What is the ‘secret sauce’ of success?

What is the ‘secret sauce’ of this company’s success?

I was at a gathering where the topic of ‘secret sauce’ came up in the context of the ‘secret sauce’ of the company’s success.  After the main forum I ended up in a conversation with two colleagues  – one of whom (D) had posed the ‘secret sauce’ question and other of whom (J) has been working with me on a recent consulting engagement.  Talking about ‘secret sauce’ J pointed out what he sees as my secret sauce: analytical skills, financial skills, workshop facilitation skills, consulting skills, being straight with clients, articulating my point of view, getting along with people……

What is my ‘secret sauce’? Is it what it seems to be?

Does my secret sauce come down to a bunch of skills, behaviour, frameworks and tools?  Is it possible that what J is pointing at are simply the visible aspects of the iceberg and the ‘secret sauce’ is hidden from view especially from those with a scientific orientation which neglects the inner dimensions of the human being? If I have a ‘secret sauce’ then it lies in my inner dimension – my being, my stance, the context from which I operate, how I see myself.

What if I told you that my ‘secret sauce’ is CARING?  I care deeply about this client – the people who have placed their trust in me. I care deeply about the what we (the client and I) are up to – the project we have taken on, the outcome which we wish to manifest in this world. I care deeply about the impact this will have on the lives of prospects and customers who touch this business.  I care deeply about how it will impact/improve the lives of the people who work within this business;.  And I care deeply about excellence – doing great work impeccably.

What if I told you that my ‘secret sauce’ is the conscious choice to operate from a context of service and of contribution – of making a difference to the quality of our lives and the ‘workability’ of the world that we share?  Yes, I am straight with people and that includes sharing/disclosing what they do not necessarily want to hear.  What J does not see is that I can only be straight because this being straight arises out of this context of service.  What J does not see is that when it does not matter, when it does not contribute to the game I am playing, I strive to keep my mouth shut.  Furthermore, what J does not see is that in my consulting work I operate from the  educational/coaching paradigm:  I help clients see, explore and get to grips with the options that are available to them and once this is done I make it clear that the responsibility for choosing the path lies with them as it is ‘their baby’ and I am simply the ‘midwife’ – they have to live with the consequences of their choices whereas I can walk away.

Lessons

Am I sharing this with you because I am on an ego trip today?  Possibly and I hope not.  I am sharing this with you to point out the following:

  • We live in a culture where the default is to look for success recipes that take away the inherent uncertainty, unpredictability, messiness of life and replace it with certainty, security, guarantees;
  • The number of explanations for anything that shows up is limited only by the number of worldviews / ideologies / perception filters that are available and used to make sense of the ‘situation/data at hand’;
  • We live in a culture where our search for these recipes is often only on the outside – that which is visible to the naked eye;
  • Often the recipes don’ work out because we only looked at the surface and did not dig deeper to get at the true ‘secret sauce’.

This probably occurs as ‘abstract and intellectual’ to you so let me share some example with you to make it more concrete.  Lets start with Honda to show how smart people can come up with multiple interpretations based on their worldview or the secret-sauce they want to promote (because they have a vested interest in promoting it).

Honda: what was the secret sauce behind Honda’s successful entry into the US motorbike market?

What accounts for Honda’s successful entry into the US motorbike industry back in the 60s/70s?  The answer depends on the worldview that you hold, the lens that you use to pose that question and dig around for answers.  Here are three different answers due to three different lenses:

“The first is the BCG Report [1975] story of Honda’s cost advantage, developed (the story goes) by the successful exploitation of scale and learning, and of the “segment retreat” response of British and American competitors. Anyone who received an MBA between 1979 and 1985 was almost certainly exposed to this version of history.

The second, explicated by Pascale [1984], offers a revisionist account of Honda’s motorcycle success.’ According to Pascale’s interview with six Honda executives, the company’s early scale in Japan came from its having a better product, flowing from design skills. Furthermore, Honda did not “target” specific market segments in the U.S., but rather showed an ability to experiment, to learn quickly from mistakes, to rapidly revise design problems, and thereby to discover opportunities.

The third, described by Prahalad & Hamel [1989, 1990], couples Honda’s success in motorcycles with its successful entry into the U.S. automobile market. Here the center of the story is Honda’s remarkable ability to go from “nowhere” to prominence despite the earlier entry of very efficient competitors like Toyota and Nissan. Prahalad and Hamel have given the names “intent” and “stretch” to the processes which underlay this success and the name “core competence” to the central skills and abilities that Honda built upon.”

