A Diffusion Analysis of Howard Schultz's Pour Your Heart Into It

By Beth Ardoin

4/15/2000

 

 

Howard Schultz's book, Pour Your Heart Into It, chronicles his interactions in the creation of the company we know today as Starbucks. While it is written as one man's commentary on decisions, consequences, triumphs and failures, it is also a great study in successful diffusion of an innovation.

 

From the very beginning of the text, there are references to techniques and categories that can be found in the study of diffusion. The title for the first set of chapters, "Rediscovering Coffee …" alludes to the redefining coffee as more than a commodity. The first chapters talk about how Schultz learned of Starbucks, and his excitement in getting involved in the start-up company with three stores and a world of possibilities. And, he talks about persuading the original owners to allow him to become a part of the company.  From the start, Schultz saw the Starbucks Coffee Company as reinventing coffee, from an ordinary, average tasting, morning pick-up, to creating a feeling, an aura, a mystique.

 

The master of diffusion concepts, Everett Rogers, would classify the three main characters as "ups". Orin Smith is thoughtful, reserved and wise. He is probably an early adopter.  He seems to use the ideas of the Howards (Howard Behar and Howard Schultz) and bring them to life. He is very intelligent and even initiated many changes internal to the company when funds were needed to compensate for the increase cost of beans and low Christmas sales. Howard Behar borders between innovator and early adopter. He brought many new ideas into Starbucks, mainly by listening to the requests from customers. He is an intelligent, loud, self-confident, outspoken visionary and antagonist.  His level of self-confidence and his clique (more outside of the company than inside - drawing new ideas into the company) classify him as the venturesome innovator.  Howard Schultz is definitely an innovator.  He, like many innovators, is quick to action, quick to judge, not easily swayed from his goal, and passionate about his "vision". Having successfully diffused several ideas into the company, he is confident and has the funding (or channels to funding) to take risks. These traits of the business side of the men, combined with their dedication to the company, have helped successfully diffuse Starbucks to worldwide recognition.

 

Much of the success of Starbucks is directly related to Schultz's innovative character and his mode of communication. According to Rogers, two traits of innovative companies include: larger companies and companies whose management is innovative.  This holds true for Starbucks.  Frappacino for instance, would not have gotten off the ground with the original Starbucks Coffee Company. Jerry was not the innovative type and the tightly connected group with little research funds would have rejected the item for lack of funds. But the large company, although it initially rejected icy coffee, still tested, refined, field tested and finally clustered to a larger company (Pepsi). Thus, innovativeness seems to permeate throughout Starbucks.

 

Schultz strength in communicating is another trait. Each time he needed cooperation, he used interpersonal communication rather than mass media: first in selling his ideas to venture capitalist, then to the employees of Starbucks after the buyout, still later in communicating to the shareholders each year and in advertising the opening of new stores. Schultz is aware that the innovators will come to Starbucks because the shop is considered chic.  Instead of advertising to the "ups," he focuses on bringing in the "downs."  He accomplishes this by using interpersonal communication rather than mass media. He even states, "word of mouth, we discovered, is far more powerful than advertising" (p. 116)

 

Another reason for Starbuck's success is the connection between the local change agents and the company.  Starbucks involves local professionals, politicians, and charities in opening stores in a new city. These locals act as change agents and become a tie between the company and the city. Their knowledge of local culture and customs create a social relationship between the company and the city, thereby assisting in persuading locals of the compatibility Starbucks with their city.

 

Compatibility was noted throughout the text.  In buying out similar type stores and getting the  previous owners involved in Starbucks, they show they are compatible with the old system (the similar store) thereby keeping most of that clientele without alienating them. In a second example of compatibility, new products are tied in closely with the old; Frappacino, ice cream, and beer present new products that are close to the base product….high quality, dark roasted coffee. Therefore, customers get the experience of something new (like Frappacino) closely tied to the old (well known Starbucks’ flavor and quality). Another example of compatibility is in their selling of local commodities.  This gives each store a slightly different look (so it is not so cookie cutter-big business) and offers the “flavor” of the city. This clusters their new product (coffee) with new designs (on cups, posters, etc.) tied to old ideas (symbols of the city.)  Also, by owning the own stores, there are quality controls keeping the product consistent between stores, cities and countries.

 

Several characteristics of organizational innovativeness are evident. Usually, the type of leader tends to flavor the rest of the company. Schultz is very innovative and encourages ideas from within the company. Still there is a degree of centralization in that Schultz likes to decide which innovations will to diffuse and which to reject.  There always seemed to be some organizational slack (extra funding within the organization or from outside partnering) allowing new ideas to be researched or produced.

 

Customers new to Starbucks must go through the innovation-decision process. First they are introduced to the idea, probably by interpersonal communication. Then in the persuasion stage, some interaction with a change agent helps to induce this new behavior. The person, individually, must decide to give the dark roasted coffee a try and then goes to the store. The smell of the coffee and then the taste confirms this as a good decision or persuades the individual to reject. The process repeats to varying degrees until going to this "third place" become habitual (or ceases). If it is implemented, it is likely to become a routine.  Starbucks prides itself on its “repeat business.”

 

Rogers states that change agents often assume that adoption of a given innovation will bring about only positive results. this is not always true. I wondered about what Rogers calls "equity," how the socioeconomic benefits are distributed in the system. For example, Starbucks, in its first year of grants to Guatemala, donated $75,000. The grants were earmarked for growers struggling to feed their families; these are probably coffee growing laggards.  How, I wonder, will this imbalance the social system? Like the steel axes for Aborigines, will the imbalance change the social system for the worse? How will the changes in Guatemala affect the other coffee growing countries? Will this likely clear more forest for coffee plantations, and if so, what are the consequences to the wildlife? If Starbucks ceases funding grants to Guatemala, what will the people who have come to depend on these funds do to survive?  I don't have these answers, and they are not provided in the text, but they are worth investigating.