Information Systems for Management Crowdsourcing at Starbucks: Embracing Customers - Case Study Example

Information Systems for Management Crowdsourcing at Starbucks: Embracing Customers Name: Course title: Instructors Name: Institution: Date: Introduction Starbuck Corporation is a global coffee and coffeehouse chain situated in Seattle, Washington. Since its establishment in 1971, the settle-based firm has progressively grown into an international powerhouse, having more than 17,000 stores in approximately 50 countries. This includes over 10,000 stores in countries such as United States, 1,000 stores in Canada, 700 in the UK and other notable establishments in regions like Turkey and parts of Asian Markets. The characteristic Starbucks store serves espresso, drip-brew among other cold and hot drinks. The store carries varieties of salad, pastries, sandwiches, Panini, snacks, and items like tumblers and mugs. Through the firms Hear Music brand and the Entertainment division, Starbucks has been bale to sell products such as music, film and books, although most of them are specific or seasonal to localities of the stores. It is worth noting that has continuously expanded. For instance, in 1990s the firm was opening stores almost on daily basis, a trend that continued up to the 2006. Ho (2011, p. 71) notes that the success of the firm can be attributed to effective customer service offered by the firm across all it branches across the globe. Due to this recommendable customer service, especially in the North American region, new and existing customers highly embraces the new stores and products sold by firm, thus being a pivotal factor for the success of the firm. Ho (2011, p. 73) notes that the firm prides its self for creating store environment, which are inviting, encouraging customers to come together for the purposes of meetings, to relax or work as well as socialization purposes. In 2008, the firm launched mystarbucksidea.com, a social media site aimed at soliciting feedback and ideas from the numerous customers served by the company. This paper critically analyses the aspect of crowd sourcing at Starbucks, with an aim of embracing its customers. Background on crowdsourcing Brabham (2008, p. 59) argues that crowdsourcing is the process of outsourcing task, which were traditionally carried out by contractors or employees, to open-ended, large groups of community or people through open call method. Further, crowdsourcing can be defined as a method of organising labour, where companies and other organisations, parcel out work to certain type of community mainly online community. They are offered with payments for any particular person, within the crowd, who complete the tasks, which are set by the organisation. The main advantage for a firm to outsource its activities to the crowd as compared to performing the operations in-house is the fact that companies can be able to access large communities of potential workers having diverse range of expertise and skills. Further, the online community are willing as well as able to complete the activities within the shortest possible duration and at highly reduced costs compared as to when the activities are carried out in-house. The concept of crowdsourcing depends highly on facts because it is open to call to the undefined community or group of people; it also gathers the ones who are fit to carry out the task, solving complex challenges with fresh and relevant ideas. For instance, the public can be invited in developing new technology, carrying out designed tasks or community based designs or DPD (Distributed Participatory Design). Further, it carries out or redefines steps of algorithm or helping to capture, analyzing or systematizing enormous amounts of data. Since the onset of Web 2.0, crowdsourcing has become popular with most businesses, journalists, authors to enable them advantage on the mass collaborations made possible by the web 2.0, in order to achieve the desired business goals, although this has attracted criticism and controversies. Crowd sourcing is a production and problem-solving model (Gentry & Zulfikar 2005, p. 80). Problems are the broadcast to undefined group of solvers, who are inform of open call for the solutions. The Crowd, who are users, typically forms into online communities, and crowds submits solutions. These crowd also sort through solutions, and finding the appropriate ones. There after, the best solutions are possessed by the firm, which broadcast the problem (Crowdsourcer) and wining individuals in crowd, who are sometimes rewarded. In some instances, the labour is often compensated, with prizes or other forms of monetary awards. Crowdsourcing produce solutions from volunteers or amateurs functioning in their spare times or from small businesses or experts that are known for initiating organisations. There are four main forms of crowdsourcing strategies namely: crowdfunding, crowdcreation, and crowdvoting and crowd wisdom. Crowdcreation This is a type of crowd sourcing of product configuration or design. This is because at certain instances, crowdsourcing calls is employed for gathering users to design or