If you want to read more then check out / download the following:  HONDA Enters Into US

Zappos: what is the secret sauce?

If you read about Zappos the taken for granted answers are: culture and wow service.  One or more astute observers have also noted logistics – Zappos wow service is enabled in part because Zappos has a finely tuned logistics operation that can get goods quickly to customers.   So is that the secret sauce?

I say that these are simply the visible manifestations of the secret sauce.  I say that if you read “Delivering Happiness” by Tony Hsieh you will find that the secret sauce is Tony Hsieh.  Tony has a particular philosophy: living a meaningful life, an affinity for people, an affinity for fun, strongly family ethos, a desire to get into and be a part of the nuts and bolts of business, getting that when you create happiness you are the first one to be lifted by this happiness.  And everything that is visible at Zappos is a manifestation of Tony Hsieh.

Starbucks: what is the secret sauce?

Is it the quality of the coffee?  Is it the location of the stores?  Is it the layout / feel of the stores?  Perhaps it is the baristas that serve customers?  Maybe it is the machinery and the processes?

From where I stand I am clear that the secret sauce is Howard Schultz.  Go read “Pour Your Heart Into It: How Starbucks Built a Company One Cup At a Time” and “Onward: How Starbucks Fought For Its Life Without Losing Its Soul”.  Read deeply enough and you are likely to find that Starbucks is simply the manifestation of Shultz’s love of coffee, the coffee experience and his stance/relationship towards ordinary people.

Schultz knows first hand what happens to people and families when people are not treated well, recognised, acknowledged, not given an opportunity to develop, to progress, to shine.  So is it a surprise that he fought so hard to give the barista’s – part time employees – pay and rights (including medical coverage) that were unheard of in the retail industry?

What happened when he handed over the reins?  Starbucks did lose its soul – the person who replaced Shultz was not Schultz and did not live Shultz’s philosophy  when it came to the quality of the coffee, the coffee experience, how people should be treated…..  Incidentally, I do know that Howard Behar and is philosophy about people and relationships complemented and made a big impact on Schultz and how he ran Starbucks.

Final thought

Be skeptical of any and all ‘secret sauces’ that are put forward.  Why?  For any phenomenon a multiplicity of stories can be constructed to explain and give meaning to that phenomenon.  The number of stories is limited only by the imagination and the number of voices that get to speak and be heard.  Furthermore, perhaps the challenge is to come up with, create, construct ‘secret sauces’ rather than find existing ones.  Where would Apple be if it had looked for the ‘secret sauce’ rather than invented it?  Where would Starbucks be?  Where would Facebook be?  Where would Google be (remember that Yahoo was the master of the online universe then)?

Howard Schultz/Starbucks: 18 insights and lessons from a customer experience master

It is worth learning from the masters

You may have noticed that I am an avid student of all things customer.  Over the last few months I have been reading Onward by Howard Schultz and I have found it to be an insightful and inspiring read – I recommend you buy it and read it!

Perhaps, I love the book because it validates my point of view (bias) on customer-centricity and customer experience – as a philosophy rather than a strategy or simply tactics (I’ll get into that distinction in a follow up post).  For today I simply want to share with you some stuff in the book that resonated with me in the hope that you may find it useful too (any stuff in bold is my doing).

18 insights / lessons from Howard Schultz

“A well built brand is the culmination of intangibles that do not directly flow to the revenue or profitability of a company, but contribute to its texture. Forsaking them can take a subtle, collective toll.” (p23)

“I always say that Starbucks is at its best when we are creating enduring relationships and personal connections. It is the essence of our brand, but not simple to achieve. Many layers go into eliciting such an emotional response.  Starbucks is intensely personal.” (p23)

“Unlike other brands, Starbucks was not built through marketing and traditional advertising.  We succeed by creating and experience that comes to life, in large part, because of how we treat our people, how we treat our farmers, our customers, and how we give back to the communities.  Inside the company, there had always been an unspoken level of trust….” (p27)

“I suggested something to the group as the ideas began to percolate. “The only filters to our thinking should be: Will it make our people proud? Will it make the customer experience better? And will it enhance Starbucks in the minds and hearts of our customers?”” (p75)

In my head I knew that no silver bullet would transform Starbucks overnight, but in my heart I was on the lookout for a big idea – what would be the next Frappucino, the most successful new product in Starbucks’ history?” (p75)

