CASE
1.3
New Harvest Coffee Roasters Brews Up Fresh Business
If you’re one of those people for whom the scent of freshly roasted coffee is irresistible, you
have something in common with RikKleinfeldt. Kleinfeldt, the co‐founder and president of
New Harvest Coffee Roasters, is a self‐proclaimed coffee fanatic. He dwells on the aroma and
flavor of coffee. He measures the freshness of roasted coffee in hours and days, instead of
weeks and months. Kleinfeldt started New Harvest Coffee Roasters ten years ago as a way to
pay homage to fresh coffee and build a business around it.
Kleinfeldt observes Starbucks’ tremendous success at creating gathering places for people to
enjoy coffee and tea—as well as baked goods—in a relaxed social atmosphere. But he also
notes with humor that, although cafes and coffee bars were thriving a decade ago, these
popular hang‐outs “weren’t really about coffee. They were about smoothies and cookies. I
thought, maybe it’s time to get back to basics and roast some coffee.” Kleinfeldt recalls that
friends and colleagues—fellow coffee fans—felt the same way. He believed that he had a basis
to start a business. “We’re coffee people,” he explains. “There is a like‐minded group of
people.”
Kleinfeldt also points out that the movement toward locally grown or produced foods has been
a big help in establishing and building support for his business. “The idea of local coffee starts
with the local roaster,” he explains. Although the coffee beans themselves are grown
elsewhere—mostly on farms in Costa Rica—they are roasted at New Harvest’s facility in
Rhode Island, where the company is based. “Freshness is a huge factor” in a good cup of
coffee, says Kleinfeldt. “Once it’s roasted, it’s good for about two to twelve days, which is a
good incentive to buy local.”
Buying local is exactly what retailers and coffee shops like Blue State Coffee do, creating a
collaborative relationship with New Harvest. Alex Payson, COO of Blue State Coffee—a
thriving shop in Rhode Island—observes that most of his customers live within a five or ten ‐
minute walk from his business. Blue State customers are educated about the coffee they drink.
“They want to know,” says Payson smiling. “We connect with our coffee farmers. Our
customers ask about the story behind our coffee,” including farming practices and working
conditions. Payson and his colleagues from New Harvest have traveled together to some of the
coffee farms in Costa Rica that grow the beans they purchase. In fact, loyal customers can
view the progress of trips like this on New Harvest’s Facebook page.
Relationships with companies like Blue State Coffee as well as with consumers are the basis
for New Harvest’s growth as a business. “We need strategic alliances,” says RikKleinfeldt.
“Blue State is a great example of that. “They buy into what we’re doing and we support what
they are doing. They collaborate with us—what’s good for Blue State is also good for New
Harvest.” Blue State educates its customers and employees about the benefits of buying from a
local firm like New Harvest, which in turn works with certified organic, free trade growers.
When Blue State’s workers are able to discuss their products knowledgeably with customers—
including where and how they are grown, harvested and roasted—a relationship is developed.
Sharing activities, comments, news, and anecdotes with customers, retailers, and coffee shops
through social media such as Facebook and Twitter allows New Harvest to broaden its base
without spending more dollars on marketing and advertising. These connections also put a
personal face on the company and allow New Harvest to gain important knowledge about the
views and preferences of its customers. In addition, they provide valuable opportunities to
showcase some of the company’s work in the community as well as its support for
organizations such as the Rainforest Alliance and New England GreenStart.
“Our mission is to be the leader in our region in developing the palate and expectations of
coffee drinkers, in order to create a permanent market for the coffee produced by passionate
and skilled growers,” states the New Harvest Web site. For RikKleinfeldt’s company and
customers, coffee is much more than a hot cup of joe in the morning. Coffee—organically
grown, freshly roasted, and served locally—represents a sustainable way to do business.
Questions for Critical Thinking
1Give examples of each of the four factors of production that New Harvest must rely on to be
. a successful operation. How does each contribute to the firm’s success?
2.Visit New Harvest’s Facebook page. Note specific examples of the ways in which the firm is
using social media to manage its relationships.
3RikKleinfeldt notes the importance of strategic alliances with firms like Blue State Coffee.
. Describe how you think New Harvest benefits from alliances with not‐for‐profit
organizations such as Rainforest Alliance, New England GreenStart, and Rhode Island PBS.
