The management consultant and author Jim Collins loves to tell about the moment he realized that Peter Drucker was the living embodiment of this important principle: The things that an organization stands for should remain firm and fixed, but how it does things should be adjusted constantly.
This dawned on Collins when he went to lunch with Drucker one day and watched his mentor order the usual: a nice glass of red wine—and, at the same time, a double espresso. Collins laughed to himself and thought, “There you go: Preserve the core and stimulate progress.”
I had a similar reaction this week when Starbucks (SBUX) announced that it would expand its sales of beer and wine, alongside its core coffee drinks, in a move to boost customer traffic in the evening hours.
So far, the effort is modest. Six Starbucks stores in the Pacific Northwest currently serve wine, beer, and what the company calls “premium food.” Late last year, Starbucks announced plans to bring the concept to a handful of locations in the Chicago area by the end of 2012. Four to six stores in both Atlanta and Southern California will also test the idea.
Judging from the comments I’ve seen in various news stories and on Facebook, consumer reaction is mixed. But I admire what Starbucks is attempting, for it’s a wonderful reminder of how all enterprises must strive to find the right blend of continuity and change.
Continuity and Change
For Drucker, this notion went well beyond what he downed at lunch. “The traditional institution is designed for continuity,” he wrote in Management Challenges for the 21st Century. “All existing institutions, whether businesses, universities, hospitals or churches, therefore have to make special efforts to be receptive to change and to be able to change. It also explains why existing institutions face resistance to change. Change for the traditional institution is, so to speak, a contradiction in terms.”
Meanwhile, for any organization that is more naturally inclined to shake things up—what Drucker termed a “change leader”—it must be mindful of the other side of the coin: ensuring that there is an ample amount of stability. This is achieved in part, Drucker counseled, by adopting “a ‘personality’ that identifies it among its customers and in its markets” with consistency.
“Change and continuity are thus poles, rather than opposites,” Drucker concluded. “The more an institution is organized to be a change leader, the more it will need to establish continuity internally and externally, the more it will need to balance rapid change and continuity.”
Undoubtedly, some people are bound to have trouble seeing that Starbucks is honoring the continuity part of the equation by introducing alcohol. I’d argue that beer and wine are potentially a terrific fit if they help reinforce what the company is really trying to peddle: a feeling of community inside its stores. Indeed, as long as Starbucks (with about 17,000 locations worldwide) can defy its size and ubiquity by providing a genuine gathering spot, it’s almost beside the point whether its baristas pour stimulants or depressants.
The Goal: A Relaxing Atmosphere
“As our customers transition from work to home, many are looking for a warm and inviting place to unwind and connect with the people they care about,” Clarice Turner, senior vice-president of Starbucks’s U.S. operations, said as the company unveiled its latest plans. “At select stores where it is relevant for the neighborhood, we are focused on creating an atmosphere where our customers can relax with a friend, a small bite to eat and a cup of coffee or glass of wine.”
Starbucks hasn’t always done a good job on this front. It grew too fast at one stage and by 2007, the company’s stores had become, in the words of its founder and chief executive officer, Howard Schultz, “sterile” and “cookie cutter.” In my eyes, Starbucks also stumbled when it tried to emphasize how little its products cost—a subject I’ve taken up before. In all of this, Starbucks essentially forgot that it isn’t in the coffee business; it’s in the business of offering a certain kind of experience.
“Nothing may seem simpler or more obvious than to know what a company’s business is,” Drucker wrote in The Practice of Management. “A steel mill makes steel, a railroad runs trains to carry freight and passengers, an insurance company underwrites fire risks … Actually, ‘What is our business?’ is almost always a difficult question, which can be answered only after hard thinking and studying. And the right answer is usually anything but obvious.”
Starbucks has gotten back on track, in large part, because it is now clear on what business it’s in. If Schultz has his way, the company won’t ever waver on that, even as it introduces new food and beverages and makes other changes, both big and small, from time to time. As Drucker wrote: “Above all, there is a need for continuity in respect to the fundamentals of the enterprise: its mission, its values, its definition of performance and results.”
I, for one, will drink to that—perhaps at my neighborhood Starbucks.