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Costa Coffee (A): A Proposal to Build the Next Generation Self-serve Espresso Bar

By Julian Birkinshaw


This is part of a case series. The case focuses on how a senior executive assesses the opportunity to drive innovation in his division. Jim Slater, Managing Director of Costa Enterprises, is thinking about a management consultant’s offer to build the next generation coffee machine for his division. The company’s business model has historically been built on incremental improvements, but this proposal would involve a ‘step change’ in how new products are developed. Costa Enterprises rolls out self-service vending machines (‘concessions’) that deliver quality coffee to customers in areas not served by premium high street cafes. The proposal Slater is considering is to build the next generation concession. However, handing over control of such an important, venture to an outsider seems like a significant risk for Slater to take.

Learning objectives

  1. Provide insight into how an established firm can develop an entirely new product line through an independent or “skunkworks” style of team.
  2. Understand the challenges of managing in an ambidextrous way: in other words, understand the tradeoffs and tensions involved in trying to innovate in a radical way while also operating an established business that innovates in an incremental way.
  3. Gain insight into the process of corporate entrepreneurship in an established firm.


Publication Date: September 2013
LBS Case Code: CS-13-013
Subjects: , , ,
Pages: 23
Format: pdf