4New Harvest builds much of its reputation on its efforts toward environmental sustainability.
. How does this reputation affect its relationship with consumers?
Sources: New Harvest Web site, http://www.newharvestcoffee.com, accessed August 18,
2010; Blue State Coffee Web site, http://www.bluestatecoffee.com, accessed August 18, 2010.
Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.
CASE
9.3
Kimpton Hotels: “Our Employees Are Our Brand”
The hotel and restaurant industry caters to its guests, but it has always had a reputation for
being somewhat inhospitable to its employees. Traditionally, hotel and restaurant workers put
in long hours for low pay and little or no recognition; they’re the invisible hosts who fluff the
pillows and sweep away crumbs. But Kimpton Hotels is setting a new example by treating its
employees as something better than family: they are, in many ways, business partners.
Kimpton Hotels was founded in 1981 by Bill Kimpton, an investment banker with a vision for
boutique hotels: small, luxurious hotels with impeccably intimate service and gourmet
restaurants. Today, Kimpton operates 50 hotels and restaurants around the country, each
beautifully designed and furnished. “But more than that,” notes COONikiLeondakis, “the
people really separate us” from other hotels. As COO, Leondakis knows first‐hand the
difference at Kimpton. Leondakis talks about her company’s full‐blown commitment to
empowering employees to make decisions, to take part in running the business, to grow as
professionals. “The employee of today wants more and expects more, and is not willing just to
be a servant, loyal worker, or soldier,” she says. Leondakis is proud of that fact and of the
army of top‐flight employees and managers who work at Kimpton’s various locations.
One of those managers is Peggy Trott, the general manager of the Kimpton Hotel Palomar in
Philadelphia. Trott explains how Kimpton empowers its employees. “Kimpton wants each
general manager to be an entrepreneur,” she says. “They want you to operate your hotel as if it
is your own business. So there’s a lot of leeway.” While some managers might argue that this
puts undue pressure on them to perform as business owners, Trott views the challenge as an
opportunity. She notes that the attitude toward empowerment travels from the top down in the
organization. She says that each of her employees is charged with being a hero every day,
especially when it comes to guest service. If an employee is acting on behalf of a guest, then
he or she is free to make the decision on the spot.
“I have high expectations, but I think that when you give people high expectations, they rise to
the occasion,” says Trott. For example, if a housekeeper sees that one of her guest rooms is
housing a family of two parents and two children, the housekeeper is expected to stock the
room with extra towels instead of waiting for the guests to call the front desk requesting more
towels. No matter how large or small the task might seem, “We expect people to be self‐
leaders,” notes NikiLeondakis. “We expect employees to use their heads.”
Because each of the 50 Kimpton hotel and restaurant properties is unique to its location and
local population, Kimpton actively recruits employees with diverse backgrounds and
qualifications, then gives them the authority to serve their guests as they see best. Individuality
is nurtured rather than squelched. NikiLeondakis observes that, because her employees come
with a wide range of experience at different locations in the hospitality industry, sometimes it
is difficult to get them to leave behind their previous assumptions about their role as hotel
workers. “The biggest challenge with employee empowerment and communication is that
we’re all products of our past,” Leondakis says. New employees often have to be retrained to
think outside the box, make decisions, and “rock the boat,” as Leondakis puts it.
The results of this retraining toward empowerment have not gone unnoticed. Kimpton Hotels
consistently win awards for service, and the group has received many accolades for its
approach to human resource management, including a recent award from the Human Rights
Campaign for “Workplace Equality Innovation.” In addition, Kimpton is regularly named to
Fortune’s list of “100 Best Companies to Work For.”
Recent praise from the industry publication Hospitality Design included a statement from
Kimpton CEO, Michael Depatie, crediting NikiLeondakis with much of the company’s HR
success. “Niki has an extraordinary ability to connect with people, from guests she meets on
the road to each and every one of our employees,” said Depatie. Leondakis, managers like
Peggy Trott, and the entire staff, embody their company’s assertion that “Our employees are
our brand.”
Questions for Critical Thinking
1Give three specific reasons why empowerment is key to the success of a firm like Kimpton
. Hotels. How might this distinguish it from other hotel companies?
2.Select the concept of either a problem‐solving team or a self‐managed team. How might this
team function at a Kimpton hotel? Who might be on the team, and what role might it play in
the running of the hotel?
