Monday, April 9, 2007

Curt Schilling & Starbucks: Same Problem

As I watched Curt Schilling's opening day debacle for my beloved Boston Red Sox against the hapless Kansas City Royals, I immediately began thinking once again about Starbucks (SBUX) because the comparisons between the two are striking (baseball pun intended). Really they are, read on and I will explain. A note: I have penned (typed?) several pieces on Starbucks in the past and will not regurgitate them again. For those interested, you can read them here, here and here.

First a bit about Mr. Schilling.
He came to Boston in 2004 with a singular goal in mind: To win the World Series and by the time the 2004 season ended, he was a hero. Anybody who saw the blood filled sock (now in the Baseball Hall of Fame) and his gusty performance in the playoffs as he lead the Sox to their first World Series title in 86 years can understand why he was then elevated to royalty in Boston.

This spring Curt who, after an poor 2006 season, apparently took the off season so seriously that he showed up to spring training almost 30 pounds overweight. Now, at 20 that weight can be worked off in spring training. At 40? Not so much. To compound this he:
  • Asked for a contract extension for two more years
  • When denied, he then spent the spring talking about "not talking" about his contract
  • When "not talking" about his contract, he spent time talking about his online game company which, in a snit had a name change from "Green Monster Group" (in reference the Fenway Park's famed left field wall) to 38 Studios which....
  • Mirrors the name of his website "baseball" blog that spend very little time talking about baseball
  • Seemed to be distracted with all the attention new arrival and pitcher Mr. Matzusake is getting in Boston with his vast array of pitches. In response he....
  • Decided he was going to expand his and start working on a change-up.

Now, Starbucks
The Starbucks concept as we know it today began with Howard Schultz in 1987. The singular premise was to mirror the Italian coffee houses he visited during a trip to Italy in 1984 and for the better part of two decades they did exactly that. They single handedly invented the coffee experience we enjoy today. Their growth exploded in the 90's and made investors gobs of money all the while staying true to what made them great, their singular focus on great coffee in an intimate, relaxed setting. This growth lead to them needing to squeeze more sales from each location to finance new ones. The formerly intimate setting became cluttered with items for sale that covered the spectrum of coffee makers, coffee mugs to CD's and almost everything in between. The rapidly expanding drink menu became complicated to both order and execute and led to longer, much longer, wait times at the counter. The peak of this came in the summer of 2006 when execution difficulties with a new frozen drink led to people choosing other options for coffee rather than waiting in line an obscene amount of time in the hot sun for one. In response to rising customer complaints and negative media reports Starbucks:
  • Decided to give away 10,000 custom made t-shirts from a designer no one has heard of
  • Introduced more drinks to further complicate an already burdensome process
  • Seemingly distracted by the incredible success McDonald's (MCD ) was having with their Newman's Own Premium coffee and the new and very popular McCafe' concept, decided to copy them with a breakfast menu. It should be noted that the same production problems that hamper the coffee experience are being exacerbated and compounded by this new wrinkle. It just is not worth the time or the $4 for an egg and cheese sandwich guys.
  • Jumped at the opportunity to finance Paul McCartney's upcoming divorce by creating a record company and signing him to a deal. I wonder if the brass at corporate realized that Mr. McCartney's last #1 hit was with Wing's in the 70's. When you sign a new act to your label and the first reaction of your core customer is "He is still alive?", it is not a good sign
  • Decided that despite centuries of drinking tea, the Chinese ought to switch to coffee
  • Are considering a Starbucks themed clothing line
  • These action now have them financing their growth with debt which has exploded from $4 million to over $700 million in just two years

Greatness requires a singular focus on the intended outcome that is desired. In Schilling's case it was being a great pitcher, a leader, and winning a World Series. In the case of Starbucks, it was the coffee, period. By focusing on those items and only those items, both accomplished those goals and received the accolades that accompany that success. Sadly, both have strayed far away from what have made them great in the past. It appears Red Sox fans will feel this pain this year again as Schilling seems to have picked up where he left off the second half of last year, focusing on everything but baseball. It also seems that Starbucks shareholders and customers will also feel the pain of distraction as Starbucks makes them wait longer in more and more crowded locations (not with people) for coffee while they try to sell them sandwiches, records and clothes.

Here is hoping Schilling at least gets his act together first....

PS. A note to Mr. Schilling: We Red Sox fans have no patience or sympathy to someone making $15 million a year who complains about not making more and then gets his head handed to him by the worst team in baseball. You have not pitched well in almost a year now. Do you want to feel our wrath? Keep it up because it is brewing out there. Just keep your mouth shut and win, you do that and we will do your talking for you.

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