Starbucks – Client Interview

SVP Global R&D/Quality & Regulatory

Innovation at Starbucks is driven by a company wide passion to create the ultimate coffee experience for its customers.  Starbuck’s Stage-Gate Model enables truly cross-functional and collaborative product development that draws on hundreds of partners throughout the company.

What’s Brewing within Starbucks’ Innovation Division
Mary Wagner, svp, Global R&D/Quality & Regulatory, Starbucks interviewed by Michelle Jones, EVP, Stage-Gate International

Dr. Wagner began her career in 1984 as an assistant food science professor at the University of Wisconsin (Madison). Since then, she has held executive R&D/Quality and Regulatory positions at General Mills, Unilever, YUM, E&J Gallo Winery and Mars, Inc.. She joined Starbucks in April 2010. Dr. Wagner delivered a case presentation at the Stage-Gate Innovation Summit, highlighting Starbucks’ product innovation system and how Stage-Gate is tailored for an entrepreneurial organization culture.

MJ: Tell us a little about Starbucks’ R&D organization

MW: We have a dedicated R&D group of approximately 70 partners [employees]. That said, Starbucks approach to food and beverage development is a truly cross-functional and collaborative process, which draws on hundreds of partners throughout the company to guide product innovation.

MJ: Where is your group located?

MW: R&D operates out of Starbucks headquarters in Seattle. In addition to our corporate headquarters, we have Centers of Innovation Excellence around the world. For example, our facility in China supports the Asian region of the world and also specializes in global tea botanicals for the entire company. Since our needs at Starbucks are global as well as regional, this decentralized structure allows us to deliver locally relevant products everywhere customers are enjoying the Starbucks experience.

MJ: Why is innovation important to Starbucks?

MW: At Starbucks, we do not purposefully set out to be “innovative.”  Rather, we aspire to be a company of people that share a common passion to create the ultimate coffee experience. Our customers are the best judge of what that experience should be and so we are continually responding to their desires and ideas.

This naturally compels us to improve our products, services and technologies. It also drives us to think on entirely new levels – “new-to-company” and even “new-to-world” products, services and technologies.  The most genuine way to keep our current and future customers happy is by innovating. That is why innovation is so important to Starbucks.

MJ: What is your most important strength when it comes to innovation?

MW: This is an easy one. Our partners are our most important strength (at Starbucks, we call our employees “partners”). We are very fortunate to attract and keep good talent at Starbucks.  Over the years, we can cite specific examples of partners that have led successful new product and technology innovations, even “breakthroughs!”  In addition to strong leadership, we are good collaborators—across functions and businesses—we foster a real team approach to innovation.

MJ: What is Starbucks’ biggest innovation challenge?

MW: We have two big innovation opportunities and both initiatives are underway right now.

MJ: Let’s start with the first opportunity.

MW: We set out on a journey to closely examine the “pockets of innovation excellence” occurring throughout Starbucks in order to learn and understand why we were enjoying success in specific areas. We sought answers to questions like “What leadership characteristics do our most successful innovators have? Why are they so successful? and, “What do their teams do differently?”

We conducted some internal benchmarking with help from the folks at Stage-Gate International. Together, we identified several internal best practices that made good sense to implement with all of our business leaders and innovation teams globally. My goal is to help Starbucks transform its innovation capability to move beyond “pockets of success” occurring periodically—to a global organization delivering consistent, predictable innovation success.

MJ: What about the second opportunity?

MW: I can’t help but chuckle when I explain that our second initiative is the reward we get for becoming really good at thinking innovatively! But it’s true! We have no shortage of really, really good ideas. We receive thousands of ideas for new products, services and technologies from our customers, partners and our suppliers. It’s exciting and energizing!

However, our ability to generate so many good ideas has created a need for us to be even better at something else – prioritization! So, the second initiative is establishing a way to prioritize and select projects that will contribute most to our business strategies. Making tough go/kill decisions is very difficult to do and so we looked to the folks at Stage-Gate International for advice on key external benchmarks and practices. And, given the importance of preserving Starbucks’ entrepreneurial culture, we worked together to customize gate scorecards, prioritization criteria and portfolio charts so they worked well for our needs.

MJ: What has Starbucks gained by participating in IFMA’s and Stage-Gate International’s collaborative Foodservice Benchmarking Initiative?

MW: At Starbucks we have an insatiable appetite for new knowledge, especially when it comes to improving our ability to innovate new products. If there is a way we can improve our results, we want to know about it. As a key leader responsible for much of the product innovation, being on top of industry benchmarks helps me to stay ahead of the innovation performance curve.

MJ: What is your favorite new product?

MW: A tough question, as I like so many!  I would have to say my favorite is probably always the most recent one to launch…in this case Refreshers. This new beverage offers a unique innovation for a cold beverage made from green coffee extract [It’s] very refreshing and crave-able. I must drink at least two Grande refreshers a day from our internal Starbucks store!

Q: This must be fun time to start exploring the broader beverage category.

MW: We saw high customer and partner [employee] demand for a natural energy solution. Starbucks Refreshers beverages are a breakthrough beverage innovation that delivers thirst-quenching enjoyment from green coffee extract, a natural source of caffeine, and real fruit juice to create an energizing, low-calorie beverage. Starbucks Refreshers beverages are the perfect solution for customers looking for a boost of natural energy and thirst-quenching, delicious refreshment.

MJ: What are a few of Starbucks’ top-selling foods? Why?

MW: It really depends on the area and potentially down to a specific store. In some places, it could be oatmeal for breakfast and somewhere else it could be the Protein Plate Bistro Box. It can be a matter of what that store represents in a customer’s daily routine.

MJ: How would you describe Starbucks’ approach to food menu development?

MW: Each year, we will continue to develop and deliver delicious and high quality products that our customers have grown to count on us for. Having a balanced portfolio of items—such as smaller portion-sized sweet treats in our Petites line to lean proteins and whole grains in a grab-and-go Bistro Box for the afternoon—means we are meeting customers’ needs at different day parts.

Some of the best feedback we get is through MyStarbucksIdea.com, hearing directly from our customers what they would like to see in our stores. We take that feedback into account when setting our path forward for 12 to 24 months and beyond.

MJ: You certainly have a wealth of CPG and restaurant experience. What would you tell colleagues about the best way to develop new items for Starbucks?

MW: At Starbucks, our partners are always on the lookout for new ingredients, product ideas, technologies, equipment and business partners/suppliers.  Since we receive so many inquiries, I always tell people that before you reach out to us, do your homework.  Take the time to learn about our company, our business strategies and our current products and service portfolio. Even though we’re a global corporation, we can move very quickly on ideas that help us to advance our business strategy.

When you do reach out to us, be prepared to be able to describe how your idea can benefit our customers. Starbucks is in a unique position to connect with the consumer like no other place I have seen.  How we do that and with what, takes consumer understanding,….so your input can help frame up what success would look like!