3Give an example of a situation in which informal communication would function well
. among empowered employees at a Kimpton hotel.
4Currently all Kimpton hotels are located in the U.S., which is a low‐context culture. If the
. firm decided to open a hotel in a high‐context culture such as Japan, how might
communication between staff and guests differ?
Sources: Kimpton Hotels & Restaurants Web site, http://www.kimptonhotels.com, accessed
August 22, 2010; “Why Work for Kimpton?,” http://www.imkimpton.com, accessed August 22,
2010; Sam Guidino, Mike Desimone, Jeff Jenssen, Lynn Alley, “Kimpton Takes Philly,” Wine
Spectator, July 31, 2010; http://www.winespectator.com; “Kimpton Hotels Aim for 100
Percent Green Seal Certification,” GreenerBuildings, March 31, 2010,
http://www.greenbiz.com.
Copyright © 2011 John Wiley & Sons, Inc. All rights reserved
CASE 10.3 Kimpton Hotels Puts Green Initiatives to Work
It’s one thing for a company to talk about green initiatives; it’s quite another for the firm to put
those initiatives into practice. Kimpton Hotels & Restaurants began putting green initiatives to
work in its hotels and restaurants nearly thirty years ago, long before these practices became
popular. Of course, it’s the operations function of the business that implements this type of
plan; it’s the hotel manager, the dishwasher in the restaurant, the housekeeping staff, the front
desk clerk. “How we do what we do defines us,” observes NikiLeondakis, COO of Kimpton
Hotels & Restaurants, which runs 50 boutique‐styleluxury hotels and restaurants across the
U.S.
Although Kimpton began its green practices long ago, in 2005 the company launched a
company‐wide program called EarthCare in order to standardize these practices across all of
its hotels and restaurants. Frank Kawecki, director of operations for KimptonRestaurants in the
Northeast, recalls that Kimpton’s green efforts started first in the restaurants with the chefs,
then spread. When the EarthCare program began, the company asked for volunteers from each
property who were devoted to the green effort because they were already committed to the
idea and could communicate best between management and staff. Volunteers ranged from
bartenders to general managers who were willing to meet once a month. One of the first
initiatives—which came from restaurant servers—was to eliminate imported bottled water,
shifting instead to locally bottled water and the use of recycled water bottles.
As EarthCare has expanded throughout the company, standard guidelines have been set for
nearly every facet of the firm’s operation. Home office materials and procedures include
shifting to online publication of many documents; using post‐consumer recycled paper and
eco‐friendly inks for those documents that are printed; making hotel key‐cards from recycled
plastic; offering continuous education in green initiatives for staff, and more. At the hotels
themselves, all hotel in‐room materials and bills are printed on recycled paper; phone books
are offered by request only; all plumbing is water‐efficient; lighting is LED or CFL, and
subject to motion sensors; rooms are stocked with green‐certified linens and towels; guest
room soaps are made of natural ingredients, and carpet cleaning is done with nontoxic
products. If the list seems endless, it nearly is—and the complexity of the operations
management required to implement standards such as these is daunting.
Waste management is a category unto itself, with hotel and restaurant‐wide recycling and
reuse of everything from cardboard and paper to batteries and computers. Restaurants in
particular present a huge challenge. “There’s an enormous amount of waste from a lot of
restaurants,” observes Frank Kawecki. “A lot of it can be composted, recycled, or reused.
There can be a 40‐percent savings in waste removal. Waste removal was traditionally a fixed
expense that we have manipulated,” through EarthCare. In addition to reducing waste and
energy use, Kimpton restaurants purchase and serve as many certified organic products as
possible, ranging from local produce and seafood to coffee, tea, and wine.
Saving the planet can be expensive. Running a business incurs costs as well. One of the
challenges of implementing the EarthCare program is monitoring costs. “Green efforts can’t
compromise the experience for our guests and it can’t cost our shareholders more money. If we
go out of business, saving the planet as hoteliers goes away,” notes NikiLeondakis. “So that
premise was very good in helping us decide what we would tackle first—water savings,
energy savings.” Whatever is good for the planet has to be good for the bottom line. One way
that Kimpton Hotels meets this goal is by looking at ways for certain costs to off‐set each
other. If purchasing recycled paper costs more, there might be a way to find savings in another
area. “We put measurements on all of our efforts to see what impact they have on the bottom
line,” says Leondakis. “We’ve still been able to say that it saves us money.”
