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Interesting story in Business Week about how Starbucks is about to introduce two new drinks this week – a Dulce de Leche Latte and Dulce de Leche Frappuccino, both of which are described as “luxurious taste treats.” More than that, these drinks indicate both “how the Starbucks marketing machine conjures and sells café romance to millions of people around the world” and “how a company…is struggling to hold on to its soul.”

According to the story, “concocting a drink is never simple at Starbucks. The research-and-development department routinely tackles 70 beverage projects a year, with 8 of them leading to new drinks. A drink must not only appeal to a broad swath of coffee drinkers but also be easy for a barista to make quickly so as to maximize sales per store (hello, Wall Street)…and yet it must seem as though the drink is being handcrafted specially for the customer.”

It is a tough balancing act, one that can take years of research and development – and it may be more important now than ever since Starbucks seems to be in a kind of public dance in which it tries to balance its desire for growth with the core values that have provided the foundation on which the company has been built.

At the same time, the Seattle Times offers an interview with Starbucks CEO Jim Donald – a food industry veteran of companies that include Wal-Mart, Safeway and Pathmark – in which he addresses the company’s priorities and values.

What we found interesting was how much focus Donald puts on maintaining a connection to Starbucks’ associates. For example, at one point he tells the Times how important it is “to retain the heritage and the history of this company, it is work to reach out and connect, to hire, to train, to keep the coffee culture within this company. [Pointing to a pile of letters:] These are personal notes I'm signing for partners [employees] in the U.K. I do this a lot — 33,000 times last year. I sign every note, so they know that it's authentic.”

And, addressing some of the negative press that Starbucks has gotten lately, Donald says, “Unfortunately, when we get mischaracterized, it's not the truth and we really get mad about it.

“Now you're right, investors say, ‘What about sales? What about profits? What about margins?’ That's what they want to know. Our customers are just saying, ‘Yeah, I see my latte. I need to get out of here.’

“Where it really affects this company is, our partners [employees] know the kind of company we are, and any time that we have to defend ourselves, not necessarily publicly but internally, we do, and it takes time.

“It's OK to be sensitive. It's OK to get a little rumbling in your belly before you get up to talk to 5,000 people. It means you care, you're concerned, you want to do what's right. If you just said, ‘Who cares what they say? It's not the truth,’ that doesn't work, not in a company that's connected to its partners like we are.”
KC's View:
Jim Donald has long said that a company’s leadership is only as successful as its front line employees. And we know from some personal experience (our son is a Starbucks barista) that the people who work there feel like assets, not costs and liabilities.

In the long term, that is the most important element in the company’s long-range prospects for continued growth and prosperity.