New CIO Hopes to Perk Up Starbucks

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Sharp-eyed and highly caffeinated regulars might have noticed the brand-new employee at the Mercer Island Drive Thru Starbucks in November. The newbie, wearing the standard-issue green apron, was receiving a crash course in just about every function at the 1,800-square-foot store. He took a turn as a barista, manned the drive-thru, handed out samples to customers, took out the trash, and assisted a patron who was trying to connect to the Wi-Fi network. He tinkered with the store's point-of-sale (POS) system. He even did some scheduling.

What customers likely didn't realize was that the nearly six-foot, three-inch man offering them free cookie and coffee samples was not just any barista. He was Starbucks' new CIO, Stephen Gillett. To Gillett, who frothed lattes last fall as part of the coffeemaker's week-long executive immersion process, nearly every business and customer-facing process in the store was new.

MORE ON SLIDESHOW Strong Brew, Free Samples and the Drive-Thru: A Week in the Life of Starbucks' New CIO

"They do a lot in the store," says Gillett, the former CIO of stock-photography company Corbis whose background includes senior IT posts at digital media ventures Yahoo and CNet. (Gillett can claim some retail experience: in his younger days he worked at a restaurant and an Albertsons grocery store.) "They do a lot of manual things, and they do a lot of automated things using systems and process. For me, it really amplified the expediency by which I want to deliver some of our key transformational technology platforms." (To see a slideshow of Gillett's in-store experiences and hear the reasons why Starbucks thinks its immersion program is important, see "Strong Brew, Free Samples and the Drive-Thru: A Week in the Life of Starbucks' New CIO.")

Since being named SVP and CIO in May 2008, Gillett has learned all about the expediency required at his new gig-whether it's delivering coffee to a hurried drive-thru customer or refreshing Starbucks' core technology portfolio. And the pressure is on. Starbucks is in the midst of a grueling companywide transformation to recapture the brand's mystique with aficionados who once didn't mind paying three to four bucks for a cup of upscale coffee. But with the economy's unraveling, newly frugal consumers are now more concerned with choosing between paying their bills each month-not with two shots of espresso or three.

This abrupt about-face by its customer base has jolted Starbucks. In 2008, the company shuttered 600 of its nearly 6,800 U.S. stores and laid off more than 12,000 employees out of a global workforce of 176,000. Fourth-quarter 2008 earnings plunged 97 percent compared with the previous year, and the stock has tanked, losing half its value last year. In 2009, the company has said it expects to reduce its cost structure by more than $400 million.

Against this backdrop, Gillett's mission is to create and implement the technology vision of "anything that touches the consumer, whether it's in back-end [IT operations] or in how a customer interacts in a physical Starbucks store," says Chet Kuchinad, EVP of Starbucks partner resources, who lead the team that hired Gillett. "Stephen's not just about legacy systems and not just about efficiency. He's about how we take technology and connect with Starbucks' consumers in a different way. Frankly, we've just begun, and there's a lot of work to be done yet."

Gillett's keenly aware of the stakes, and his role. "I feel like the pressure is equally distributed among the executive team," he says. "I'm part of the team, and the pressure is shared."

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