The Best Little Coffee Shop in the CBD

26 May 2011

John Hemphill - Director

At one stage in life’s adventure, I worked in the Sydney CBD near a coffee shop I’ll call “The Menagerie”. It had charismatic owner I’ll call Gus. One day The Menagerie sported a large yellow plastic banner carrying the message “Award for Best Coffee in the CBD”. It really stood out and grabbed your attention.

You can imagine the place — not quite a hole in the wall but not big either. It had a lot of buzz and good coffee. Gus’ ebullient personality was very evident and Gus’s coffee was very good. So an award seemed eminently reasonable. But, of course, the devil of curiosity kicked in. “Who gave you the award?” I asked. Innocent smile from Gus. “Gave it to myself, mate. We deserved it.”

I saw Gus recently. He’d just sold three coffee shops and was (in his early forties) in temporary retirement.

Telling this story to one of my colleagues, he recalled a company of his own in a very competitive, medium-tech industry with high profile international companies in it. He’d always promoted his locally made products as “the best”. And they worked very well and were backed by good customer service. He said, after a while, he’d win contracts where customers said they’d paid a premium of 10% but “it was worth it to get the best.”

So what are the lessons for developing and running businesses?

I guess the first is, you should always ask questions. Things often aren’t what they seem. They can be better or worse – and it’s good to know which. Time spent asking questions, and listening carefully to the answers is seldom wasted.

Second, you need to think about your business model. Gus was good at managing coffee shops – so the systems he developed for The Menagerie could be used scalably to run enough businesses to build real value. Very sensible.

And the third fits into that delicate area between self-belief and incontestable fact. I think Gus (loveable rogue he might be) was overdoing it. I think my colleague probably wasn’t — as long as his products delivered what customers wanted.

In short, positive thinking is a very good thing. (If you want to explore this, have a look at Martin Seligman’s book Flourish. The first chapter is hard work, but the rest is good. The methodology he talks about is in growing use including by US Army and Marines and at least one major Australian school. It was also written up in last issue of Australian Financial Review’s Boss magazine).