The Barista Principle – Starbucks and the Rise of Relational Capital

How did a small Seattle company turn itself into a global synonym for java and joe? The answer, we believe, lies with an ingredient as central to Starbucks’s business as the premium coffee beans it roasts: Relationships.

Starbucks is not the only company that firmly believes that an emphasis on relationships should be more than simply management rhetoric. Nor is it the only company that has profitably put this belief into practice. Our research indicates that relationships are indeed central to the sustained, superior performance of many of the world’s most successful companies. In late 2001, researchers at Booz Allen Hamilton and Northwestern University’s Kellogg School of Management surveyed 113 executives at a representative sample of Fortune 1000 companies and found that winning companies define and deploy relationships in a consistent, specific, multifaceted manner. Although some companies will dub any concluded business deal a relationship, top-performing companies focus extraordinary, enterprise-wide energy on moving beyond a transactional mind-set as they develop trust-based, mutually beneficial, and long-term associations, specifically with four key constituencies: customers, suppliers, alliance partners, and their own employees. Starbucks, we believe, exemplifies this new model of the relationship-centric organization.

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