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Wednesday, February 27, 2008

Free at last! Free at last! Thank God Almighty, we are free at last!

The Nu household is no longer dependent on Starbucks! Check it out, people! Our very first cappuccino! Look at the foam on that thing. We made a cup last night around 11:15pm as a nightcap for myself. Mr. Nonny Nu was worried that I wouldn't be able to fall asleep afterward but I was out like a light by 12:30. That's what drinking tea as a child does to ya. But, really, check out that foam. Honestly, I didn't know what was the big deal about foam until I tried that cup. OMG, it was so creamy!! Previously, all the foam I tried was just watery tasting and not creamy at all, which is why I always opted for whipped cream. But, last night's foam? YUM. I'm going to have another one tonight. We are all stocked up on the coffee pods, too. Mr. Nonny Nu ordered around 200 pods, so we are all ready for Stillman's and MonkeyPig's visits! The Nespresso people gave us a decorative box and with descriptions of each coffee flavor in the top of the box (that's Kash's tail behind the lid).

Skillet and Kash just looked on as I enjoyed that piping hot and fresh cup of joe. These two are just too cute.

Remember yesterday when I told you about the new book I am reading (Predictably Irrational)? Interestingly, when I read some more of it in bed before I went to sleep, it talked about Starbucks!*cue Twilight Zone theme* In the following excerpt, the author uses the term "anchor" to refer to a price that, for whatever reason, has been anchored in our minds as a starting point of comparison for a particular product or service:

Now that we know we behave like goslings, it is important to understand the process by which our first decisions translate into long-term habits. To illustrate this process, consider this example. You're walking past a restaurant, and you see two people standing in line, waiting to get in. "This must be a good restaurant," you think to yourself. "People are standing in line." So you stand behind these people. Another person walks by. He sees three people standing in line and thinks, "This must be a fantastic restaurant," and joins the line. Others join. We call this type of behavior herding. It happens when we assume that something is good (or bad) on the basis of other people's previous behavior, and our own actions follow suit.

But there's also another kind of herding, one that we call self-herding. This happens when we believe something is good (or bad) on the basis of our own previous behavior. Essentially, once we become the first person in line at the restaurant, we begin to line up behind ourself in subsequent experiences. Does that make sense? Let me explain.

Recall your first introduction to Starbucks, perhaps several years ago. (I assume that nearly everyone has had this experience, since Starbucks sits on every corner in America.) You are sleepy and in desperate need of a liquid energy boost as you embark on an errand one afternoon. You glance through the windows at Starbucks and walk in. The prices of the coffee are a shock--you've been blissfully drinking the brew at Dunkin' Donuts for years. But since you have walked in and are now curious about what coffee at this price might taste like, you surprise yourself: you buy a small coffee, enjoy its taste and its effect on you, and walk out.

The following week you walk by Starbucks again. Should you go in? The ideal decision-making process should take into account the quality of the coffee (Starbucks versus Dunkin' Donuts); the prices at the two places; and, of course, the cost (or value) of walking a few more blocks to get to Dunkin' Donuts. This is a complex computation--so instead, you resort to the simple approach: "I went to Starbucks before, and I enjoyed myself and the coffee, so this must be a good decision for me." So you walk in and get another small cup of coffee.

In doing so, you just became the second person in line, standing behind yourself. A few days later, you again walk by Starbucks and this time, you vividly remember your past decisions and act on them again--voila! You become the third person in line, standing behind yourself. As the weeks pass, you enter again and again and every time, you feel more strongly that you are acting on the basis of your preferences. Buying coffee at Starbucks has become a habit with you.

But the story doesn't end there. Now that you have gotten used to paying more for coffee, and have bumped yourself up onto a new curve of consumption, other changes also become simpler. Perhaps you will now move up from the small cup for $2.20 to the medium size for $3.50 or to the Venti for $4.15. Even though you don't know how you got into this price bracket in the first place, moving to a larger coffee at a relatively greater price seems pretty logical. So is a lateral move to other offerings at Starbucks: Caffe Americano, Caffe Mistro, Macchiato, and Frappuccino, ["Ah, the Oxford comma--a man after my own heart!" --Nonny Nu] for instance.

If you stopped to think about this, it would not be clear whether you should be spending all this money on coffee at Starbucks instead of getting cheaper coffee at Dunkin' Donuts or even free coffee at the office. But you don't think about these trade-offs anymore. You've already made this decision many times in the past, so you now assume that this is the way you want to spend your money. You've herded yourself--lining up behind your initial experience at Starbucks--and now you're part of the crowd.

