Tales from the Strategy Vault

Tales from the Strategy Vault

Contributed by Denise Harrison

Starbucks: Differentiating between needs and preferences
After many years of significant expansion Starbucks had a slow summer. Starbucks is well-known for turning coffee from a commodity into a specialty product by enhancing (or creating) an experience. Growth for the company came not only from geographic expansion, but also additional products. The development of one new product occurred after Starbucks identified its customers' desire to have a cool drink in the hot summer months rather than the traditional coffee offering – hence the birth of Frappuccino. While this preference was correctly identified, Starbucks did not take into account a key customer requirement in its product design: speed of service. So when the lines grew due to the length of time it took to make a Frappuccino (significantly longer than a traditional coffee selection), Starbucks' customers went elsewhere. In order to solve this problem, Starbucks is installing faster blenders and automated pitcher washers.

Lesson learned: It is important to stay in touch with changes in customer preferences due to changing seasons (hot weather) and develop new products to meet these evolving preferences. Still one must assess how the new product meets the basic customer needs to fully understand the impact it will have on overall sales. In this case, Starbucks did not take the time factor into account and lost customers because they had to get to work.

Toyota: Shoots itself in the foot
Toyota strives to unseat General Motors as the leading automotive manufacturer. In order to achieve this goal Toyota set out to speed up its new model introductions. While they improved the Time-To-Market, Toyota found they needed to put on the brakes and tone down this strategy. Why? An increasing number of quality and recall problems haunted Toyota over the last 18 months. Why? In order for Toyota to speed new model introduction it chose to depend on computer-aided design models and deleted the step where physical prototypes were developed to test functionality. By reducing the speed limit on new product introduction Toyota hopes to regain its quality image. It is looking to design in quality at the front end rather than deal with the problems at the back end.

Lesson learned: Toyota's desire to speed up new model introduction was a good idea; however, they failed to look for ways they could shoot themselves in the foot by pursuing this objective. By assessing the risk they might have been able to put the checks and balances in place to prevent the quality issues and black eye they received in the press.

Ford: How much luxury is too much?
Historically, Ford tried to gain market share in the high-end luxury niche by buying Land Rover, Volvo, Aston Martin and Jaguar. This smorgasbord approach was not successful. Rather than focusing on one luxury brand, Ford had a complex set of offerings for a relatively small niche in the automotive market. Key to Ford's turnaround will be its ability to focus on a few key strategies. This may mean simplifying its luxury offering or getting rid of it altogether. Ford's ability to focus will be offset by its inability to streamline or delete these brands.

Lesson learned: Focus is important, don't try to dominate all market niches. Trying to be all things to all people dilutes your efforts in high potential areas and is extremely costly.

Denise Harrison is a Consultant with Center for Simplified Strategic Planning, Inc. She can be reached via e-mail at

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