creation of product, which totally depends on their inputs. For instance, in 2007, crowdcreation led to the new Fiat 500 after the Fiat Company asked for suggestions on how to revive its products, whose markets value was on a decrease. More than four million suggestions were given that enabled the firm to develop the new model. The other example of crowdcreation is that of Spreadshirt.net initiatives, where customers were allowed to edit and upload photos and graphics for creation of personal t-shirts .From this, the firm has been able to come up with a wide model. Collective intelligence It is worth noting that collective intelligence focuses more on communication technologies, especially the Web 2.0. It has enabled interactivity and therefore users are able to make their own contents. Ho (2011, p. 77) indicates that collective intelligence is not merely quantitative contributions of the information from different culture, but it also of a qualitative type. Reporting and voting Brabham (2008, p. 58) from large number of users into marketable products is organising consumers into a community of registering the users who reports on new services and products, new trends. For instance, sites such as trendwatching.com, a website which brings together over 9000 trend spotters globally, has created a system, there has been supply of observable changes to firms. Crowdfunding It is worth noting that, while crowdsourcing mainly focuses on preferences and knowledge of clients, crowdfunding is all about financing people and projects by the large crowds. Crowdfunding is related to the social networkings and online communities. The crowd can be exiting as communities, although this can be sudden occurrence from disparate groups around the world, sharing interest in funding projects and events. The internet allows information to flow easily around the world thus creating more awareness (Boutin 2011, p. 77) Advantages of crowdsourcing Despite the numerous types of criticism raised on crowdsourcing, there are numerous advantages, which arise from the process of crowdsourcing . One of the advantages of crowdsourcing is getting the work done for cheap (Michelli 2011, p. 111)This has made crowdsourcing to be a famous method of improving existing products and services offered by the firm, especially during this time when there is a great need to cut on operating cost. The other advantage brought about by crowdsourcing is creating more value for the money. Even if the cost of implementation is high, the large number of choices availed to the company provides for good value of money as projects adopted gives good returns. Crowdsourcing also serves a as a great marketing tool for any give firm. For instance, LG crowdsourcing drew many eyeballs through the news, which went viral on the LG crowdsourcing. This helped the fir to attract numerous customers s well as retained the existing customers. Lohr (2009, p. 49) also notes that talents comes from searching. For instance, for a firm to get new ideas, they are normally forced to hire new employees. However, it is important noting that hiring employees does not always guarantee a firm of employees with new ideas in comparison to crowdsourcing also prevents the futile research and development. For instance, firms are required to invest substantially in research and development, which can be often up to 15% of the firm’s annual revenues. Contrary to this, in the process of crowdsourcing, the same activities are done although at a cheaper cost, thus becoming a perfect substitute for R&D (Michelli 2011, p. 101) Disadvantages of Crowdsourcing One of the disadvantages associated with crowdsourcing, information may be leaked to the competitors. Unlike in the R&D, where most of activities are in door, crowdsourcing is mainly in the public domain, hence not effective way researching information, which may make the firm loose in the end. At times crowdsourcing is nota n effective way of carrying out marketing activity. This is due to the bad word of mouth publicities. For instances, if an automobile company aims at crowdsourcing the next models design, then, if the end products are proved not to be good, existing and potential customers will blame the firm for not taking the recommendations seriously, thus may end up loosing a substantial market shares rather than vice versa. Benkler (2011, p. 88) also argues that ideas in crowdsourcing are open as compared to other forms of research. To impress the firm, there are people who will show the firm on a glimpse of what they can do. This can be risky affair, especially if the firm seeks to create unique product or service, chances exists that other people had an eye on this. Benkler (2011, p. 39) argues that crowdsourcing results into conflicts, hence making it not to be adopted as business model in comparison to other approaches of getting ideas and suggestions. The other disadvantage associated with crowdsourcing is the fact that it is easy to get the ideas but it hard to implement them. Sincerity of Starbucks in using crowdsourcing approach As indicated above, the aspect of crowdsourcing cannot be underrated in the contemporary