Broad-based competition, a severe economic slowdown, and many other factors have combined to stagger the coffee juggernaut known as Starbucks. Sales are down; profits are down; and analysts, in general, have not been kind to the former Wall Street wunderkind.

So, it was with more than a passing interest that I read a WSJ article entitled Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques (Julie Jargon, August 4, 2009). It seems that Starbucks has discovered the concept of a “lean” approach to doing business; i.e., changing processes to become more efficient in the use of labor and other resources.

It appears that the “lean” approach may be paying dividends. For the quarter ending June 30, Starbucks reported gross profits increasing 14.6 percent, while net income jumped from $25 million to $150 million. Of course, there are other factors at work in the performance improvements, but one store, for example, reported improvements in both efficiency and customer satisfaction as a result of working with “lean” techniques. This Chicago, IL store had a dismal customer-satisfaction score of 56 percent in April, but saw that number jump to 76 percent in June while customer transactions increased 9 percent in the same period.

However, my interest was more in how the everyday work changes were impacting the company’s employees and culture. To that end, one particular statement in the article caught my eye:

Starbucks has faced some resistance to the program. “They’re trying to turn workers into robots,” says Erik Forman, a barista in Minneapolis. “It’s going to essentially turn the cafe into a factory. They want to control our every move in order to pinch every possible penny.”

Here is the ever-present evidence of the consequences of change – there will always be resistance to doing things differently. While the reasons for resistance will vary considerably, the fact is that change always creates organizational friction. And, while that friction will never be completely eliminated, it can be lessened dramatically by focusing on communication before, during, and after the change.

How to Lose Up to 99% of Your Effectiveness

John Kotter, “widely regarded as the world’s foremost authority on leadership and change” and “the premier voice on how the best organizations actually “do” change,” believes that one of the problems in an organization during times of significant change is that leaders will under-communicate by a factor of ten or even a hundred.

Knowing that communication can have a dramatic impact on the change process, here are some things to remember:

• Communicate early and often; use different media (group meetings, email, memos, intranet, etc.)
• Explain the reasons for change; be specific (economy, sales and profits declining, competition from McDonalds, etc.)
• Acknowledge the inconvenience – the need to do things differently – especially when the perception is that things have worked fine in the past
• Show the benefits to each employee (improving profits helps avoid lay-offs, preserve benefits, etc.)
• Use one-on-one communication for best results

Tagged as: Culture, Lean, performance