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Innovation in an Instant

Posted by on September 29, 2009 at 10:40 pm

Starbucks' new instant "VIA Ready Brew" coffee

When I stopped into my local Starbucks this morning to get my usual tall cup of Joe, I found a store buzzing with a new entrant in its coffee line-up – instant coffee.

I must admit I was skeptical. Instant coffee? After all these years of treating my taste buds to the full-throated flavor of my Starbucks favorite blends such as Verona, Estima, and Sumatra, how can I take instant coffee seriously? The last innovation I witnessed in instant coffee was the “freeze-dried” branding of Taster’s Choice in the 1970s, which was a must-have for every college dorm room. Today, that same freeze-dried brew tastes a little too freezer-burned to me, with all due respect to Nescafe.

Yet, my coffee snobbery this morning quickly gave way to curiosity (and the notion of something free), and so I tried Starbucks’ new “VIA Ready Brew” (aka, instant coffee), which they were handing out in Dixie-like cups. And to my surprise, I liked it. Now, I will admit that it’s not quite in the league of my favorite fresh-ground brew I’m accustomed to, but it’s remarkably good considering it is, well, instant.

Give Starbucks CEO Howard Schultz credit, it’s a pretty gutsy move. This is the same guy who swam against the tide years ago, and proceeded to build a corporate empire one cup at a time — when most everyone else at the time was saying, “you can’t get rich selling coffee.”

Today Starbucks has more than 5,000 stores in over 40 countries. Sure, it had to close a few stores over the last year and dial back some prices in light of the bad economic times. But its stock is up 75% in the last 6 months. I like that math.

So stay tuned. Will Starbucks’ gamble on instant coffee pay off? Wall Street didn’t seem too impressed given SBUX closed down over one percent today, despite its big instant coffee roll-out.

But I don’t count Starbucks out, and for this reason. Its success to date is not simply the result of great coffee and market savvy. It also has something to do with how management runs the company and how they treat their employees (or “partners” as they are called). Starbucks routinely gets some of the highest marks in corporate America in terms of employee satisfaction, and “best places to work.”

As Howard Schultz puts it, “We realize our people are the cornerstone of our success, and we know that their ideas, commitment and connection to our customers are truly the essential elements in the Starbucks Experience.”

Happy and satisfied employees lead to greater productivity and greater innovations. And companies that get this important point, and live by it, will generally prosper.

In fact, prosperity has been known to have a very distinctive aroma. It smells like a great cup of instant coffee.