MIT Sloan Management Review

How Starbucks Has Gone Digital

April 4, 2013 | Adam Brotman and Curt Garner, interviewed by Michael Fitzgerald

Retailers struggle with keeping brand strategies consistent across the physical and digital worlds. Starbucks has made great strides in maintaining its brand message, whether customers are on Facebook or in one of its 17,000 stores, anywhere in the world. The company’s digital transformation began with the seemingly simple decision to offer Wi-Fi and access to digital media such as The Economist as a free service in its stores. That was Adam Brotman’s first big idea after he was hired in 2009 to the new job of vice president of digital ventures. The free Wi-Fi and content put the customer’s wants at the center of Starbucks’ digital strategy. Brotman was named Starbuck’s chief digital officer in March 2012, putting Starbucks in the front ranks of companies that have a digital czar.

Brotman works closely with Curt Garner, a 15-year Starbucks veteran named chief information officer at the same time Brotman became CDO. The two talk every day, their leadership teams meet every other week, and the two run digital scrums at least once a quarter, where their teams brainstorm how to use technology to give customers a better experience at Starbucks.

Brotman and Garner’s close collaboration leads to iterative transformations, like figuring out how to use a point-of-sale system upgrade and save 10 seconds per card transaction, eliminating 900 million hours of line time for customers. Starbucks is now piloting mobile ordering in stores, which should mean less time in line, and perhaps even the ability to walk in and order “the usual.” They believe Starbucks acts like a consumer technology company.

Video: Leading Your Company’s Digital Transformation

October 29, 2012 | George Westerman (MIT Center for Digital Business), interviewed by Michael Fitzgerald

Business leaders hear plenty about how digital technology can transform a business, but so much of the discussion focuses on Amazon, Apple, Facebook and Google that executives at traditional companies might be forgiven for thinking that only high-tech startups can achieve digital transformation. Many companies have tried to gain leverage from technology only to find that they get just a substitution effect or have merely extended their businesses onto a new platform like mobile devices.

But traditional companies are gaining transformative results from digital technologies, in every sector of the business world. George Westerman of the MIT Center for Digital Business explains how some executives are able to lead their companies into the digital era. The most impact comes from the proper adoption of four kinds of new technologies: social networking, analytics, mobile and intelligent sensors. Westerman tells how these evolving technologies are being used at a number of traditional companies to achieve promising results. Companies across the globe are transforming their customer relationships, their operations and even their entire business models by adopting these technologies.

Success does not depend on having a high comfort level with technology. Westerman identifies four types of traditional companies when it comes to using these new technologies: digirati, fashionistas, conservatives and beginners. All four can achieve powerful transformative effects on their business through new technologies, by adopting effective governance approaches, like creating digital czars and digital units that work across the business to achieve goals.

But top leaders have to be behind the idea of change, or it won’t occur. Counting on ideas to bubble up from the bottom of the organization will fail, Westerman warns.