In its tax fight with Google, Starbucks, and Amazon, the UK has in essence been demanding that they tax themselves: that they pay more tax than they are legally obligated to because lawmakers, in their hectoring, say that would be the “moral” thing to do.
Now see this discussion by Reuters’ brilliant Chrystia Freeland about the notion of plutocrats self-taxing. She says, quite rightly, that the concept of self-taxation is a challenge to the authority of governments: rich people are saying they can better spend their money to benefit society than society’s representatives in government can.
The irony, then: The UK’s lawmakers are undermining their own authority when they demand that Google et al meet different — perhaps higher — demands than their own laws’. They are abdicating their responsibility to write good tax laws and to negotiate tax treaties with other nations, which are attracting business and thus tax revenue from these multinational companies by offering them better deals than other countries (it’s called competition).
And therein lies another challenge to the authority of national governments: that multinational corporations can indeed play states against each other to get the best deal in minimizing taxes and thus maximizing profits (which, let’s remember, is their fiduciary raison d’etre: maximizing shareholder value). This is especially true in the digital economy, when companies can operate anywhere, even apparently nowhere (across distributed, virtual networks), and also find customers anywhere (that’s the subject of a Guardian story today lamenting the VAT taxes it loses to multinationals selling products directly to consumers, offering lower tax rates and thus better prices … which usually is seen as a good thing for consumers).
Taxation is not a moral question. It is a legal obligation. It is the role of government to write and enforce equitable tax laws for the benefit of society. In the current fight over taxes in the U.S. — which, of course, is what the fiscal cliff is all about — we see various sectors predictably acting in their own self-interest: the middle class wanting to tax the rich, the rich hoping to at least minimize that change. In the end, after much needless pain and struggle, Congress will have to pass a tax law and we will pay our taxes as is our legal duty. I would agree that is a moral duty: to serve and protect the rest of society, to give us services and to help those in need.
But if government makes taxation a matter of moral choice, then what of the law? Where is the certainty that both companies and individuals require to plan their lives if we are held to some unwritten standard? Where is the certainty of government revenue to do its work if taxes are a matter of taxpayers’ judgment?
In an age when borders are increasingly meaningless, when citizens can organize themselves, and when new and stateless armies of hackers bear new but damaging weapons, the authority of governments is being challenged on many fronts. Here governments challenge even their own authority.
Starbucks now has a quiet policy of not brewing decaf coffee after noon.
I thought something was odd as Sbux after Sbux had run out of decaf and I go off muttering, ‘How can they run out of coffee? They’re Starbucks.’ Then an honest counterman in Toronto told me about the new policy. I didn’t believe him at first. But after two failed attempts to get decaf this weekend, I asked another employee and was told, yes, it’s a new policy. They will offer to give you a decaf americano (diluted espresso) at the same price. They will even brew decaf if they have to. But you have to wait for that. And don’t believe it when they say “two, two-and-a-half minutes.” I’ve waited five minutes and more. This is passive-aggressive retailing, putting barriers between the customer and what she wants to get your way.
I went to MyStarbucksIdea and found fellow decaffers urging a change in the policy here and here. As my fellow customers point out there, a lot of us cannot drink caf (for me, it’s a medical necessity to avoid it; my wife wonders why I bother). And, by the way, does it make sense to get rid of decaf later in the day, when more people drink it.
Obviously, Starbucks is trying to eke out operating pennies by throwing away less stale decaf coffee and forcing drip customers to one choice. It’s more efficient and Starbucks needs the pennies as its quarterly profit just dropped 77 percent.
But when companies start inconveniencing customers as a business strategy and being sneaky about it, it ends nowhere good. They might as well just give us coupons to Dunkin Donuts and McDonald’s.
My fellow decaffers, please go to MyStarbucksIdea.com and add your voice to the uncaffeinated chorus. We want our decaf.
As Starbucks tries to recapture its old focus, it is stepping back from the music business — from the content business, really — and that made me wonder what spot Starbucks should fit into in our lives.
