The Transformation Agenda

transformation agendaOne of the toughest jobs for any marketer is to repair a damaged brand. Sometimes, it’s not repairing damage, but simply changing the attributes that the market associates with the brand. In early 2008, Howard Schultz of Starbucks was faced with this challenge. Starbucks, while a well recognized brand, had become associated with cookie-cutter coffee houses and mediocre expresso drinks. Their stock had fallen by almost half, and Howard Schultz, the founder, had returned as CEO after several years away from running the day-to-day business.

Schultz re-invigorated the Starbucks brand through what he called the “Transformation Agenda”. This was a concept he borrowed from Michael Dell, and it allowed him to articulate on a single page his vision, his strategy, and the key moves or tactics that he would take to transform the brand. He communicated this Transformation Agenda through a series of 15 memos to Starbucks Partners (their word for employees) in his first four months after returning as CEO.

As Agile Marketers, we can use this concept of the Transformational Agenda to articulate our own vision for where we want to take our brand. We can use it as a roadmap for a series of Sprints to take us on a long journey of transformation.

The Transformation Agenda Statement

My template for a Transformation Agenda, which borrows from work done by the New Directions Consulting Group, which in turn was based off the work of Howard Schultz and Michael Dell, begins with a brief statement of the Transformation Agenda. This paragraph must paint a picture of the destination: where are we going, and why do we want to go there? This is the pitch that inspires everyone to come along on the journey.

Examining the memo that launched Howard Schultz and Starbuck’s Transformation Agenda, I cannot find a crisp statement of the transformation agenda. It was conveyed in fragments: “We will now shift our emphasis back onto customer-facing initiatives”, “capitalize on our heritage to drive our successful future”, “there are certain integral aspects of our company that will not change at all”. The agenda at this point was a quintessential founder statement – we’ve strayed from what made us great, and I will bring us back to greatness.

For most of us, we don’t have that kind of heritage or founder to draw on. We have to articulate a new direction, which must be compelling and different, while at the same time retaining the best of what exists today. The Transformation Agenda statement should paint the picture of the future in a succinct but concrete fashion. It must be clear about how this is a new direction, while tying the change to the current foundation of the brand. Crafting this statement is a challenge. Generally, one person, the CEO or the marketing leader, must own the germ of the ideas that are embodied in the statement. But others must be involved in crafting its final form. I’ve always said that people support what they help to create, and the transformation agenda is no exception. Your leadership team must be involved and committed to the transformation agenda. Without that commitment, the statement won’t result in change.

Your Big Moves

The New Directions Consulting Group separates these big moves from strategies, but I prefer to keep things simple. Big Moves are your Strategies. They are the pillars of your transformation, and the fewer, the better. I’d suggest no more than five. Starbucks had seven big moves, as follows:

  1. Be the undisputed coffee authority
  2. Engage and inspire partners (staff)
  3. Ignite the emotional attachment to customers
  4. Expand global presence while making each store the heart of the local neighborhood
  5. Be the leader in ethical sourcing and environmental impact
  6. Create innovative growth platforms worthy of Starbuck’s coffee
  7. Deliver a sustainable economic model

The language is simple, direct, but inspirational. The goals are specific to Starbucks, not generic (not “Be the leader in our industry”, for example). Each statement is broad enough to be strategic, but specific enough that it can be translated into concrete actions. Take “Ignite the emotional attachment to customers”, for example. One issue for the old Starbucks was the use of semi-automatic expresso machines. The machines were tall, too tall for the customer to see the barista at work. Shortly after Howard Schultz came back, he introduced the Mastrena machine, which was 4-5 inches shorter, and allowed the barista and the customer to make eye contact. This was an important tactical step to address the strategy of igniting emotional attachement to customers.

Concrete Enhancements

Words are not enough to transform a brand. It will take concrete enhancements and changes. In my template for the Transformation Agenda, I’ve suggested that you list concrete enhancements in five areas:

  • Product and/or Service enhancements
  • Customer service enhancements
  • Operational enhancements
  • Staff development enhancements
  • Technology enhancements

For those of us in the technology business, there may be some confusion as to the difference between product and/or service enhancements and technology enhancements. If you improve the technology that you deliver as a product or service to your customers, that would fit under product and/or service enhancements. However, if you use technology internally in order to improve some other aspect of how you operate, or how you deliver customer service, but it’s not part of your product or service offering, that’s a technology enhancement. For example, we recently implemented Github, a web-based service for hosting our product development. Our customers will never see Github, instead, they will see the improved productivity and quality associated with using the technology. Starbucks embraced social media and customer relationship management tools like Salesforce.com’s community management technologies. These are not products or services themselves, but helped Starbucks deliver better products and service.

Looking at the template, you may be tempted to relate each column of the enhancements section to the Big Move above it. That’s not what I intend. Any big move, any strategy, will likely require enhancements in multiple areas. For example, for Starbucks to make each store the heart of the local neighborhood could require product and/or service enhancements (offerings specific to that location), customer service enhancements (service in Tokyo might be different than service in lower Manhattan), operational enhancements and so on. Think through the enhancements for each Big Move. Some enhancements may contribute in multiple ways. The above mentioned Mastrena machine not only helped improve the emotional attachment to customers through its lower profile, it also delivered a better product, particularly for steamed milk drinks.

Transformation Takes Time

Howard Schultz came back to Starbucks in January of 2008, and announced his transformation agenda at that time. By November of 2008, Starbucks stock had continued to fall, from about $23 a share when Schultz retook the reins as CEO to a low of $9.10 a share on November 20th. Today, Starbucks trades at around $63 a share. Clearly, his transformation agenda did not succeed overnight, and in fact, public perception continued to worsen for almost a year afterward. Not until the enhancements of 2008 started to show fruit in 2009 and beyond did the stock resume it’s upward trend, and Schultz was credited with a successful turnaround.

Remember that for your own transformation. It is unlikely that you will be able to transform a brand image in anything under 6-12 months, depending on the size of the company and the seriousness of the problem.  Set the expectation that it will take this amount of time to realize the fruits of your labor. Look for other, early indicators of success. These will vary by business, but may show up as anecdotes, individual customer success stories, etc.  Celebrate these successes, as they will help keep people committed to the tough work of transformation.

What do you think? Have you had to transform your brand? How have you accomplished it, and do you find the idea of a transformation agenda useful?

Comments

  1. Nice article Jim (Transform or die !)

    Would like to hear your further thoughts on specifically
    “Staff development enhancements” & “Technology enhancements”.

    Feel these are the ones that are most difficult to measure,
    and really need to be forward looking on how it can transform
    the future. The balance on when, how, where is always a difficult
    choice ..

    • Jerry, thanks for the comment. The specifics vary by business. I’m reading Onward by Howard Schultz right now (which inspired the post), and they closed all Starbucks worldwide for an evening to retrain all their baristas, trying to make sure that they were making the perfect cup of expresso. It cost them millions, and made them the butt of jokes by Stephen Colbert and others. On the technology enhancement side, they embraced Social Media, in particular implementing something they called “Green Storm” (the code name), where customers could provide feedback and vote on ideas for improvements to Starbucks.

      In reading Onward, I was struck by Howard Schult’s passion: he didn’t try to strike a balance, he threw himself and Starbucks into what he thought mattered, almost regardless of cost. Lots of people told him he was crazy closing the stores and admitting publicly that their baristas weren’t making the best expresso, but he felt like it was the right thing to do. Sometimes you have to follow your heart, not your head . . .

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