So is there any innovation scenario that would ever result in the end of Starbucks’ complete coffee domination?
The base case scenario, of course, is that a smaller coffee shop upstart will appear out of nowhere and “out-Starbucks” Starbucks, beating the company at its own game with a combination of superior coffee, a better customer experience, new menu items, or just by dint of being newer and less ubiquitous. One upstart starting to gain traction, for example, is Caffe Bene, which has been described as the “Starbucks of South Korea.” The coffee chain, which already has more than 1,600 locations globally, now plans a massive launch across the United States, starting in New York City. However, the sheer size of Starbucks — over 21,000 stores worldwide, over 70 million customers a week, over 9 million loyalty program members — makes it a daunting task for anyone bold enough to take on Starbucks head-to-head.
But what if a new coffee shop rival emerges that has its roots in a completely different industry? This company would fly so far below the radar that it would be impossible for Starbucks to view them as a competitor until it’s too late. According to the rules of disruptive innovation first proposed by Clayton Christensen, this theoretical company would also have to offer a coffee product that is cheaper and inferior to Starbucks coffee products, as well as appeal to a segment of the coffee-drinking market that’s not attractive to Starbucks (i.e. people who can’t or won’t buy $5 coffee drinks).
So how would you go about finding this “stealth” disruption in a place that nobody expects to find it?
Back in 2012, Stephen T. Gordon suggested a fascinating concept: “In the future, everything will be a coffee shop.” What he had in mind was that the unique customer experience of the coffee shop — a “third place” that was neither home nor work — was starting to influence the experience of many other industries. As Gordon suggested, any struggling business or institution could turn to the coffee shop for inspiration in an attempt to become “an irreplaceable gathering place full of beverages that cannot be downloaded.”
That’s one big idea that Starbucks gets — it’s not about the coffee, it’s about the shared experience of meeting face-to-face.
The office experience, for example, is already transforming into a co-working experience at the local coffee shop, where mobile workers with laptops and smartphones work offsite in comfortable chairs with creative surroundings. This is one of the reasons why Starbucks has become so successful — there’s nothing easier than grabbing a laptop and heading over to the corner Starbucks to get some work done, to meet a client, or to socialize with fellow workers.
By thinking about other industries that could be turned into similar types of coffee shop experiences, it might be possible to find the next business waiting to disrupt Starbucks.
Higher education, with its shift into online learning, MOOCs and flipped classrooms, might be ripe for coffee shop innovation. Community colleges or universities could create a place that’s neither classroom nor dorm room. Most students probably would prefer to pay less than $5 for a coffee drink, and they may not have the discriminating palate required to appreciate the offerings of the new high-end Starbucks Reserve Roastery and Tasting Room. So imagine a tutoring, networking and mentoring experience — a coffee shop as the ultimate flipped classroom, where students work on homework communally rather than at home or in the classroom, all while drinking coffee (or, depending on their age, uncaffeinated drinks that taste like coffee).
Another area to look for innovation is retail, where many brick-and-mortar store owners are looking for some answer to the “showrooming” phenomenon created by ubiquitous smartphone usage. They are tired of people checking out products in their brick-and-mortar stores and then going home to shop online where prices are usually cheaper. The answer might be a new kind of “reverse-showrooming” retail experience that features lower-grade coffee than Starbucks serves (just a step above the kind you drink when waiting for a doctor or an auto mechanic to fix your car).
One idea that Gordon has suggested is that 3D print shops might lead to a new breed of coffee shop — a place where customers mingle with others and drink coffee while they wait for their custom 3D-printed objects to be printed within the store: “Imagine the 3D print shop of the future: You put in your order, probably from your smartphone, and then go pick it up. What does the lobby of such a business look like? A coffee shop.”
Finally, what about a new entertainment experience based around coffee? Walk into a Starbucks today and what do you see — lots of people tapping on computers and checking their smartphones. The next technological device that people may want to bring into the coffee shop is a pair of virtual reality glasses. It’s not realistic to walk around with one in a Starbucks today. So what if there were a coffee shop experience where it was socially acceptable for gamers to strap on their virtual reality glasses and sip caffeinated drinks?
Gamers would be immersed in their own unique VR experiences, but they would be enjoyed communally with many others, maybe as part of a new type of coffee shop-meets-theater experience. Think back to the video arcade experience of the 1980s, when people went to arcades in malls to play video games instead of playing them at home. Add in plush couches, better music, some funky artwork, and almost-as-good-as Starbucks coffee and you might just have a business concept.
Crazy? Perhaps. But that’s the nature of disruptive innovation – it’s often not recognized when it appears and not appreciated when it is recognized because it happens at the low end. The perverse logic of disruptive innovation is that, the more that Starbucks super-serves its best customers, moves into premium-priced products and experiments with high-end customer experiences, the more it opens itself up to disruption at the very, very low end.