How the Wise Decide by Aaron Sandoski

Author:Aaron Sandoski
Language: eng
Format: epub
ISBN: 9780307449337
Publisher: The Crown Publishing Group
Published: 2008-08-25T16:00:00+00:00

Rule #3: Test the Waters Before Taking a Plunge

Not all business decisions need to be made quickly. Sometimes it pays to let a concept simmer for a while, experimenting with an idea before committing fully to it. Experiments limit your downside risk, but not your upside reward. If the experiment fails, you will have minimal losses and learned something. But if the experiment works, you can refine the concept and roll it out with significant rewards. Experiments can be a powerful tool to move an idea out of the Danger Zone and squarely into the Profit Zone, as Orin Smith discovered when he took Starbucks into the drive-through market.

To Starbucks’ management team, the very idea of being associated with “fast food” was anathema. That wasn’t what Starbucks was about, and anything that hinted at connotations of fast food—drive-through stores, for example—simply weren’t up for consideration. Being lumped together with McDonald’s and Burger King could destroy the brand that had been so carefully built over the years.

“We didn’t want Starbucks to ever be seen as a fast-food place,” Smith says. “It wasn’t that we were inherently opposed to the idea of drive-through stores, but we put the idea on the back burner. We said we wouldn’t try it until we had a sufficient number of stores in the market for customers to understand the Starsbucks experience. The brand was based on a total experience and, as hard as we might try, we didn’t believe we could deliver the total experience in a drive-through.”

But as the company continued to grow, Smith eventually began to think that perhaps Starbucks had established its brand image sufficiently well that it could at least experiment with a single store. The company tried one and it did well. Over a period of a few years, while focusing mostly on expanding its metropolitan stores, the company built a few more drive-through stores. Each was designed differently, but they all worked.

“We didn’t have any experience when we started building the drive-throughs, and we ended up solving a lot of problems, like signage, on a store-by-store basis,” says Smith. “When we really started to dig into the numbers, we realized that they were the highest grossing stores we had.”

The drive-through stores had the same interior ambience as any other Starbucks and thus appealed to the brand’s loyal customer base. But they also attracted a new type of customer who had been neglected in the past: people who for one reason or another didn’t want to park their car and get out to buy a cup of coffee. That might be a mother with two small children buckled into car seats, or it might be a businessperson who didn’t think she had time to get out of her car and stand in a line. The mother could keep her kids in the backseat and the businessperson could be using a cell phone while sitting in line in the drive-through lane. That expansive new customer base made it important for Starbucks to figure out how to build and run an efficient drive-through store.

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