Its choice of books and music and emphasis on them said much about its old aspirations: a lifestyle company, yes, but one with a worldview and a message: fixing the world, fixing your life, soothing your soul.
But that’s not what Starbucks is to me: It’s my third place, an office, my place for meetings, writing, reading … and drinking a simple cup of coffee, nothing in it and no room for anything, thank you. I’m busy when I’m there. I want it to be pleasant but practical.
Starbucks wanted to be — or was — Barack Obama. I want it to be Hillary Clinton. (And given my preference in candidates — take that as a disclosure — you shouldn’t see this as an insult.)
So what sort of books should Starbucks sell, if it sells any? It occurs to me that it should sell business books, at least in some locations, if so many of us look at it as an extension of our business lives. (Of course, I’ll have one humble suggestion come spring; take that as another disclosure.)
What sort of music should it sell — and, for that matter, play — if any? It’s not easy for Starbucks, as customers see different places in the same location. Look at the discussion about music at MyStarbucksIdea.com: Some want to turn it down so they can make a phone call or talk or read; others want the music to be more democratic for customers or employees; some wonder what the hell music has to do with coffee. It’s as fractured as the Democratic Party.
By putting CIO/CTO Chris Bruzzo — who also headed MyStarbucksIdea — in charge of entertainment now, it seems that Starbucks realizes it’s not a publisher or producer but a distributor and promoter. That’s a very important question to answer for businesses today: deciding what you are and where you fit in, and the answers aren’t the same as they were a decade ago, pre-internet.
And regarding the internet, I’m delighted at Starbucks’ new AT&T wi-fi deal, giving customers with cards two free hours a day. That says to me it is emphasizing business use.
So I wonder what it would look like to have a business-district Starbucks that goes all the way, renting desks to us: place 2.5. I wonder how a neighborhood Starbucks could be more a part of the neighborhood, using its connectivity and localness to gather the events and restaurant recommendations of the locals. (If an airline can be a social publisher, why not Starbucks?) What if Starbucks in cool, late-night neighborhoods got liquor licenses and had wine and port tastings? Does that confuse the brand or would our ability to mold the stores and the brand give it more context? A few years ago, McDonald’s violated advertising rules when it started advertising different brand messages to different audiences: to moms, it was a fun place to take the little buggers, to late-night stoners it was the place to get your midnight munchies. But the stores themselves didn’t change.
And where’s my point and grand conclusion? You got me. I don’t have one. I find companies’ self-examination and reformation fascinating and I’d be very interested in your take.
Marc Benioff, CEO of Salesforce.com on the platform:
* On the genesis of Ideas: “We started using the technology ourselves to talk to our community about what they wanted from salesforce. We called the site ideas.salesforce.com, and we noticed right away that this was a powerful way for us to connect with our community and to make sure that we were delivering the right services and features at the right time. Our product managers have to deliver highly-ranked features and work with Ideas if they are going to succeed in our company. It’s like a live focus group that never closes. I love it and look at it all the time. After using it for a while, we decided this had to be part of our portfolio, so we acquired the assets of the company that built it (called Crispy News), and the employees work at salesforce now.”
* On whether this is really new. “I believe that these days, the rapid communication that is enabled by wikis, blogs, Twitter, YouTube and you name it ensures that no matter what kind of company you are, your customers are having a conversation about your products and practices. The question that every company has to ask is: ‘Do I want to be part of this conversation? Do I want to learn from it? Am I willing to innovate on the basis of it?’ If you harness the power of this community, you will benefit. If you turn your back on it, you get further and further out of touch while competitors flourish. So yes, I think this is a new kind of communication for a new age of customer engagement.
The dead-end suggestion box and the auto reply are symbols of corporate indifference and are no longer tolerated. Customers expect a higher level of responsiveness now, and they will go where they find it. We learned this when we were pioneering Software as a Service. We had to stay connected with our customers or they would not continue their subscriptions. We needed to hear their ideas, or we would miss out on their creativity. And most important, they needed to talk to each other. Dell and Starbucks are pioneers in understanding this.
