Good Things Happen to Good Companies

By Michael Kanazawa, Guest Author

One of my business partners at Dissero, John Dare, has been a serial entrepreneur and has raised money from many of the top venture firms. One of the pieces of advice he still carries around today from all of those experiences came from one of the Partners of Kleiner Perkins Caufield and Byers. He was told, “Remember, good things happen to good businesses.”

What this means is, focus on your customers, employees and fundamentals of the business and the rest will work itself out. Too many times under the heat of pressures to grow revenues, increase earnings and increase market value, executives and their teams start to focus more on the business outcomes and forget those other fundamentals. That’s when businesses fail to reach their potential.

Given that we’re in the midst of March Madness – the NCAA College Basketball Championships, this winning philosophy also was proven in that arena by coach John Wooden of the UCLA Bruins. He led the team to the most championships and greatest winning streaks in history. And, he never allowed the team to talk about winning games. They only focused on what they would do as a game plan and doing their best. He believed if they focused on those things, the wins would accrue. And – he was right.

This approach to business success also applies well to Starbucks’ situation today. When Howard Schultz started the company he took someone else’s idea – he bought the original stores from Peets – and then by focusing on great customer experiences, built a massively successful company. It wasn’t the innovative idea to build coffee houses that was important, but the constant focus on building a good and consistent customer experience every time.

After Howard Schlutz left, others came into the company to focus just on growth. As a result, the Starbucks stores started to focus more on how to “monetize” current customers by heavily merchandising the area in the front of the store and rapidly opening new stores. Now there is more tough news as the policy of taking some of the tips to pay shift managers has brought a very public lawsuit that pits Starbucks against it’s employees. Given that another one of their secrets to success over time has been their great baristas, this is not a good sign either.

However, with Shultz’s return, it seems that the company may be able to get back on track. He is undertaking one of the types of transformations that we describe how to do in our book, BIG Ideas to BIG Resutls. And so far, he is down a great path.

He explained recently that the focus had drifted too much to growth itself and that going forward it would shift back to coffee and customers. In a voice mail to all “partners” or people who work at Starbucks, Schultz explained, “In refocusing our Company, we are going to play to our strengths – to what has made Starbucks and the Starbucks experience so unique; ethically sourcing and roasting the highest quality coffee in the world, the relentless focus on our customers, the trust we have built with our people, and the smart, entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our company.”

If you agree that good things happen to good businesses, then this transformation of Starbucks should be a great success. I think they will do a great job coming back with this re-focusing on what is truly important and trusting that the financial results will come about as a result, not as the goal.