marketing. The reasons as to why different businesses adopts the crowdsourcing approach varies significantly ranging from improving on products and services being offered to cutting on operational costs associates with research and development. By using the aspect of crowdsourcing through its site ( mystarbucksidea.com), Starbucks, the leading coffee chain globally, has been able to connect and gather information from its customers in all its branches across the globe. Anyone customer can pot their own ideas regarding how Starbuck can improve on its products and services. They are also given the opportunity to share and discuss ideas with the other people as well as voting for the best suggestion given on the website. The idea, which currently rank top on the list has gathered more 48,005 points, and received more than 600 comments. One of the most realistic approaches of improving Starbuck targets at turning Starbucks cafes into places meant for conversations about culture as well as art. Another popular idea regards giving of cup of coffee to customers coming in during their birthdays free. Lohr (2009, p. 48) having millions of fans on Twitter and Facebook, Starbuck has ensured that crowdsourcing ensures that it provides differentiated services to the customers, through inviting customers to give their wants and preferences through the site. To make sure that crowdsourcing becomes effective the firm has collaborated with search engines such as Yahoo. As once indicated by Stephen Gilett, the firms’ CEO, through crowdsourcing, Starbuck aims at creating an online destination, true to, as well as expand the firm’s ability to deliver open, premium offerings. The digital network for Starbuck is an extension of the firm’s earlier decision of offering free, instant and an unlimited WI-FI access. The firm has also collaborated with information and content sites such as Facebook, Twitter among others, to ensure that diverse interest articles to all the customers. The major channels of information include the community links that are entertainment, location specific, news, business, careers, health among other notable areas. Despite its call for suggestions regarding upgrading products and services, crowdsourcing has helped the firm to involver its customers more than improve on the existing products (Zook 2010, p. 13). As indicated by the table below, the number of suggestion given by the customers largely out ways the number of implementation carried out by the firm. Product ideas Type Number of ideas Coffee & Espresso Drinks 26,415 Frappuccino Beverages 2195 Tea& Other drinks 2195 Food 12393 Merchandise and music 6,252 New Technology 1,211 Other products ideas 8,600 ( Benkler 2011, p. 49) Experience ideas Type Number of ideas Ordering, payment and Pick-up 6642 Atmosphere and location 11,716 Other experience ideas 9191 ( Benkler 2011, p. 49) Involvement ideas Type Number of ideas Building community 3820 Social responsibility 7521 Other involvement ideas 4878 Outside USA 957 ( Benkler 2011, p. 49) From all the above, suggestions the firm has implemented less than 10% of these ideas ( Benkler 2011, p. 49). This is an indication that the firm just wish to involve its customers from all the part of the world , rather than seeking opinions on how to improve product and levels of service delivery in the cafes. Further, Starbucks have been known for investing substantially in research and development. This has enabled the firm to come up with innovative products and services as compared close competitors such as McDonald. Due to the fact that the form has not announced any plan to reduce on these costs, it can easily be deduced the main aim of crowdsourcing is to raise the number of customers interacting with the site. Key elements of Starbucks crowdsourcing In order to achieve the desired results of the crowdsourcing process, via mystarbucksidea.com there are numerous elements, which have been adopted by Starbucks. Sharing: The site helps community members to post their ideas on the products and services offered by Starbucks as well as changes in operations and contributions. Voting: Any of the customers can be able to create electronic suggestions box. One of the main distinguishing factor of this particular site as compared to other sites offered by competitors is the fact that mystarbucksidea.com allows members to vote for the ideas posted on the electronic suggestion box. By doing this, the firm is able to prioritize ideas, which are attractive to customers. This will attract new customers as well as retaining potential customers. Discussing: In addition to the voting process, the members can be able to give feedback, through commenting on ideas of others. Designated ideas partners or the company ideas in participating in these answer questions, discussions, and provision of insights. Seeing: By accessing this particular site, community members can be able to track ideas progress towards implementation. Running tally of votes whether thumbs up or a thumb down, is displayed on every next entry. The next ideas are tagged by the firm with one of the four status icons such as under review, reviewed, in