* On response to Dell’s IdeaStorm: “…But the response was mind-blowing. To be honest, Michael and I were both surprised at both the volume and the content. It was absolutely fascinating to watch, and for Dell, it has opened a new chapter for a terrific brand. Michael was kind enough to share his experience with Howard Schultz at Starbucks, and then we helped them build mystarbucksidea.com
* What about government starting ideastorms? “That is simply a killer idea. We are in an election year of course, and I would like to see both parties use technology to better connect with the electorate. Salesforce Ideas is democracy, as the saying goes, red in tooth and claw. But you have to invest in a conversation–it’s not going to work unless there’s a real back-and-forth.”
From Chris Bruzzo, CTO and CIO of Starbucks and the leader of the MyStarbucksIdea project:
* On customers’ relationship with Starbucks: “Anybody who works for Starbucks… it’s this universal experence that people open up this to-do list that’s in their head. THey have very specific, detailed ideas. That’s a phenomenon. All these ingredients were in place. Howard [Schultz, the returning CEO] said to me we have to reconnect with customers and drive our company, Starbucks, as an entity to having a ‘seeing culture.'”
* On this platform: “Our goals were to collect ideas and to understand which ideas have the most momentum and passion in our customer base
But it was also to open up a dialogue with customers and build up this muscle inside our company in having a give-and-take conversation with our customers. As compelling as the ideas themselves are, it’s almost as compelling to us from an objective standpoint to be able to have this kind of running dialogue with our customers: to close that loop in an authentic way and show the commitment on the part of Starbucks to responding to what we’ve heard, which is about putting those ideas in action or building those ideas together with customers and coming to a new place.”
* On integrating it with the company: “We were not going to simply have this be an opportunity for customers to share perspectives. We were truly going to adopt it into our business process — into product development and experience development and store design. In order to do that, I thought it was critically important to have real experts form the teams that were building our experience selected on the basis of their characteristic and trained to not only have the conversation but the advocacy for what customers were saying via this new channel. So that literally customers would have a seat at the table when product decisons are being made. They have champions inside the company that are advocating for that.”
* They launched it that the annual meeting, where 6,000 people showed up and started sharing their ideas. There’s still some debate whether people should be able to vote down, as well as up, the ideas. For now, Bruzzo says, “it’s a happy place.”
* After I saw one of the “idea partners” say there were things Starbucks was working on in secret related to the Starbucks card, I pushed Bruzzo on really being open. He said: “Onee of the things we have to worry about is IP and competitiveness. We will invest significantly to make enhancements to the Starbucks card platform, for example. We want a head start.” But he acknowledged the issue. “This is an evolution. The community is evolving and so is Starbucks. We’re going to have to rethink when we would disclose broadly about a particular strategy because we have a vested community. There are advantages to having that kind of transparency because it creates more engagement… and we actually get to iterate on our solutions while we’re building them. What we do wit the Starbucks card is likely to be a different process than it would have been without this community. I think it is changing and evolving our views of confidentiality and competitiveness.”
* Surprises? “That coffee classes perked up as much as it did. That shows a level of interest in coffee expertise that some of us were surprised at.”
* What about ideas that don’t work? Some customers are pushing for separate lines for brewed coffee (that is, faster lines without all the froo-froos). “The idea partner is in there saying we actually tried this here and there and these are some of the things we ran into. What do you guys think of that… If it fails our customers who are on MyStarbucksIdea ought to participate in being accountable for it.”
* What’s next? RSS and the ability to track an idea’s progress.
* Advice to other companies: “Don’t underinvest in adopting it into your business process. Take it seriously. See it as an important part of how you run your business…. Go for it. The perfect is the enemy of the good. Don’t attempt to perfect it. Learn. Iterate. Your community is incredibly forgiving actually if you show a real interest to listen and respond.”