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104

Leading Global Transformations

LESSONS FROM COMMODITIES Oil is the most valuable traded commodity in the world. But what ranks second? Surprisingly, the answer is not gold or silver, but coffee. 2 Its historical spread as a beverage offers a fascinating take on the notion of “solution selling.” Introduced into Europe in the mid-17 th century, coffee quickly became a popular beverage, particularly in Britain. Forty years later, there were some 2,000 coffee houses in London alone. Today, people sometimes wonder how Starbucks can charge such high prices for a drink that can be made at home or bought from another store for a fraction of the price. CEO Howard Schultz responds, “Our product is a lot more than coffee. Customers choose to come to us for three reasons: our coffee, our people and the experience in our stores.” 3 It is a response that would have resonated with the 17 th century coffee-house owners. The appeal of the first coffee houses was in part due to the novelty and alleged health benefits of the drink. But the real pull lay elsewhere. Compared to the rival pubs and taverns, which were often rowdy and unpleasant, coffee houses encouraged sobriety, dialogue and deliberation. They became the venues of choice for people wishing to exchange ideas and do business. For the price of a penny, patrons gained access not just to a drink of coffee but also to the latest news, and could participate in or listen to sharp social debate. Some coffee house owners went one better, catering for the needs of a particular clientele by providing additional services. Jonathan’s coffee house issued a list of stock and commodity prices that attracted brokers and gave birth to the London Stock Exchange. Edward Lloyd provided free information on shipping in his coffee house, which later evolved into the insurance underwriters Lloyd’s of London. And the great auction houses Sotheby’s and Christie’s grew out of coffee houses that proposed the use of salesrooms to hold auctions. More than three centuries ago, coffee was the glue to the social networks that then spawned organizations, much like the internet does today. Coffee was really a proxy for networking. Coffee