted after rattling off that list and I likely even missed a few different shifts that happened. Throughout all that change they were able to keep their core brand intact and expand upon its meaning by asking themselves the same question every time one of these opportunities came up:

“Does the proposed expansion dilute our core ability to deliver on our promise to bring the very best coffee bean experience to the customer?”

It seems like such a simple question to ask but with proponents on both sides of the issue it is quite complex. When at an impasse Howard Schultz often relied upon were his customers to make the decision for him. He would use a few stores to test a suggestion such as: frozen drinks, or syrups. Usually, the customers would come back with an unequivocal answer, sales would rise dramatically proving the validity of the idea and he’d act on it.

It’s important to keep your identity as a business, but being closed off to bringing in new ideas that are not counter to your mission statement and branding will cripple your ability to grow the business.