Lean Without Daily Management? Here’s What Happened at Starbucks

My first experience with lean came as an employee of the Starbucks Coffee Company. In 2007, I was managing a café for Starbucks in Portland, Oregon. I had been hired as a barista a few years earlier and had worked my way up to store manager.   

Exploring the Problem 

A recent introduction to lean had made me and my team acutely aware of waste. Our shop had been chosen to become a “model lean café.” Freshly enlightened and empowered, we examined one value-creating process after another: making and serving tasty drinks and food, maintaining a clean and welcoming environment, fostering friendly connections with customers. 

We identified a big opportunity for waste elimination with brewed coffee. Not only were we pouring leftover coffee down the drain several times every hour; we were also throwing away unused ground coffee when it expired at the close of business. Every day, several pounds of coffee went to waste. 

At the same time, we were frustrating customers. The quality and availability of brewed coffee—our signature product—were inconsistent. That’s right. We were both brewing too much coffee, leading to waste, and not brewing enough at the right time, leading to stockouts. (Is it just me, or do you also see the problem of too much and too little everywhere?) 

Quickly doing the math, with tens of thousands of stores worldwide, brewed coffee alone was causing tens of millions of dollars in annual waste for the company. Keep in mind, this was happening at the onset of the world financial crisis in 2008, which put the company under tremendous financial pressure. Fewer people were coming into stores. Each customer held the potential for repeat business or lost revenue.

Guided by experienced lean coaches, my store team and I ran a series of experiments. We eventually developed a “repeatable routine” for grinding and brewing just the right amount of fresh coffee, at the right time, with minimal waste. It wasn’t a fancy process, but it worked—saving our prime resource (coffee) and satisfying valuable customers.

Shortly after this innovation in the work, I was invited to join a new “lean team” at the headquarters in Seattle. There I led further development and testing of the coffee routine across a variety of store environments. We trialed it in places like Penn Station in New York City, where the brewed coffee volume was extraordinarily high, and in suburban drive-thru stores outside Seattle, with very different flow and staffing dynamics.

When it came time to scale the validated routine company-wide, we tried something different from the usual protocols. Instead of issuing top-down instructions—Thou shalt brew coffee in this new way—we guided regional, district, and store managers through a leader-led process that mirrored A3 problem solving and coaching: 

1. We set direction and framed the problem.  
   Customers were unhappy with inconsistent quality and availability, stores were wasting product, and the company was losing money. 
2. We asked them to “go and see.”  
   Managers observed the brewed coffee process and the customer experience in their own stores, collecting real facts and data. They were not asked to simply trust corporate’s claims about the problems.  
3. We taught the routine.  
   Using Job Instruction (from Training Within Industry aka TWI), we provided step-by-step training to regional directors. Those directors taught their district managers, who then taught their store managers. Finally, store managers taught their team of baristas. 
4. We invited adaptation.  
   Teams were encouraged to “make it yours”—to customize the routine based on their store’s unique layout, staffing model, and customer traffic—as long as a clear set of safety and quality standards were followed. In other words, each store team created their own standardized work to uphold clear work standards. 

Brewed coffee waste was cut in half and availability improved significantly. But our goal was to go beyond implementing a better brewing routine; we wanted to build problem-solving capability across the company. For that purpose, brewed coffee was only one in a series of “better way” implementations. Other processes such as making espresso-based drinks received similar attention and treatment.

At the time, it felt like winning. And in many ways, it was. So much so that the company moved on to other initiatives. CEO Howard Schultz even wrote a book titled Onward, effectively declaring victory.

Failure to Build Sustainability 

But in terms of transforming Starbucks into a lean enterprise, it was all premature. The company was far from reaching its full potential as a continuously improving organization. More concretely, successful measures like the brewed coffee routine didn’t fully stick.

Frankly speaking, when I left the company in 2013, I felt dejected. I had experienced the all-too-common pattern of improvements followed by backsliding. Fortunately, John Shook introduced me to the Lean Transformation Framework when I joined the Lean Enterprise Institute (LEI) later that year. He asked me to use it for reflecting on my Starbucks experience. Doing so would alter my perspective.

My first attempt—assessing the company’s overall transformation—felt overwhelming. So, I narrowed in on just the brewed coffee initiative. By applying it to something discrete that I could get my head around, I began to see things differently. Although my reflection was narrow and deep, the insights that emerged were both profound and broadly relevant.

My greatest learning came from reflecting on the company’s management system—to the extent Starbucks had one—for making change. As I described earlier, the lean team guided operations leaders and store teams through improving processes, such as brewed coffee, in a methodical problem-solving way. While this system was effective, it was also quite limited. It did little for sustainment, much less continuous improvement.

In other words, we had improved the work, but we had not established “daily management.” What I mean by that is we didn’t create mechanisms for continually monitoring the process’ performance. We didn’t build in capacity—say, in a team leader role—for rapid response when things went wrong. Simply put, there wasn’t a good way to see problems and respond; to keep everyone improving and learning. Ultimately, the gains could not be sustained.

Reflection prompt 

For the latest change you made, what systems did you put in place for sustainment and continuous improvement? What mechanism(s) did you set up for ongoing, frequent PDCA?  

Editor’s Note: Missed the beginning of the series? Read “Reflections on Lean Transformation and Management: Introduction.”