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1735 : STEP THREE – EVALUATING AND SELECTING IDEAS

We saw in Chapter 3 how Ray Kroc spotted the potential of the single
fast-food outlet run by the McDonald brothers. The history of Starbucks
exhibits a similar process of an outsider spotting the potential invisible to
the founders or incompatible with their ambition. Starbucks Coffee, Tea
and Spice was launched in Seattle in 1971 by three men – Jerry Baldwin,
Zev Siegel and Gordon Bowker – who shared a passion for fine coffee
and tea. Their determination to provide the best-quality coffee beans
helped their business to expand to four stores in Seattle within a decade.

Enter Howard Schultz, who in 1981 was a vice-president at
Hammarplast, a Swedish maker of stylish kitchen equipment and
housewares. Noticing that the Starbucks coffee-bean store had been
buying a significant volume of Hammarplast drip coffee-makers,
Schultz emulated Ray Kroc and visited the account to find out more.
Schultz had the big vision to appreciate immediately the possibilities of
the coffee-bean culture and attempted to join the Starbucks operation
with a plan to take the concept across the country. The founders did not
share Schultz’s bigger picture approach, but eventually hired Schultz to
head Starbucks’ marketing and to oversee the four Seattle stores.

the italian analogy Schultz took the idea further by spotting an
analogy with the Italian market. On a visit to Italy he had noticed that
coffee bars existed on practically every corner, not only serving
excellent espresso but also acting as meeting places or public squares.
Numbering around 200,000 throughout the country, they formed a large
part of Italy’s social framework.

Finding the Starbucks’ founding trio unwilling to embrace his reshaped
idea on the grounds that ‘they had no desire to enter the restaurant
business’, Schultz struck out on his own. He launched Il Giornale, a
string of speciality coffee stores in Seattle modelled on the typical
Italian espresso bar. The concept was so successful that Schultz was
later able to buy Starbucks for $3.8 million and initiate the programme
of store and country roll-outs which has now made Starbucks
ubiquitous.127

evaluation framework 5: decision balance sheet The decision
balance sheet is a useful technique for combining person-focused
criteria in an evaluation of specific business ideas. It can also be used
for evaluating your whole approach to setting up on your own.

Devised initially by I. L. Janis and subsequently developed in
conjunction with L. Mann in the late 1970s, the decision balance sheet