John Shook's Lean Management Column

A Lean "Teachable Moment": Starbucks in The Wall Street Journal

I like to keep my consulting relationships quiet. Nothing like a provocative piece on the front page of The Wall Street Journal to blow any quietude out of the water.

This week's Journal featured an article titled: "Latest Starbucks Buzzword: 'Lean' Japanese Techniques." The article referenced me as the 'former Toyota executive who has been advising Starbucks on lean methods." You can also find a free version of the article here.

The blogosphere – the Journal on-line comments space and other websites – is buzzing. Starbucks is a huge flashpoint for bloggers anyway. Many folks hate and many folks love Starbucks. Many folks seem to hold both feelings about the company. Some seem to love hating them.

I won't comment on everything in the article nor will I reply to all the things being said in the blogosphere. But, there are a few matters that call for being set straight, key among them the charges (we've heard this before, from industry after industry as it encounters lean) that lean is nothing more than an efficiency campaign that is indistinguishable from Taylor's scientific management; and, that Starbucks baristas will become robots as Starbucks seeks to equal fast food joints in labor efficiency.

Of course, that is all far from the truth.

The problem with Taylor's Scientific Management: Who is the scientist when it comes to process improvement? Scientists must see real work to do science on the work.

Previously in this space, we've discussed the unscientific nature of most interpretations of Taylor’s scientific management. Those misconceptions seep into the dialogue of even very experienced lean practitioners.

There is a technical side of lean that seeks to make production – all production, all services, all work – flow from beginning to end as efficiently and effectively as possible. Traditional industrial engineering practices – including the ideas of Frederick Taylor – play a critical role in those aspects of lean.

Lean Thinkers (from Toyota Production System developer Taiichi Ohno to MIT lean production research team leader Jim Womack) credit Henry Ford with first establishing flow production, a precursor to the lean enterprise. Henry combined interchangeable parts with the flowing assembly line and showed it to the world. Production hasn’t been the same since.

Toyota then evolved Ford's flow production in two critical ways. First, technically, Toyota figured out (with great benefit for the customer) how to achieve flow production in lower volume, high-variety environments. Ford's flow production worked best when offering only "any color you want as long as it’s black." But, customers eventually demanded more variety. And when faced with the need to respond, Toyota showed us that flow is possible even in complex product mix environments.

Toyota's most radical innovation.

Toyota's second, and most radical, innovation was to answer the central problem that came with Taylor’s Scientific Management: the inhumane treatment of workers doing manual labor. Toyota revolutionized the technical side of lean production with the inclusion of product diversity into the production flow. But more importantly, Toyota revolutionized the social dimension of work, respecting workers brains as well as their hands. So factory workers become knowledge workers.

Toyota combined old IE Scientific Management principles and techniques with social dimensions appropriate for the modern world. Even workers who do "manual labor" with their hands are knowledge workers. Front-line employees become the scientists.

By redefining roles, Toyota changed the answer to the question of who is the scientist in scientific management.

The march of civilization is usually considered to progress from the Agrarian Age (with the Agricultural Revolution) to the Industrial Age (with the Industrial Revolution) to the Information Age (led by the knowledge worker).

So, Starbucks...

It seems that in early stages of embracing lean or any process improvement methodology, practitioners inevitably misunderstand and go through a period of neglecting the social dimension of lean. They try to determine the One Best Way to do work and then deploy (roll out) that Way, in a programmatic way, seeking compliance. What is especially interesting in the Starbucks case is that they can't even HOPE to do that, not with 10,000 stores in North America managed by kids managing part-timers to provide a high-end product and service. So Starbucks is working out a way that could be revolutionary. It leads to a better way of working for baristas that brings even better service for customers. And, oh, by the way, tremendous cost savings can come along, as well.

The way Starbucks has chosen to incorporate this new way of working is revolutionary. Traditional companies too often try to implement lean (or perhaps traditional industrial engineering, or six sigma or process reengineering), in a programmatic way. They do it that programmatic way because … simply because they can. Starbucks, on the other hand, couldn’t approach change on its massive, diverse level in a programmatic, straight-forward, cookie-cutter way. Not and provide the kind of unique, customer-oriented service they want to provide. They had to do it a different way. They have no choice but to do it the right way – through involving the people who do the work.

