Posts Tagged ‘Starbucks’

Richard Florida
by Richard Florida
Wed May 20th 2009 at 1:00pm UTC

Starbucks and the Economic Crisis

Wednesday, May 20th, 2009

The Seattle Times Jon Talton suggests the coffee-maker’s ongoing financial problems may be an “artifact” of deeper economic troubles:

“What if Starbucks is an artifact of an economy that’s not coming back? A time of rising, if fleeting, American affluence as we moved from dot-coms and telecoms, to day trading and house flipping, all based on the biggest run-up of debt in the history of the world. For this venti, triple-shot America, it might have been the quintessential bubble drink…

Although Starbucks suffered a 77 percent drop in its fiscal second-quarter net income, it actually beat analyst’s expectations slightly. Its shares have been generally rising since March and have outperformed the Standard & Poor’s 500 Index… Still, same-store sales remain in negative territory, a critical measure for any retailer. For two years, it has underperformed the Dow Jones Restaurants and Bars Index (yes, there is one).

Looking back, Starbucks’ fall was a leading indicator of the trouble massing across the land. Now the question becomes whether the America that emerges from the financial shock of the Great Disruption will have the appetite, and the cash, to fund Starbucks’ hopes.  How long will Wall Street just wait and see? However the recession has changed America, Wall Street is still in a pre-2007 mindset, and it may demand growth that Starbucks simply can’t deliver anymore.”

Wendy Waters
by Wendy Waters
Mon Apr 27th 2009 at 8:54am UTC

The Information Age and the Workplace

Monday, April 27th, 2009

There is more data than ever available for human resource specialists, including:

  • The unemployment rates in specific occupations, in specific cities.
  • Employee turnover rates in particular industries, and places.
  • The relationship between particular workplace styles and productivity.
  • Graduation rates in certain fields (and thus the supply of new accountants, lawyers, engineers).

And, within certain large employers such as the big accounting firms, retail chains, or large information technology companies such as Google or Microsoft, further internal data can be scrutinized.

Jason Warner, the VP of HR at Google (and formerly Starbucks), recently pondered the role of enhanced information on the human resources field:

I’m not a statistician, but for large sample sizes at large companies, there is a LOT of information that is just waiting to be discovered by progressive HR organizations who can pull the data and turn it into meaningful information. We had talked about doing this at Starbucks right before I left; running multivariate regression analysis against the thousands of store level staff to better predict attrition and the demographic trends that play out when you have large sample sizes of people.

But HR is rarely predictive. It tends to be more like ‘old medicine’, identifying what is wrong and then prescribing a fix. “You see, your attrition spiked so now we need to recruit more…..” Exit interviews. Employee relations. Compensation reviews. Most all of it analyzes post data.

It is admittedly difficult to be predictive, but it is also because we don’t ask enough smart questions. We ought to be significantly better as an HR function at predicting things. Because predictive HR is a lot more helpful that diagnostic HR.

For example, we can reasonably predict what range the US unemployment level is likely to be in the next 2 years, by comparing the delta in unemployment from the top of the boom in 1999/2000 to the peak in unemployment in 2003 (50 basis points, or 2% points overall) and fudge a little for the gravity of the economic issues that we face. It’s probably going to jump to about 8% (we can now wait and see if I’m right). And from that, HR should be able to extrapolate candidate flow and inform a recruiting strategy and resourcing plan. But the vast majority of groups won’t ever do this.

I expect in the next decade (provided I make it that far), that we’ll see much more predictive HR at the best companies.

I think Warner is right.  Workplaces will start to be shaped by this knowledge.

A firm that has below-average employee retention rates might change up the workplace, offering employees something different.

Maybe we’ll soon know much more about how turnover really affects productivity, for example. The conventional wisdom is the cost to recruit, hire, and train a replacement is very high in terms of dollars and lost productivity. But maybe, based on our discussion here last week, it may be that some turnover is desirable and actually raises productivity through the introduction of new ideas – even best practices – from new employees coming from competitive and complementary firms.

Richard Florida
by Richard Florida
Thu Apr 23rd 2009 at 9:27am UTC

Home-Base Effect

Thursday, April 23rd, 2009

There’s an undeniable home-base effect for leading consumer brands. So, Starbucks does better in Seattle; Wal-Mart in Arkansas; Heinz ketchup in Pittsburgh. Here’s the abstract for the detailed study published in the Journal of Political Economy.

We document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.

Tyler Cowen comments; and Andrew Gelman has maps which depict a similar diffusion away from home-base effect for Starbucks and Wal-Mart.

I wonder though if this is just a home-base effect, as brands take hold where they are established and get picked up more slowly elsewhere, or if there might be another (deeper) process which would explain why certain kinds of brands – say like Starbucks and Wal-Mart – crop up in particular locations to begin with.

Your thoughts?

Richard Florida
by Richard Florida
Mon May 19th 2008 at 1:07pm UTC

The Entrepreneurial Society

Monday, May 19th, 2008

Writing in the Wall Street Journal, Michael Malone argues that we are rapidly becoming one:

The most compelling statistic of all? Half of all new
college graduates now believe that self-employment is more secure than
a full-time job. Today, 80% of the colleges and universities in the
U.S. now offer courses on entrepreneurship; 60% of Gen Y business
owners consider themselves to be serial entrepreneurs, according to
Inc. magazine. Tellingly, 18 to 24-year-olds are starting companies at
a faster rate than 35 to 44-year-olds. And 70% of today’s high
schoolers intend to start their own companies, according to a Gallup
poll.

An upcoming wave of new workers in our society will
never work for an established company if they can help it. To them,
having a traditional job is one of the biggest career failures they can
imagine.

Hmmmm… to a certain extent or for a certain segment of society.  However, Google, Microsoft, Starbucks, Toyota, Wal-mart, the health sector, the defense-industrial complex, the public school system and the government still really do exist. In fact, education and health are the largest single employers in many large cities.  Honestly, while people change jobs frequently, I wonder to what degree the profile of the entrepreneurial and self-employed has changed over the past 2 or 3 decades. There are many people who prefer the security of a “job” to the risk of an entrepreneurial venture.  Our own personality studies, as well as those of others, substantiate that.  I could go on, but what do you think?