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How Starbucks Creates Habits of Success
August 27,2013 [ by Larry Chao ] 40007 Read and 13 Comment

For loyal Starbucks patrons, doling out 120 baht for a Café Latte gourmet coffee experience is well worth the money. Part of that experience is the promise of pleasant, attentive customer service. What makes this possible is the ability of Starbucks to shape habits that lead to business success among its in-store employees.

But it wasn’t always this way. After Howard Schultz stepped down as president and CEO in early 2000, Starbucks stumbled. Its products and customer service often took a back seat to rapid expansion. Eventually, Schultz returned as chief executive in 2008. Part of his turnaround plan was to revitalize customer service.

In his remarkable book, The Power of Habit, Charles Duhigg examined how Schultz changed the way hundreds of in-store employees behaved, by strengthening their willpower to deliver outstanding customer service. Schultz’s intent was to make willpower and self discipline a core habit to drive competitive advantage.

In normal circumstances said Duhigg, in-store employees only need minimum willpower to deliver basic customer service such as service with a smile, fast order taking or offering food with coffee. But from time to time, things go wrong. A customer might explode in rage with an incorrect order, testing an employee’s willpower to deliver great service.

It is in these moments of truth, or “inflection points” that employees need additional willpower to stay cool and collected. Duhigg researched how Starbucks managed to do this and discovered that by anticipating and rehearsing how to react to specific confrontations with customers, Starbucks could boost its employee’s willpower to give courteous service through the most difficult times.

Moreover, with rigorous training, Starbucks inculcated willpower into all of its employees. The result: Willpower became a habit across the organization.

The emergence of this new habit was priceless during Starbucks turnaround, when it needed consistent, great customer service. Former Starbucks president Howard Behar put it aptly: “Our entire business model is based on fantastic customer service. Without that, we’re toast.”

So why does preparing employees to manage their emotions and muster the willpower to deal with even the most confrontational inflections work? How did willpower into an organization habit, rather than a once- off management fad?

According to Duhigg, the theory of creating new habits is all about changing a person’s regular behaviors or routines. To do this one needs to understand three things: (1) what triggers a person’s routine, (2) the routine itself, (3) what rewards the routine.

Anyone who has struggled to quit smoking or drinking knows this only too well. For example, the trigger for an alcoholic might be when he is confronted by a difficult problem. The routine might be to drink whiskey. The reward is temporarily forgetting about the problem.

If the alcoholic can understand the benefits of drinking and replace it with a better routine to achieve the same reward, then he can create a new habit. So instead of drinking, maybe he tries to gain relief from the problem by talking about it with others. He still achieves the reward, but he has replaced the dysfunctional routine with a constructive one. This in fact is how Alcoholics Anonymous works.

Likewise, Starbucks recognized the need to replace poor routines – impulsive behavior and knee-jerk reactions when customer became irate, with more acceptable routines that enhanced employees’ willpower.

Preparing how to behave beforehand is the key. To do this, Starbucks provided employees with detailed instructions on how to handle each type of difficult customer interaction. These instructions were translated into well defined routines for how employees should handle specific conflicts, like impatient customers waiting in line.

Then, using role plays and rehearsals, employees rigorously practiced how to use these routines until they became second nature. The benefits and results were striking. Whenever an employee felt his willpower waning in the face of an aggressive customer, he would fall back and use the routine he had practiced so hard to boost his willpower. With this new routine, he still received the same reward – happy customers, praise from his boss, but was able to deliver better customer service more consistently.

Larry Chao is managing director of Chao Group Limited, an organization change and training consultancy based in New York and Bangkok (www.chaogroup.com)


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