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Open Innovation

My Starbucks Idea: An Open Innovation Case Study

Featured image: My Starbucks Idea: An Open Innovation Case Study

Since opening its first store back in 1996, the Seattle-based coffee behemoth now includes almost 30,000 coffee shops around the world and is valued at a staggering $30 billion. A strong commitment to open innovation has helped to drive this incredible growth.

This zest for open innovation led to the "My Starbucks Idea" platform, a customer participation experiment. Now that the company has retired this platform after nearly ten years, we thought it would be a good opportunity to look back and ask a few questions.

So, what can a case study of the "My Starbucks Idea" platform tell us about open innovation? What were the benefits to Starbucks from managing this platform, and how can other businesses take advantage of these benefits?

Pour yourself a little cold brew, and we’ll show you how it all came together.

How did they do it?

As a company, Starbucks has always placed a lot of value on refining its products and procedures following customer feedback. In the company’s earliest years, this was reflected in simple systems like suggestion boxes and customer surveys.

In 2008, however, founder Howard Schultz launched the open innovation platform "My Starbucks Idea". This platform encouraged customers and fans to share their ideas and suggestions for how to make the company’s beloved products even better.

“We need to put ourselves in the shoes of our customers,” Schultz said at the time. “That is my new battle cry. Live and breathe Starbucks the way our customers do.”

As it turns out, the as-yet undecided 2020 Presidential candidate was on to something. Starbucks customers had a real thirst to share their ideas: over the first five years of operation, the platform received over 150,000 ideas, and the company put hundreds of them to use.

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The original "My Starbucks Idea" platform. Source: Starbucks Melody  

The format was simple. All customers had to do was create a profile, write (and categorize) their suggestion, and submit it for others to comment on. If the idea gathered enough steam, or if the Starbucks administrators liked the looks of it, it could then be adopted by the company.

Plenty of companies crowdsource product ideas via customers. So, what made "My Starbucks Idea" unique?

What made "My Starbucks Idea" unique?

"My Starbucks Idea" was a lot more than just a fancy suggestion box.

To help encourage a community of fans, Starbucks enabled users to vote and comment on ideas they liked. There was also a public leaderboard showing the most dedicated fans, as well as those with the most popular ideas.

Users could also see profiles for the Starbucks ‘Idea Partners’ - the company representatives tasked with managing and monitoring online discussion and working with customers on their suggestions. This helped put a human face on the company.

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  The original "My Starbucks Idea" platform. Source: Starbucks Melody  

This blend of open innovation, customer co-creation, and fan community site proved immensely popular. Not only did it create a lot of great product innovations for Starbucks, but it also helped to drive increased customer loyalty.

Through actively managing the "My Starbucks Idea" platform, Starbucks engaged customers, making them feel they were being listened to. By rolling out fan-driven ideas like cake pops and pumpkin spice lattes, Starbucks created greater product diversity.

In June 2018, after almost a decade, the company retired the "My Starbucks Idea" platform. Starbucks still encourages its customers and fans to submit their suggestions for new products on Twitter, of course, as well as via its website.

Now, let’s dig into the detail a little more. What were the results of the "My Starbucks Idea" platform, and what can these results tell us about customer-driven innovation?

Cake pops and pumpkin spice: the results of "My Starbucks Idea"

By paying attention to customer preferences, Starbucks was able to hold its spot as the market leader, even in a rapidly changing industry like the food and beverage sector.

The "My Starbucks Idea" concept was based on a core belief: customers know what they want.

The company’s commitment to this concept led to fans submitting over 150,000 ideas, of which hundreds were adopted. And these weren’t just run-of-the-mill suggestions, either - they include fan favorites like hazelnut macchiatos.

More than just receiving product suggestions, however, the platform also led to suggestions around process improvements, including finessing Starbucks’ mobile payment systems and offering free Wi-Fi.

For a better overview of the range of innovations submitted through the "My Starbucks Idea" platform, check out the following infographic, published in 2013:

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  "My Starbucks Idea" Infographic. Source: HBS  

These examples demonstrate the value of open innovation. By handing power over to customers, and by giving them an incentive to participate by recognizing their ideas, Starbucks was able to channel a lot of crowd creativity.

So, it’s clear that the "My Starbucks Idea" platform led to a huge amount of valuable product innovation. But beyond just suggesting new drink flavors, what were the wider benefits of this experiment?

What were the benefits for Starbucks?

First, there’s the obvious benefit: empowering customers to make suggestions for product improvements meant that Starbucks had access to new, and potentially very valuable, ideas. Many of these were things that would only have occurred to dedicated customers.

The "My Starbucks Idea" platform created significant benefits for Starbucks.

