Lessons From Starbucks: Are You Watering Down Your Services?

Time recently featured an article on Howard Schultz’s return to Starbucks. After a rough year, Schultz has taken the helm to attempt to right the Starbucks ship. His belief about Starbucks’ drop in U.S. traffic (its first ever) is that recent decisions have “led to the watering down of the Starbucks experience.”

If you’ve visited a Starbucks recently, then you likely know what this means. Starbucks now sells CDs & DVDs, charges for Wi-fi access, peddles breakfast sandwiches and has been skimping on the plush carpet and lounge chairs one used to find in each Starbucks location.

This is not an uncommon problem for growing businesses. In an effort to grow the bottom line, a business undertakes selling other goods and services that are ancillary to their core services or products. This is not unusual even in small personal service businesses led by real estate agents, attorneys and investment providers.

I’ve seen many smaller service providers attempt to craft revenue sharing arrangements with other professionals and expand into areas outside their core expertise. Now we have the real estate agent who can also do your mortgage, or the residential investment provider who will also help you find a commercial project. This tends to dilute the focus and reduce the value of a provider’s core service.

In his interview with Time, Schultz posed the question, “We've been selling teddy bears, and we've been selling hundreds of thousands of them, but to what end?”

Are you selling teddy bears?