the works and launched. All these forms of feedback demonstrate the responsiveness of Starbuck towards customer satisfactions Since the site was launched, more than 85,000 ideas have been submitted to the firm through the firm’s crowdsourcing site. In 2008, Starbucks social media initiative was rewarded by the Forrester Research with Groundswell Award, which recognized the firm as a good example of using the social media to embrace its customers. However, the firms’ approach of tapping into the desires and wants has not impressed all it is exiting as well as potential customers. It is worth noting that the crowdsourcing employed by Starbuck is more than a normal electronic box used by many firms across the globe. This is due to the fact that, it allows customers to comment as well as give thumbs up or thumbs down for the suggested issue. Ideas in action are also well indicated on the homepage mystarbucksidea.com, thus making it easy for customers to know what is exactly happening in the site. For instance, some of the current ideas on action includes smaller portions, merger the Starbucks and card apps for iPhone, treat receipt 2011, I want a Starbuck hoodie, Almond milk please among other notable ideas on the site. The firm has also been able to partner with idea partners . For instance, one of the Starbucks Idea partner is Cindy, working with the Mobile and Emerging Platforms team aimed at coming up new innovative ways to reach customers.She is mandated at exploring ways of enhancing customer experiences like the Starbucks app for the iPhone as well as reaching customers through the in-store digital signage. The other Starbucks Idea partner is known as Megan. She works with the food scientists on Research and Development team designing as well as developing food and beverages at the firm. She also works with the bakeries to bake up the tasty supports and treats consumer testing to acquire feedback on the firms’ products. Concerns voiced on mystarbucksidea.com Lohr (2009, p. 45)argues that most of the ideas given to the company through this particular site are just the ones, which were in consideration by the firm. For a website to be realistic, both positive and negative ideas, brought about by the customers should be clearly indicated. This makes the customers visiting the site to be confident about the products and services on offer due to adequate knowledge on the positive and negative aspects of what is being offered. Looking at mystarbucksidea.com one can clearly see that the negative comments have been censored, hence making the site to be less realistic. Generally, this is against cultural norms of the social Web. Other true forms of criticism suggests that if Starbuck was interested in engaging its customer, it would be participating in conversations at the existing web sites, where people talk about the firms performances Using social media to engage customers Generally, the idea of engaging customers through the social media is quiet recommendable for global companies such as Starbuck. For instance, social media sites like face book and twitter have more than 0.7 and 0.4 billion users across the globe. By using crowdsourcing through mystarbucksidea.com and linking it to search engines like Yahoo and social sites like facebook, MySpace among others, Starbuck will be able to tap on the tech savvy generation, especially the youths who have become continuously become rich as compared to the old generation across many parts of the globe (Michelli 2011, p. 201). This will arise the firms brand image, thus more profitability in both the short and long run. Conclusion From the above case study, one can clearly see the great need of crowdsourcing in the current market environment. From mystarbucksidea.com, we can deduce that customer’s participatory levels have been enormous in comparisons with other firms that have tried similar approaches in the pasts. This is an indication of customers confidence with the firm across the globe, so there is the need of Starbuck to implement at least 60% of the ideas given by the customers in order to gain the much needed customers confidence. References Benkler, Y 2011, The Wealth of Networks: how social production transforms markets and freedom, Yale University Press. Boutin, P 2011, Crowdsourcing: consumers as creators, Chicago university press, Chicago. Brabham, D 2008, Moving the Crowd at iStockphoto: The Composition of the Crowd and Motivations for Participation in a Crowdsourcing Application, Rutledge, London. Gentry C & Zulfikar R 2005, Secure Distributed Human Computation. Proceedings of the sixth ACM Conference on Electronic Commerce Ho, M 2011, Assignment Zero First Take: Wiki Innovators Rethink Openness: Citizendium, for Assignment Zero and Wired Lohr, S 2009, The Crowd Is Wise (When It’s Focused),The New York Times, New York. Michelli, A 2011, The Starbucks experience: 5 principles for turning ordinary into extraordinary, Sage, New York. Zook, M 2010 Volunteered Geographic Information and Crowdsourcing Disaster Relief: A Case Study of the Haitian Earthquake, World Medical & Health Policy: Vol. 2: Iss. 2, Article 2. Read More