Page 13 - MS Perspectives 2014 YIR

A relatively neglected source of differentiation is corporate culture. Corporate
culture can be used to differential an organization in two key ways: 1) in the
treatment of customers or client, and 2) in the treatment of its employees.

This dual strategy of using culture as a differentiating factors or core strategy is
captured best by Starbucks. As Howard Schultz, founder and Chairman of
Starbucks, clearly one of the great entrepreneurs and architect of arguably the
most dramatic corporate success story of the last 25 years, states: "When people
ask me the reasons for Starbucks success it tell them something that surprises the,
the real reason for the company's success its people." Schultz's view of the
underlying reason for SBUX's success is more clearly stated in the title of the book
written by Howard Behar, who was the head of retail operations during the
company's great growth and an iconic brand. As the books title states: It's not the
Coffee! As Behar explains, it is the leadership and culture of Starbucks that is the
real reason for it great success3.

Culture As A Core Strategy And "The Bottom Line"

The underlying message is captured in the implicit core strategy articulated by
Starbucks: "the way we treat our people influences the way they treat our
customers, and in turn, our financial performance". Today SBUX has more than $15
billion in revenues, is a recognized global brand, a respected corporate leader. Yet it
was all done with a commodity product. Coffee is coffee is coffee! The nominal
product (coffee) comes from Arabica coffee beans which are gown in many places.
The real product is the experience of customers, and that is the product of
Starbuck's core strategy based upon its leadership and culture.
____________

For further information about Corporate Culture and Culture Management, see
Culture Management. See also Eric Flamholtz and Yvonne Randle, Corporate
Culture: The Ultimate Strategic Asset, Stanford University Press, 2011.

For more information on Starbucks Culture see: The Making of Howard Schultz

3 Howard Behar with Janet Goldstein, "It's Not About The Coffee: Leadership Principles From A life At
Starbucks," Portfolio, 2007.

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