Recently Kimpton Hotels announced its plan to seek third‐party Green Seal certification on all
50 of its properties; ten properties have already been certified. Green Seal certification
involves an application process and evaluation similar to LEED certification, which the
company is also seeking for its new or renovated properties. “It will be an ongoing work in
progress forever,” predicts Leondakis. But Kimpton Hotels has a head start.
Questions for Critical Thinking
1Location is certainly a production factor for Kimpton Hotels & Restaurants, which are
. located in cities such as New York, Los Angeles, Boston, Chicago, and Seattle. What
location factors might Kimpton managers consider when thinking about whether to acquire
or build a new Kimpton hotel and restaurant?
2.According to the EarthCare program, what factors might a Kimpton restaurant chef or
manager consider when selecting suppliers?
3A daily staff meeting at a Kimpton hotel can be considered part of production control,
. contributing to the smooth running of the hotel. Who might attend such a meeting? What
kinds of topics might they discuss?
4Quality is top priority at Kimpton Hotels & Restaurants. What steps can a Kimpton hotel
. manager take to balance quality and the initiatives of the EarthCare program?
Sources: Kimpton Hotels Web site, http://www.kimptonhotels.com, accessed August 22, 2010;
Matt Courtland, “Environmental Mission Statements: A List of Hotel Sustainability Policies,”
Environmental Leader, March 18, 2010, http://www.environmentalleader.com; “Kimpton
Hotels Aim for 100 Percent Green Seal Certification,” GreenerBuildings, March 31, 2010,
http://www.greenbiz.com.
Copyright © 2011 John Wiley & Sons, Inc. All
CASE 10.2 Zappos: How Not to Get Zapped by Customer Service
If you like shoes, you’ve heard of Zappos. Perhaps you’ve ordered a pair (or two or three) from
the popular Web site, taking advantage of the free shipping and free returns. Tony Hsieh, CEO
of Zappos, wants you to be happy. He wants to you be happy with your shoes, and if you’re
not, he wants to make returns easy for you. This is because he wants you to come back and
order more shoes—which you probably will. Hsieh believes that the best way to attract and
keep customers is to “wow” them with customer service. It’s a formula that works—Zappos
reports that nearly 75 percent of its business comes from repeat customers.
Although Zappos is now owned by Amazon, and has also grown to offer apparel, accessories,
and other products, the company’s commitment to customer service has not changed.
Delivering top service, which includes fulfilling and shipping orders as quickly as possible, is
a significant part of Zappos’ production function. While Internet and other computer
technology helps speed delivery and turnaround time, it also sets the bar higher than ever
before. One survey recently revealed that consumers would be willing to pay nearly 11 percent
more for superior customer service at online shopping sites. “Due to the seemingly distant and
remote nature of online shopping, it makes sense that consumers would pay a higher premium
to have the comfort and peace of mind that they will be taken care of in the case of a serious
question, concern or problem,” concluded the survey.
Customer service is also an investment in quality. Zappos currently has a Customer Loyalty
department staffed by 380 employees whose job it is to communicate among the different
departments of the company and with customers. The customer loyalty team interfaces with
the resource desk, order verification (anti‐fraud team), quality assurance, kaizen (continuous
training), and e‐mail/live chat, along with other departments as necessary. Customer loyalty
team members have the authority to send individual customers personal notes or request
flowers for a wedding or anniversary celebration. They don’t need to ask permission to issue
refunds or coupons or to give out their contact information. At Zappos, the outlook is that
everyone is a customer and should be treated with respect.
Constant improvement is also part of the company culture. “Let’s take our learnings and
improve, constantly,” says marketing chief Aaron Magness. “If we rest, we’ll be passed by the
next more hungry business.” Tony Hsieh agrees, adding that it is necessary to embrace change,
recognizing opportunities in the industry and the marketplace. The formula must work—
Zappos rakes in more than $1 billion each year selling shoes online to customers who haven’t
even tried them on to see if they can wiggle their toes.
Questions for Critical Thinking
1Explain how customer service fulfills a significant portion of Zappos’ production function.
.
