Blue Ocean Strategy - The Starbucks Struggle: Wake up and smell the coffee

Blue Ocean Strategy - The Starbucks Struggle: Wake up and smell the coffee

Blue Ocean Strategy Example - Starbucks - Blue Ocean Strategy Company

“There’s no such thing as a permanently great company or a permanently great industry. All industries rise and fall as do companies. However, there are permanently smart strategic moves” -- W. Chan Kim & Renee Mauborgne (“Flouting Conventional Wisdom,” Chief Executive Magazine, May 2003).

We recently read a though-provoking article at BusinessWeek online entitled “Latte Questions for Starbucks' Execs.” It highlights Starbucks struggle to cope successfully with its growing pains as it joins the ranks of multinational heavyweights.

The article cites a memo written by Starbucks Chairman Howard Schultz entitled "The Commoditization of the Starbucks Experience." While for some at Starbucks the leaking of this memo was a bit of an embarrassment, we feel that Mr. Schultz, in his memo, brings to light a critical point that is oftentimes overlooked in business today:

In 25 years I have written hundreds of memos, and if I look at the theme and the thread of those memos through the years, there is a common thread … It's self-examination, it's the pursuit of excellence, it's the willingness to constantly challenge yourself and not embrace the status quo … It is important we take a step back and ask ourselves a serious question, about whether or not we're as good as we once were, whether we're good as we need to be.

Mr. Schultz’s sentiment reminds us of the entry we posted two years ago entitled “Are There Really No Permanently Great Companies?” All companies face difficult or life-threatening challenges at one point or another, and it is their adaptability to make smart strategic moves which allow them to prosper even in the face of adversity. And clearly, Mr. Schultz and his team are now facing the challenges of continued flexibility. May we suggest Blue Ocean Strategy for guidance?