Starbucks CEO says Lean drives margin and satisfaction

Starbucks To Cut 7,000 Jobs And Close 300 Stores

Starbucks Corp. F4Q09 (Qtr. End 09/27/09) Earnings Call Transcript — Seeking Alpha

Following up on Starbucks and their use of Lean methods in their stores, CEO Howard Schultz had this to say about Lean in their investor conference call:

“Behind the scenes, we have continued to build on our work to drive efficiency through lean processes, optimal scheduling and technology upgrades. These innovations, though not always visible, continue to help drive margin growth and customer and partner satisfaction.”

He didn't have data to back that up, but Lean, done well, should be focused on customer satisfaction and making the workplace better for the partners and baristas at Starbucks. It will be interesting to see the impact as Lean spreads more broadly throughout Starbucks and their thousands of locations.

For previous posts about Starbucks, click the tag/label at the bottom of the post.


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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. I have been doing a little research on this topic locally in Austin at several Starbucks across town. At the flagship store here on Anderson Lane, I asked about Lean/Process Improvement for their store. They told me that some people came in from HQ and "told them what to change, and half of the changes made things worse". To me, that is not Lean, since it did not appear that there was any involvement with the people that work at this location. This combined with the notion that Starbucks can increase productivity and hire fewer workers (reported elsewhere) are not consistent with true Lean.

  2. I don't know if what Andrew says is true, but if it is this is command and control. The fundamental thinking problem we have been talking about in systems thinking.So if "true lean" isn't tools, top-down decision-making, decisions separated from the work, etc. is this "l.a.m.e." as you described earlier?Regards, Tripp

  3. Yes, what Andrew describes would be very L.A.M.E.Instead of focusing on whose label is better (I thought Deming was opposed to labels, but here comes the "systems thinking" label crowd), let's focus on what's the right management behavior or not under any heading.Systems thinkers don't have a monopoly on railing against "command and control," by the way.Are there any documented cases of what I'll call:Systems thinkingAsMisguidedlyExecuted?I'm sure there are bad things that happen under any label.Let's criticize Starbucks instead of criticizing "lean." As Jim Womack says, managers can unfortunately practice any variety of "stupid meanness" under the heading of lean. We can't control that. We can huff and criticize it on blogs, I suppose.

  4. Mark:The labels were not mine. I leveraged Andrew's definition and yours via l.a.m.e.Regardless, I would say the point is we can't advocate and advertise success until we get the thinking right for lean, systems thinking, etc. at all levels.I think our greatest opportunity is to call out wrong thinking, but that needs some reconciliation. Maybe we can start by getting service orgs to understand the right thinking doesn't entail this being a cost reduction exercise. If Shook is still working with them (Starbucks) I was hoping that he would have helped avoid some of the pitfalls Andrew outlined.Anonymous, I have trouble taking a shadow serious. You have some good points and some bad ones. Nice to know who is making them. Do we not call people out and share what we see? Could be the root cause of why testosterone levels are down in this country . . .

  5. I'm sure Shook isn't teaching them to be top down. Tripp – are there any cases of problems caused by S.A.M.E? I'm curious. I BTW I deleted the other anonymous comment that was being insulting and not contributing. Let's keep it civil folks.

  6. Nah, we are too busy razzing the toolheads. Seriously, the system dynamic folks have their thing, they seem to be very deliberate and heady folks. Passionate, yet passive. I believe they have a lot to offer, some real depth.We advocate the Vanguard Method. So if someone (outside) calls it systems thinking we pretty much say it wasn't our method. Method becomes important as Deming would say, "By what method?" He also said that there is "no perfect model, some are useful." I find the Vanguard Method to be useful and is constantly improved as we learn. Although (hmmm) colorful John Seddon has advanced the thinking. I really didn't expect so much from him (psychologist and all), but his knowledge and application of Deming, Ohno, Ackoff, etc is quite remarkable especially the use of intervention theory. Anyway, that is how we approach things.Regards, Tripp

  7. @Tripp:I'm confused by what you say about others calling it systems thinking and it not being your method. You don't embrace others using that term to describe your work? You don't embrace others doing work under that heading??Back to Starbucks – if the CEO thinks lean is great for partner satisfaction and people at the stores say otherwise, is Howard Schultz not going to gemba first hand??

  8. Further down in the transcript, Starbuck's CFO provides some additional detail on the results of their lean effort (emphasis added):"The largest component of the savings comes from our efforts within the store to optimize labor and reduce waste. This category is the primary reason why we exceeded the projected savings targets, as we were able to gain earlier and better traction on these initiatives as the year progressed.We finished the year with roughly $190 million of savings in this area. It’s important that I mention again here, that at the same time we made our stores more efficient, we drove significant improvements in our customer satisfaction scores."

  9. I always like to hear of organizations that are actively taking steps towards continuous improvement and/or performance excellence, especially those that I frequently visit. I live in the greater Boston area and walk to a Starbucks several times a week. The staff is always very friendly and do their best to be customer focused. While at Starbucks this morning, I decided to ask an employee about their lean program. At first, she said that she knew about the program and that they had installed energy efficient lighting. As we continued our conversation, she later realized that she misunderstood my question and acknowledged that she knew nothing about the lean program at Starbucks which is consistent with the statement in the article about lean being implemented "behind the scenes". I explained the basics of lean which she found to be very interesting. It will be interesting to see the evolution of lean at Starbucks and the level of involvement and awareness of the frontline workers (aka Baristas).


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