Besides the simple value of these ideas, however, the platform also helped generate a lot of media attention and free advertising. By encouraging die-hard fans to engage online, Starbucks created a new way to market their products to their most valuable customer segment.

The platform also served as a market research tool, too. Many thousands of fans signed up to submit their ideas, and in doing so provided the company with demographic information. This allowed Starbucks to build detailed customer profiles.

The benefit didn’t go just one way, though: Starbucks customers also got plenty of value out of the platform. By engaging with the company, customers experienced a greater sense of inclusiveness, with the platform helping to build a real community.

It wasn’t all sunshine and rainbows, however. As significant as the benefits were for both Starbucks and its customers, the "My Starbucks Idea" platform still created a number of risks to be managed.

How did Starbucks manage the risks of open innovation?

As we’ve seen in the examples of General Motors crowdsourcing advertisement suggestions on Twitter, handing the keyboard over to the customer can open a company up for online criticism, and even harassment.

Sometimes, open innovation can be something of a double-edged sword.

For "My Starbucks Idea", this risk was definitely present. Starbucks employees were required to sift through the online ideas and comments on a regular basis to weed out any trolling or abuse, and to prevent the platform from becoming a tool for corporate mockery.

Managing the risks of online abuse and platform misuse took a lot of dedicated resources, requiring an active approach from the company. Despite a strict set of community guidelines, the platform still required a lot of moderating.

But enough about the negative stuff. What can "My Starbucks Idea" tell us as a case study in open innovation, and how can you put these ideas to use in your own business?

How to make open innovation work for you

As we’ve seen in our article on ten companies showing us how to get it right when it comes to customer co-creation, successful open innovation takes careful planning and foresight.

If you want to make open innovation work for you and your customers, you need to:

  • Appeal to the intrinsic motivations of your fans and customers
  • Set clear limits and guidelines for the exercise
  • Encourage and reward different perspectives
  • Embrace open communication

Let’s take a closer look at these things one by one.

Appeal to intrinsic motivations

Whether it’s a beer fan giving Anheuser-Busch suggestions on their new line of craft lager, or the LEGO community suggesting new toy sets, nobody ever wants to give away a great idea for free. If a product suggestion is valuable, it’s only fair that a company should pay for it.

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  The "My Starbucks Idea" platform. Source: SlideShare  

So, before you ask your customers and fans to put on their thinking hats, give them a reason to participate in the exercise. Whether it’s monetary compensation, public recognition, or a mixture of the two, there should be something on the line if their idea succeeds.

This is something Starbucks got right with its open innovation platform. Not only did fans get the public recognition associated with having their names attached to the ideas, they were also eligible for monetary compensation, too.

Set clear guidelines and limits

Sometimes, a little structure can be a great way to encourage creativity.

Rather than simply asking fans for ideas, "My Starbucks Idea" included guiding categories for suggestions. These included ‘products’, ‘atmosphere & location’, ‘service systems’, and others. These categories helped guide the submissions process and helped stimulate fan creativity.  

Starbucks also set clear community guidelines to help manage online exchanges, too. This not only gave customers a more secure environment in which to share their ideas, it also cut down the amount of work for Starbucks employees managing the site. Win-win!

Encourage different perspectives

The true value of open innovation rests in the ability to encourage customers to share different perspectives on a product or service. After all, you can have the world’s most amazing thinkers on your payroll, but having access to a broad pool of opinions will still get the best ideas.

Starbucks really got this right with "My Starbucks Idea". By actively encouraging and rewarding a range of perspectives and values, the company was able to unlock the innovative potential of a huge number of people, with great results.

If you’re thinking about how to embrace open innovation, make it a priority to encourage people with a range of different perspectives, opinions, and life experience to participate.

Embrace open communication

When it comes to encouraging innovation, open communication is a must - especially given the rise of company representation on social media platforms like Twitter and Instagram.

Businesses need to engage their customers with transparency, consistency, and, above all else, respect. If open innovation participants feel they’re being listened to, and are getting a trusted source of information, they’re more likely to contribute.

Once again, Starbucks really nailed this with "My Starbucks Idea". By communicating regularly with fans, and providing a clear source of dependable information about the platform, Starbucks was able to build trust and reward fans for their ideas.

For Starbucks, open innovation is much more than just cake pops.

Don't just take it from us - here is Matthew Guiste, one-time Director of Social Media at Starbucks, talking about the value of open innovation for the company.

By unleashing the creative potential of its diverse customer base via the "My Starbucks Idea" platform, Starbucks was able to source valuable new product ideas, engage with their most dedicated fans and gather market information to stay on top of trends.

All it took was a little investment in a web platform, some community guidelines, and a commitment to open communication. That’s a small price to pay for such a valuable tool.