Layoffs at Starbucks!

When one thinks of high growth, innovation and the new corporate model – one of the first names that comes to mind is Starbucks. In recent days, Starbucks has been in the news because their CEO has announced layoffs, store closings and a slower pace of growth. What – a corner without a Starbucks coffee shop? The shake-up at Starbucks can serve as a lesson for any business or organization.

Growth

The bigger a company or organization grows, the harder it is to stay true to it’s “roots”. Even if quality and image are strictly controlled – as they are with Starbucks (like McDonalds), there mentality, vision and passion of the corner start-up is difficult to maintain. Having a clear mission and staying true to that mission is essential for every location and every employee.

Core Business

When I think about Starbucks I think about coffee, maybe something to nibble with the coffee and a place to work, meet clients or read the WALL STREET JOURNAL or NEW YORK TIMES. While some people may think of it as a place to buy CDs, coffee mugs, calendars or other items, I do not. And it seems that Starbucks began to stray further from their basics. The point – stick to your knitting (your core business).

People

Starbucks is not about coffee – it is about people. People take the orders, people prepare the coffee, people keep the locations clean, and people manage what could be chaos during busy times. There people are the face of Starbucks – not the CEO and not the headquarters staff. While Starbucks has been very public about how people-oriented they are (benefits, training, respect for employees), there is a slippery slope that will be created by lay-offs. A people oriented business that lays people off and shutters locations can soon become just like any other fast food outlet or massive retail chain – cold, impersonal and full of clock watchers.

Overhead

Organizations that grow love to create new positions, new rules, and new bureaucracies and new titles (each requiring their own staffs for “support”). This is not unique to Starbucks. But every dollar that goes to overhead steals a dollar from the customer-facing resources and also from the profitability of the enterprise. Headquarters, regions, areas – each with their own functions, executives and support staffs drain the life out of any business rather than invigorate them. As a business grows, unless every function can demonstrate in some way there are generating revenue or creating value, I recommend the function either be outsourced to support business with that core competency or incremental to “line” (profit-focused) responsibilities.

Down-sizing people and locations will not be the death of Starbucks. But any business or organization can learn from downside of rapid growth as demonstrated by Starbucks. The tendency to grow quickly, lose focus, to treat employees as overhead, to build non-customer facing staffs are not unique to Starbucks. But any entrepreneur or executive with a growing business would be well served to avoid the same pitfalls.


George F. Franks, III is the President of Franks Consulting Group, a Bethesda, Maryland management consulting and leadership coaching practice. Franks Consulting Group is on the web at:
http://franksconsultinggroup.com
George can be contacted by e-mail at:
gfranks@franksconsultinggroup.com

The Myth of Consolidating "Headquarters"

The buzz in telecom, especially in the Washington, DC metro area, is about Sprint-Nextel closing their Reston, Virginia headquarters location and shifting the focus to Overland Park, Kansas. While Sprint-Nextel is as good a textbook case as any on how NOT to integrate two large companies following an acquisition, the issue of retaining two headquarters is of particular interest.

Why ONE headquarters location? Other than the symbolism and the potential cost savings, it is fascinating that a technology company refuses to embrace technology themselves. Some points that the current and previous Sprint-Nextel executives should have considered include:
- Executives should be out with customers, employees and investors, rather than sitting in any headquarters location.
- Technology allows for both audio and video conference calls from anywhere at anytime.
- The idea of a singe headquarters location is as archaic as castles, forts and bunkers.
- Many companies no longer have a single, sacred board room but rather meet at a location where board members can stay overnight (the outsourcing of board rooms).
- Staffs, like headquarters are now virtual. There is no reason why a CEO cannot be in Silicon Valley, the CFO in New York and the Sales and Marketing Chief be in London while their staffs, perhaps with the exception of the Executive Assistants could be anywhere globally if they are truly the best and the brightest.
- If and when “all hands” executive meetings are held, they are best held, like board meetings, at an outsourced location where all can be away from the disruptions of any office and focus on the tasks at hand.

If technology has freed executives and their staffs from being “hard wired” to their offices, it does indeed appear odd that executives still claim the need and benefits of being co-located at a “headquarters” facility.

"Executives vs. Managers"

From the WALL STREET JOURNAL, November 14, 2007, Letters to the Editor:

"I read your article "Alcatel Stakes Turnaround on More Cuts" (Leading the News, Nov. 1) with great interest having worked for Patricia Russo both at AT&T's Business Communications Systems division and at Lucent Technologies, pre-Alcatel-Lucent.

I had anticipated nothing less than "more cost cuts, operational improvements and a slimmer management team" as her "much-anticipated turnaround plan" for Alcatel-Lucent. Those executives who cut their teeth at AT&T, including Ms. Russo, Carly Fiorina, Rich McGinn and Gary Forsee, had a formula for any crisis. It included: cut headcount, cut budgets, reduce senior management (especially those who were threats or outspoken) and always reorganize. From 1984 on, this formula played out again and again at AT&T and its spinoffs.

Anyone can lay off personnel, cut budgets and change an organization chart. It takes true genius and creativity to grow a business. Without that genius, executives at any level are just managers.

George F. Franks III
Bethesda, Md."

George F. Franks, III is the President of Franks Consulting Group, a Bethesda, Maryland management consulting and leadership coaching practice. Franks Consulting Group is on the web at:
http://franksconsultinggroup.com
George can be reached by e-mail at:
gfranks@franksconsultinggroup.com

George Patton's Words

With the renewed interest in all things related to World War II, it seemed an opportune time to share some of the gems spoken and written by the great battlefield leader General George S. Patton, Jr. One of the most controversial military leaders of the war, Patton was a great orator (in spite of his shrill voice) and a prolific writer. His favorite topic, other than military history, was leadership. Patton's words on leadership can provide us some insights and guidance today, in a world where "great" leaders seem to take the safe and politically correct path.

"Do not take counsel of your fears."

"Lack of orders is no excuse for inaction."

"There is only one kind of discipline. Perfect discipline."

"New tell people how to do things. Tell them what to do and they will surprise you with their ingenuity."

"There is a great deal of talk about loyalty from the bottom to the top. Loyalty from the top down is even more necessary and much less prevalent."

"When a decision has to be made, make it. There is no totally right time for anything."

"The more senior the officer, the more time he has. Therefore, the senior should go forward to visit the junior rather than call the junior back to see him."

"No one is thinking if everyone is thinking alike."

Although George Patton was talking about war, the points that he made about leadership are applicable today in business, the nonprofit sector and government.

Credit to PATTON ON LEADERSHIP by Alan Axelrod, a "Business Week" bestseller.


George F. Franks, III is the President of Franks Consulting Group, a Bethesda, Maryland management consulting and leadership coaching practice. Franks Consulting Group is on the web at:
http://franksconsultinggroup.com
George Franks can be contacted by e-mail at:
gfranks@franksconsultinggroup.com