Privileged Information

As knowledge accumulated, he altered policies. 

One of the most important resources a business can have is valuable privileged information--that is, knowing something that others do not.  There is nothing arcane or illicit about such information--it is generated every day in every operating business.  All alert businesspeople can know more about their own customers, their own products, and their own production technology than anyone else in the world.  Thus, once Schultz initiated business operations, he began to accumulate privileged information.

As knowledge accumulated, he altered policies.  He took the Italian off the menu, then eliminated the operate music.  He knew the baristas were central, but he did away with their vests and bow ties.  He departed from the Milanese model and put in chairs for the sit-down trade.  Over more time, Schultz discovered that Americans wanted takeout coffee so he introduced paper cups.  Americans wanted nonfat milk in the lattes, so, after a great deal of soul searching, he allowed nonfat milk.  In the technical jargon of international business he gradually "localized" the Italian espresso bar to American tastes.

ACTION POINT: As you accumulate knowledge about your customers tastes, alter your policy where needed to localize the customers experience.