Perhaps no other retail business can better illustrate the small-to-big retail growth process than Starbucks – from a single store in 1975 to 18,000+ stores in 30+ years, limited lines of retail products in the offering, heavy brick-and-mortar dependency, a decent sized corporation, yet trying to grow in global scale with scattered and outdated IT infrastructures and a questionable culture.

Starbucks has long been known for its infamous “consensus building” culture. Seldom the employees who left the company had anything more encouraging to say about its culture. A former Starbucks senior officer, an ivy-league graduate with degrees from both Princeton and Yale Law School, who left the company and now heading a Seattle startup company, said recently “With such a culture, nothing can be done there.” No wonder in their IT department, almost all projects run late or over budget. Yet their culture, on the other hand, is very calculating to the pennies: Most of the coffee beans to the stores are supplied from Mexico or Southeast Asia, the cheapest areas to get those (not Ethiopia as you might think); they drive hard bargains with landlord; every employee has to report allocation and hours; and extremely penny-wise to use consultants/contractors. Inside the company everyday, everyone are running around with lots of meetings, most of them are for those “sync-ups”- almost everyone wants to know what everyone else is doing so that they can have a say. All managers, no matter how remotely related to a project, request to be invited to every project meeting. Even when they can contribute little, they want their presence known and respected. Layers and layers of “sync-ups”, but can never be synced up enough for any meaningful decision to be made timely. Of course prep after prep meetings for one senior management meetup. Every minute thing needs consensus or sync-ups. There is no accountability, only plenty of superficial niceties on the surface.

In such a culture, rarely competent people can tolerate or be tolerated. Then what left are less competent managers and people in survival mode and who do what they can do the best: fear-driven behaviors(for job security), self-serving, cover-one’s-own-butt, micromanagement, in-fights. They have high focus on money saving, but can’t see that the largest costs are right in front of themselves- the penny-wise-pound-foolish ways they run their business, organize people and make decisions.

In November 2013, Starbucks lost an arbitration lawsuit with Kraft for $2.76B for its corner-cutting contract practices. Recently, the company is also over the news on the unfair pricing over the coffee offerings in China, their fastest growing region. One can say these were the results of being cunning. Yet, most of their business are still done in the very old-fashioned manual-labored retail ways. Their IT infrastructures and processes are far from ready to support the needed global efficiency. How far can they go in today’s changing world?

Coffee business is a low-entry business. Starbucks is not the first one who invented the popular combination of “espresso + foamed milk” and they will not be the last to use it. A culture that encourages mediocre dominance, to the best, can only perform mediocrely in the long run. Everything changes and no company will last forever.