“But there was an even more important reason that I chose to eliminate comps from our quarterly reporting. They were a dangerous enemy in the battle to transform the company…….The fruits of this comp effect could be seen in seemingly small details. Once I walked into a store and was appalled by the proliferation of stuffed animals for sale.  “What is this?”  I asked the store manager in frustration…..The manager didn’t blink. “They’re great for incremental sales and have a big gross margin.” This was the type of mentality that had become pervasive. And dangerous.” (p89)

“In any well run retail business, there is, by definition, a maniacal focus on details……..In 2008 I felt very strongly that many of us had lost our attention to the details of our business…..Like a doctor who measures a patient’s height and weight every year without checking blood pressure without checking blood pressure or heart rate, Starbucks was not diagnosing itself at a level of detail that would help ensure its long-term health….We thought in terms of millions of customers and thousands of stores instead of one customer, one partner and one coffee at a time. We forgot that “ones” add up.” (p97

Their instruction at this “seeing” exercise was to consider each retail experience not as a merchant or an operator, but from the point of view of the customer. What did they witness, smell and hear? What non-verbal cues enhanced the experience? ……That journey helped put our leaders back in customers’ shoes, providing an enlightening and for some emotional exercise that underscored how important it was to put the customer at the centre of every meeting and business decision.” (p107)

“Starbucks coffee is exceptional, yes, but emotional connection is our true value proposition.  This is a subtle concept, often too subtle for many businesspeople to replicate or cynics to appreciate. Where is emotion’s return on investment? they want to know. To me, the answer is clear: When partners like Sandie feel proud of our company – because of their trust in the company, because of our values, because of how they are treated, because of how they treat others, because of our ethical practices – they willingly elevate the experience of each other and customers, one cup at a time.” (p115)

I have always believed that innovation is about rethinking the nature of relationships, not just rethinking products and as Michael explained how Ideastorm was helping Dell listen to customers and improv its products and services…..Thee was definately something here for Starbucks.  A chance to reconnect with customers we had lost touch with.” (p120)

“..one of the most important pieces of advice I’d heard upon my return…….”Protect and preserve your core customers.”…..”The cost of losing your core customers and trying to get them back in a down economy will be much greater than the cost of investing in them and trying to keep them.“” (p129)

“Some corporations are built, or rebuilt, on data driven business plans and hired guns with formulaic strategies. They may succeed, but they lack soul.  Starbucks is, by its founding nature, different……..transformation was not only about tightening nuts and boltsIf we did not also feel, if we did not have conviction in our values and believe that we really were in the business of human connection – on our farms, in our offices, in our stores, in our communities – then we were doomed.  We had to preserve our humanity.” (p131)

“But what many or our people had in spirit they lacked in business acumen and tools…….We also observed too much waste…….Something subtler was being wasted: our people’s time and energy……The fault did not lie with our people in the stores.  They were doing the jobs they had been asked to do with the resources and training they’d been given.  For all the brand’s marketing success, Starbucks needed a more disciplined operations system…..” (p145)

Growth had been a carcinogen. When it became our primary operating principle, it diverted attention from revenue and cost saving opportunities, and we did not effectively manage expenses……..Then as consumers cut their spending, we faced a lethal combination – rising costs and sinking sales – which meant Starbucks economic model was no longer viable.” (p149)

“As I stared at the list of 600, a lesson resonated: Success is not sustainable if it’s defined by how big you become.  Large numbers that once captivated me – 40,000 stores – are not what matter. The only number that matters is “one”. One cup. One customer. One partner. One experience at a time. We had to get back to what mattered most.” (p152)

“Kristen summed up Lean’s benefit well: “We were spending too much of our time fixing moments , but not actually solving problems. But fixing moments, like mopping a dirty floor, only provides short-term satisfaction.  But take the time to understand the problem – like how to keep a floor from getting so dirty in the first place – solves, and maybe eliminates a problem for the long term.”” (p278)

“At it’s core, I believe leadership is about instilling confidence in others..” (p302)

“There are companies that operate huge global networks of retail stores, like us.  Others distribute their products on grocery shelves all over the world, like us.  And a few do an extraordinary job of building emotional connections with their customers, as we have learned to do.” (p311)

My recommendation

Buy the book – it is a great read and has lots of real world lessons and insights.  For most business people it is likely to be a challenge because Starbucks is Starbucks because it is not built on nor operates on conventional business wisdom and practices.