However, there is something odd in this story. If anchoring is based on our initial decisions, how did Starbucks manage to become an initial decision in the first place. In other words, if we previously anchored to teh prices at Dunkin' Donuts, how did we move our anchor to Starbucks? This is where it gets really interesting.

When Howard Shultz created Starbucks, he was as intuitive a businessman as Salvador Assael. He worked diligently to separate Starbucks from other coffee shops, not through price but through ambience. Accordingly, he designed Starbucks from the very beginning to feel like a continental coffeehouse.

The early shops were fragrant with the smell of roasted beans (and better-quality roasted beans than those at Dunkin' Donuts). They sold fancy French coffee presses. The showcases presented alluring snacks--almond croissants, biscotti, raspberry custard pastries, and others. Whereas Dunkin' Donuts had small, medium, and large coffees, Starbucks offered Short, Tall, Grande, and Venti, as well as drinks with high-pedigree names like Caffe Americano, Caffe Misto, Macchiato, and Frappuccino, Starbucks did everything in its power, in other words, to make the experience feel different--so different that we would not use the prices at Dunkin' Donuts as an anchor, but instead would be open to the new anchor that Starbucks was preparing for us. And that, to a great extent, is how Starbucks succeeded.


Descartes said, Cogito ergo sum--"I think, therefore I am." But suppose we are nothing more than the sum of our first, naive, random behaviors. What then?

These questions may be tough nuts to crack, but in terms of our personal lives, we can actively improve on our irrational behaviors. We can start by becoming aware of our vulnerabilities. Suppose you're planning to buy a cutting-edge cell phone (the one with the three-megapixel, 8x zoom digital camera), or even a daily $4 cup of gourmet coffee. You might begin by questioning that habit. How did it begin? Second, ask yourself what amount of pleasure you will be getting out of it. Is the pleasure as much as you thought you would get? Could you cut back a little and better spend the remaining money on something else? With everything you do, in fact, you should train yourself to question your repeated behaviors. In the case of the cell phone, could you take a step back from the cutting edge, reduce your outlay, and use some of the money for something else? And as for the coffee--rather than asking which blend of coffee you will have today, ask yourself whether you should even be having that habitual cup of expensive coffee at all.*

We should also pay particular attention to the first decision we make in what is going to be a long stream of decisions (about clothing, food, etc.). When we face such a decision, it might seem to us that this is just on decision, without large consequences; but in fact the power of the first decision can have such a long-lasting effect that it will percolate into our future decisions for years to come. Given this effect, the first decision is crucial, and we should give it an appropriate amount of attention.

Socrates said that the unexamined life is not worth living. Perhaps it's time to inventory the imprints and anchors in our own life. Even if they once were completely reasonable, are they still reasonable? Once the old choices are reconsidered, we can open ourselves to new decisions--and the new opportunities of a new day. That seems to make sense.

*I am not claiming that spending money on a wonderful cup of coffee every day, or even a few times a day, is necessarily a bad decision--I am saying only that we should question our decisions.
Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions 37-39, 43-45 (2008).


Cl. Panic said...

I came by your castle for a foamy latte, but nobody answered the door. Were you closed for a training session, perhaps?

Nonny Nu said...

OMG, that was the biggest publicity stunt ever. Their "coffee" is still inconsistently made, I bet. But, I will never know, since I'm boycotting them.

Cl. Panic said...

So here's a big reveal, that's sure to attract all of the Starbucks bloggers:

One of the big changes is that the baristas are always supposed to pull 2 shots -- even if your drink only takes one. That's pretty standard, as most expresso machines naturally pull two shots.

But Starbuck's fancy automated machines have a 1 shot setting. It uses less coffee and makes the 1 shot. Well, per the training, that 1 shot is not as good as 1 shot takes from a 2 shot pull. So for quality, waste that coffee and dump out the second shot (or use it in another drink being made at the same time).

So guess what -- they're now asking people if they want to add a second shot! (i.e.: want to upgrade your drink?) For a small fee, you'll get what they were going to toss.

Smart cookies they are!

But that aside, I was more pleased with the service I received post-training. Hopefully it will stick and there will be mroe consistent and proper milk foaming in my future.

Nonny Nu said...

Smart cookies they are!
Yes, very smart, disgusting cookies...