The comparison with McDonalds is erroneous and misleading. McDonalds very business model seeks a highly cookie cutter approach. Therefore, McDonald's may be successful in implementing traditional Industrial Engineering (Taylorism and all that – not lean) in a very traditional, top-down, programmatic way.

Starbucks decided long ago – and reconfirms this every day – that a cookie-cutter store approach is not the pathway to success for their product, which is a higher-end, higher-priced coffee that emphasizes the customer’s experience. (That is Starbucks’ explicit aspiration. Many people hate Starbucks. Some hate it because it is too upscale, over-priced, and pretentious. Others hate the taste of the coffee, complaining that it is too strong, too weak, too "burnt." Some call Starbucks loyalists with their particular espresso demands "coffee snobs" while there are also extreme coffee connoisseurs who consider Starbucks coffee to be undrinkable swill. You may or may not appreciate Starbucks' aspirations or agree or disagree that it meets them – that is not the point of this discussion.) Each Starbucks store is different. The footprint is different, the customer experience is different. I believe Starbucks wants the customer experience from store to store to be consistent but unique. McDonald’s wants the customer experience to be exactly the same, totally common from store to store.

Starbucks wants the customer to enjoy the experience of being in the store, of interacting with the barista, of hearing the barista call his or her name. Starbucks wants the customer to appreciate the fact that the barista is highly skilled at crafting each drink to perfection and to the customer’s satisfaction.

In each of Starbucks 15,000 or so stores (the gemba or place of work for over 100,000 employees), the next customer to walk in the door may order any of over 80,000 drinks from the nearly infinite available combinations. And then there are those custom drinks, with "quad shots" of espresso (popular with students during final exam week).

Far from becoming robots, think of the best bartender or waiter/waitress you've ever seen. Remember marveling at how he or she could handle orders coming from all directions, without missing a beat. That’s what Starbucks wants from its lean initiative.

Instead of barista's having to stop to search for things that are in the wrong place, or aren't there at all, the goal is to make as many things as possible routine so that the barista can spend just a few more seconds talking with the customer. That's the goal. No workarounds due to the line backing up, no short-cuts to get caught up – handling each unique order as it should be handled, in stride, without burden, and to the customer’s satisfaction.

No doubt McDonald's wants its customers to be just as happy, but they want to achieve that by making every experience exactly the same. Therefore, there is no problem with designing the work (with good Industrial Engineering built-in) at headquarters and then rolling that work design out to the masses. In other words, I would argue that McDonald's and the others aren't doing lean, but Industrial Engineering. The technical side of lean without the social side isn’t lean at all.

Starbucks is approaching lean with the intent of providing their baristas with the skills to do better work design on their own, as they go along. This is in total contrast to the uninformed charge that baristas are being made into "robots." If that is what Starbucks wanted, there are easier means to get there than their chosen method of introducing the concepts to each store and asking the baristas to work on their own unique solutions suitable to their own unique situations.

Starbucks and beyond . . .

By the way, the lean transformation Starbucks is pursuing is possible for all service and retail industries. Many service industries – especially healthcare – are discovering the power of lean. But retail is still a state of nature - the way employees have to stock and restock goods, often having the wrong items in stock is a huge opportunity for retailers everywhere. Did you know that, on average, grocery shoppers fill their baskets with what they want only a little over 50% of the time?! Did you realize that a good 20% of the time, your shoe store doesn't have the style or size you need?! Do you remember the last time (this morning for me) you received service that made you want to scream or just roll your eyes?

Back to The Wall Street Journal, all this publicity is probably unfortunate in the sense that Starbucks is still very early in its lean journey. Starbucks is approaching lean the only way it can, and has been very slow and methodical in developing it in a way that fits its Starbucks culture. It is fantastic that as a result of all this Starbucks may be able to provide a great model for other service and retail companies to learn from. But that's a big maybe (underlined, italicized, bold) – it's way too early to tell about that. I’m happy that they're trying and learning.

john

John Shook, Senior Advisor
Lean Enterprise Institute, Inc.

Summary of evolution of lean – from Chicago meat packing to Starbucks

Chicago Meat Packing -> Henry Ford -> Toyota -> Starbucks

Chicago Meat Packing and the technical side of lean production -> the disassembly line

Henry Ford and the technical side of lean production -> the assembly line

Toyota -> revolutionized the technical side of lean production with inclusion of product complexity (for customer benefit). More importantly it revolutionized the social dimension, respecting workers brains as well as their hands (so factory workers become knowledge workers, the scientists).