More Sand in the Gears...and Maybe in Your Coffee?

My business partner quoted an incredible statistic the other day. He told me that Starbucks is hiring 200 people per day! According to information available on their website, they now have 3,205 company-owned stores, and recently opened 266 stores in the 21 weeks prior to February 26 of this year. The numbers are 10,985 and 744, respectively, including licensee locations.

So Howard Schultz is opening more than 10 company stores per week, which would account for the employee growth. That is, 2 company stores per day, plus 5 licensee stores per day, plus turnover. With 'more than 100,000' employees currently, they are adding roughly 1% to their employee base per week. Allow for some Kentucky windage, and they are growing like topsy.

At these rates, I would guess Schultz lies awake nights wondering how his company's culture can withstand this sort of dilution and explosion among its ranks. When the US military saw these levels of growth during WWII, they employed the "cadre" system- seeding new units with experienced combat veterans. Is Starbucks doing this? Can they afford to, if they are moving into new locales?

This exemplifies my point in a prior post regarding how rapid growth necessarily creates a counterbalancing inertia of mediocrity resulting from a tidal wave of new, "foreign" influences who are new employees. How long has Starbucks to grow before the inevitable slowdown from unmotivated human "sand" in the corporate gears occurs? Will quality suffer? Turnover rise? Margins thin to pay for adequate talent and training at breakneck speeds?

To once again paraphrase Tom Wolfe from "The Right Stuff," at which "seam" will it blow?

It's only a matter of time. As I write this, I've just read of Intel's big reorganization, and Microsoft's losing 11% of its market value just today in trading.

Don't ever say "it can't happen here.....or there." Schumpeter taught us that it happens "everywhere" in time.