2.What kind of firm might Zappos use for benchmarking? Why?
Sources: Sean Smith, “What Can Zappos CEO Tony Hsieh Teach You About Online Business
Success?” Power of More, April 19, 2010, http://powerofmore.net; “Zappos’ Customer Service
Draws Raves in a New Report,” Internet Retailer, March 22, 2010,
http://www.internetretailer.com; Brandon Gutman, “Zappos’ Marketing Chief: Customer
Service is the New Marketing!” Fast Company, March 15, 2010,
http://www.fastcompany.com; Eric Friedman, “Zappos and the Continued Power of Customer
Service,” Marketing, March 12, 2010, http://www.marketing.fm; Graham Charlton, “Q&A:
Zappos’ Jane Judd on Customer Loyalty,” Ecoconsultancy, November 4, 2009,
http://ecoconsultancy.com.
Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.
CASE 11.3 Zipcar and UNH: Customer‐Driven Marketing
When you’re a college student, getting around campus (or off‐campus) can sometimes be a
challenge. You can walk. You can ride your bike or your skateboard. But when rain is
pummeling your backpack or when you have to carry that heavy box of marketing flyers
across campus, you wish you had a car—not to mention if you want to head off‐campus for a
weekend road trip. So you decide to bring a car to campus, but discover that you’re forking
over several hundred dollars for a parking permit and you can’t find a place to park anyway.
Then there’s the expense of gas and insurance, and the nattering of friends who want a ride or
who want to borrow your car—just for an hour or an evening. Depending on where you go to
school, Zipcar has got you covered. If you happen to attend the University of New Hampshire,
you’re in luck.
Zipcar is a car‐sharing network based in Cambridge, Massachusetts that operates in
metropolitan areas and on university campuses around the U.S., Canada, and the United
Kingdom. Car‐sharing was already popular in Europe ten years ago when Zipcar founders
decided to see if the idea would fly in the U.S. Shortly after its introduction to urban dwellers
and U.S. students, Zipcar’s message had wheels.
At the University of New Hampshire (UNH), students and faculty already had several
transportation options, including an Amtrak station nearby and several bus services. But Brett
Pasinella, who works for the University Office of Sustainability, wanted to find a way to link
the different transportation options and expand them in a sustainable fashion. His research told
him that Zipcar fit UNH’s existing options. “We went through a bidding process to get the
right company,” Pasinella says. The firm had to meet UNH’s requirement that membership
include insurance and fuel. “Zipcar really stood out because of their technology and
understanding of the services and what we were looking for,” explainsPasinella. But UNH still
had to sell the idea to budget‐conscious students in order to make it work.
The Zipcar system is simple: for a $35 annual fee, UNH students or faculty get round‐the‐
clock access to Zipcars that are parked in designated parking spots around campus. When they
join, members receive their own Zipcard (like a key card) that unlocks any Zipcar. Members
reserve a car online, then use their Zipcard to access it. Gas and insurance are included with
membership, as well as an average of 180 miles per day.
To sell the concept to UNH students, Brett Pasinella engaged a senior class of marketing
students to develop a marketing plan for all the transportation systems available on campus.
The class split into teams, one of which chose the Zipcar project. The marketing students
created presentations designed to answer questions and help classmates overcome the hurdle
of a $35 fee. Once they realized that an annual parking permit at UNH is $400—and that gas
and insurance are included with Zipcar membership—they began to recognize the benefits. In
addition, they saw Zipcars parked around the campus so they became familiar with the brand.
Brett Pasinella notes that UNH is also a sustainable campus, and that most of his job is
focused on finding ways to reduce waste and energy use—including throughout the
university’s transportation system. Zipcar’s entire fleet is EPA Smart Way certified and
includes hybrids as well as other zero‐emission vehicles. But Pasinella and UNH marketing
student Erin Badger point out the realities of college life. “A lot of students will focus on the
fact that Zipcar is easier for them and saves them money,” concedes Erin Badger. “We have to
promote Zipcar toward what students are looking for, and those are the two biggest factors.”
After the first year in operation at UNH, Zipcar membership is growing. Pasinella plans to
market the service proactively in coming years—sending Zipcar information to incoming
students and faculty before they arrive on campus with their own vehicles. UNH conducted a
survey of members and discovered that users like the convenience and visibility of the
