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William A. Levinson

Lean

Would You Like Coffee With Your Muda?

Starbucks (and others) must avoid mixed messages when it comes to value

Published: Monday, May 23, 2016 - 12:49

Colonel Paul M. A. Linebarger’s authoritative Psychological Warfare (Infantry Journal Press, 1948) defines propaganda as any planned communication with the  purpose to influence behavior, but this definition is actually too narrow. Propaganda consists of any action or communication, whether planned or unplanned, that influences attitudes and behavior.

A class action against Starbucks underscores this principle, regardless of the suit’s actual merits. The suit claims that the popular coffee shop shortchanges customers by filling cups with ice rather than coffee. Starbucks argues that ice is an expected part of an iced beverage, and that the ice is also clearly visible to the customer, who can insist on its replacement with beverage before leaving the counter. When I was a teenager, my father taught me to specify “light on the ice” when ordering any soft drink at a restaurant, because the restaurant will otherwise try to make a few extra pennies (now perhaps dimes) by filling the cup with ice rather than drink.

However, this practice might not always be intentional, as seen by restaurants that also fill water glasses with ice. In this case, the ice is more expensive than the beverage due to the cost of refrigeration, and also the need for the server to keep refilling the glass because there is less actual water to drink. Waste often gets built into processes through pure habit, so an excessive amount of ice in a drink cannot necessarily be attributed to malice. It wouldn’t surprise me if it came out that Starbucks employees make their own drinks in the same manner because they don’t recognize the waste that hides in plain view.

The problem is, however, that Starbucks has harmed its own reputation regardless of the lawsuit’s merits or even Starbucks’ intentions. A picture on Starbucks’ website of iced coffee with milk shows a cup that is filled to the top with ice. This conveys the unintended but entirely accurate message, “We sell muda.” Shigeo Shingo once commented, in fact, that he regarded the peel of a banana as muda because it was not edible, but the peel is at least a form of packaging that preserves the quality of the product. Starbucks has, on the other hand, effectively deployed military-grade propaganda against itself by showing how little value it provides for its customers.

Starbucks and the trick of Mecone 

I personally got a poor impression of Starbucks when I was at Newark Liberty International Airport during two recent business trips. The Starbucks there offered a pricey salad that had a rich layer of chicken and cheese on the top. When I looked at the plastic package from the side, however, I saw exclusively lettuce underneath. This is a variant, whether intentional or not, of the ancient Greek story of the Trick at Mecone, in which Prometheus taught mortals how to shortchange Zeus on sacrificial offerings. The mortals followed Prometheus’ instructions by slaughtering an ox and dividing the carcass into two piles. One contained the best meat under a thin layer of undesirable byproducts, and the other contained the bones and entrails under a layer of snow-white fat. Zeus failed to do a thorough inspection, and chose the latter as his share. This turned out badly in the long run because angry customers are bad enough, and Zeus had ways of venting his frustration on the mortals in question.

I also found that Newark Airport no longer has a McDonald’s or any other reasonably priced restaurants, but only CIBO Express and other upscale (i.e., expensive) vendors. I would encourage any reader who travels through this airport to bring nutrition bars or, as I did on my most recent business trip, flatbreads and StarKist Tuna Creations (flavored tuna in foil packets), along with disposable spoons, so I could make tuna sandwiches. The latter was a specific reaction to Newark in contrast to other airports, where you can get something reasonable from McDonald’s, Arby’s, Chik-fil-A, and so on. Any meal you purchase on the airplane itself will be similarly astronomically priced, so it is again advisable to bring your own. Nonfood items offered for sale in airports or, for that matter, upscale shopping malls, should similarly be purchased on the Internet to avoid paying for the muda of the retailer’s overhead and rent.

The takeaway, of course, is that when you come across (whether rightly or wrongly) as looking for ways to make a little extra profit by giving your customer as little value as possible, the customer never comes back. Any communication or action that influences customer perception and behavior is, regardless of its intention, propaganda. Starbucks can post all the social responsibility material it wants on ethical sourcing, supplier diversity, coffee and farmer equity, and so on, and the entire message goes out the door the instant a customer perceives—again, rightly or wrongly—that he or she has been shortchanged.

Education rather than litigation is, however, the proper way to address this situation. Although I can’t give legal advice, it looks like Starbucks is not trying to deceive its customers. The ice is in plain view, and the customer can insist on its replacement with beverage at the counter. The fact that Starbucks displays the ice on its own web page suggests that the company doesn’t even realize that there is anything wrong with it, which reinforces the lesson that waste often becomes an accepted part of a process or product by habit.

The fact that it took years before even one person complained publicly about the ice, reinforces this lesson, which carries over into every manufacturing and service enterprise on Earth. Remember that it took thousands of years for the construction trade to figure out that a job design that required masons to pick up bricks from the ground wasted almost two-thirds of their labor. Perhaps a radio personality like consumer advocate Clark Howard could teach his audience to always include “light on the ice” in all beverage orders to minimize the muda.

New customers or loyal customers?

The principle that all communications are propaganda also applies to “new customer only” offers. The company may think it’s telling people, “We welcome new customers,” but it’s really saying, “We prefer new customers to loyal customers.” This is a poor policy because it is generally far more expensive to get a new customer than to keep an existing one. The fact that many business executives (the kind whom Henry Ford said put the dollar ahead of the job) can’t handle the basic lesson taught in Aesop’s fable, The Goatherd and the Wild Goats, doesn’t speak well for the organizations in question.

As an example, PAPowerSwitch.com offers customers a variety of electrical power providers. Many of these offer outstanding introductory prices of perhaps two-thirds off the standard price offered by the local utility provider, PPL Corporation. When the introductory period expires, however, they raise their price to well above that of PPL.

Following is a dialogue I had with one such supplier last year. Their customer service department emailed me: “We have received notification that you have canceled your account. Your last date with us will be 04/09/2015. If this was a mistake, please let us know by replying to this email.”

I replied, “I saw that my energy generation cost from [your company] jumped to almost 11 cents per kilowatt-hour on my March bill, so I did indeed switch to another provider.”

Now I have my Outlook calendar set up to remind me when my current provider’s introductory rate expires so I can become somebody else’s new customer before the current provider can raise my rate. Most intelligent businesses prefer long-term relationships to the equivalent of one-night stands, but these electrical suppliers don’t understand the problem with “new customers only” when customers can switch providers with a few keystrokes at the PAPowerSwitch website. Again, however, consumer education is the best course of action, and most service providers (e.g., cable TV and Internet) will suddenly discover a way to give a current customer the new customer price as soon as that current customer says that he or she will become somebody else’s new customer. Education is again far more effective than litigation in this context.

“Anything you say can be used against you in a court of law” is a well-known phrase from movies about crime and law enforcement, and the corresponding psychological warfare warning is, “Anything you say or do can be used against you in the court of public opinion.” It is therefore critical for organizations to avoid mixed messages (or worse) that suggest they give customers anything but value for their money.

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About The Author

William A. Levinson’s picture

William A. Levinson

William A. Levinson, P.E., FASQ, CQE, CMQOE is the principal of Levinson Productivity Systems P.C. and the author of the book The Expanded and Annotated My Life and Work: Henry Ford's Universal Code for World-Class Success.