When Howard Schultz set out on business, it was not his objective just to make money. He wanted to build a great, enduring company: a balance between revenues and relationships. The result we all know was Starbucks. However, the Starbucks journey has not always been positive. An obsession on growth tainted the company over time and Starbucks lost its sparkle. In his biographical book, Onward, Schultz shares with us the challenges he faces and actions taken to reinstate the third place in our lives. So, in less time than it takes to enjoy a skinny, extra hot caramel macchiato, join us to find out how we can learn from Starbucks soul-saving steps.
Lesson 1: It’s all about you
One of the first things Schultz identified on his return as the CEO of Starbucks was the loss of personality. In its early years the baristas in the stores became friends of the regulars. making the store a friendly, relaxing oasis. With a focus on growth, Starbucks recruitment meant staff were appointed and put into positions more relating to sales than service. Starbucks had key values: Respect and dignity. Passion and laughter. Compassion, community, and responsibility. Authenticity. Unfortunately, these were taking second place to growth, expansion and profitability.
Schultz identified that Starbucks had to restore the passion and the commitment that everyone at Starbucks needed to have for its customers. Doing so meant taking a step back before it could take many steps forward.
He gave staff the opportunity to make the change. “It is not about the company or about the brand,” He said to them, “It is not about anyone but you. You decide whether or not it is good enough, and you have my complete support and, most importantly, my faith and belief in you.”
Schultz was determined to reinstate Starbucks as a company committed to building shareholder value and profit, while at the same time, acting through a lens of social consciousness.
Key thought: Work should be personal. For all of us. Work should have meaning for the accountant, the construction worker, the technologist, the manager, and the clerk.
Lesson 2: Success is a dual-edged sword
When we think of Starbucks, other than the coffee, what springs to mind are the intangibles: atmosphere, a sense of belonging, safety, etc. Collectively they are its brand. Its identity. Forsaking them can take a subtle, collective toll.
On his return Schultz felt a gap. Something intrinsic to Starbucks’ brand was missing. An aura. A spirit. Without these sensory triggers, something about visiting a Starbucks had vanished. The unique sights, smells, and charms that Starbucks introduced defined its brand. They were less noticeable. Yet, every week, Starbucks’ stores had 45 million visitors. Why complain?
In short, Starbucks was losing control of its story. Schultz re-emphasised Starbucks was in the business of exceeding expectations. He also identified that it also means they have to admit it when they are not as good as they think they should be.
In Schultz’s eyes Starbucks is a merchant and the merchant’s success depends on his or her ability to tell a story. What people see or hear or smell or do when they enter a space guides their feelings, enticing them to celebrate whatever the seller has to offer.
Schultz firmly believes every small gesture matters, and so much of what Starbucks achieved was because of partners and the culture they fostered. Starbucks did not take their success for granted. Until some did.
Key thought: Success has a way of covering up small failures, and when we get swept up in our success, it has unintended effects. We ignore, or maybe just fail to notice, shortcomings. This is why so many companies fail. Not because of challenges in the marketplace, but because of challenges on the inside.
Lesson 3: Confidence in Commitments to Change
When Schultz took over as Starbucks CEO for a second time he came with a mind full of ideas for change. Being an observer looking in permitted him the opportunity to see beyond the rose tinted glasses of success and to identify the weaknesses overlooked by achievement. But that in turn was his major challenge. How could he get people to change an apparently successful business model?
His number one priority was to instil confidence in Starbucks future. Without confidence, people could not perform. In his opinion strategies and tactics were not enough to get Starbucks back on the experience track: passion, an intangible concept many businesspeople belittle, was also essential. Schultz’s focus was to muster a collective faith in the original Starbucks Experience—its reason for being—and then refocus the company on customers instead of breakneck growth.
Re-installing strategy and creating confidence requires communication that is authentic, decisive, and concrete and comes from all leaders. But it is not a one-man job. Everyone has to work together and commit to the things deemed important.
Differentiation is key. Without differentiation – recognised by the customer – competitors can encroach into your markets and coffee is no exception. Schultz chose the offensive game – proactively defining Starbucks by sharing its full story with its customers, staff and partners.
Key thought: Change is often a necessary component of success. But at the core of any company is the need to maintain a commitment to its story and image. Not by the leadership team, not by customer service…but by all.
Lesson 4: People follow Icons
What is an icon? According to Schultz, icons make sense of the times, offering hope and even mending a culture in turmoil as The Beatles did in the 1960s. Icons assert a “cultural authority,” helping to frame the way people view the times they live in. Icons don’t confuse history with heritage, and always protect and project their values. Icons disrupt themselves before others disrupt them.
So Schultz looked internally to the imminent changes in Starbucks. Will it make their people proud? Will it make the customer experience better? Will it enhance Starbucks in the minds and hearts of its customers? Will it reinstate Starbucks as an icon?
One thing became clear to Schultz: Starbucks had to advance its position as the undisputed coffee authority. He wanted it to attain the position that no one in the coffee business knew more than Starbucks. Of equal importance is to recognise when you deviate from that position of authority. Falling into the trap of “celebrity” can have fatal consequences.
As the story goes, when the Beatles played New York’s Shea Stadium in the summer of 1965 to 55,000 screaming, hysterical fans they couldn’t hear their own music. Their art was literally drowned out by their popularity. Paul McCartney said that in retrospect, this was the beginning of the band’s end.
Key thought: Have you got caught up in your own image? Remember, icons don’t last forever, the times they are a changing. “When did you stop hearing your own music?”
Lesson 5: Change needs a plan not a strategy.
Schultz recognised this requirement immediately. A clear, concrete plan that framed Starbucks bold goals and articulated exactly what they would do to achieve them. It needed to be all on one page, in approachable language so that anyone at the company (part-time baristas, store managers, regional directors, division presidents) could read it, quickly grasp Starbucks priorities, and understand how they could effect productive change.
Strategy is not aspiration. It is not the definition of goals, of objectives or of a vision. The main challenge with aspirational statements is the fact that, in the real world, they are often unattainable. They focus more on the desire and fail to consider the tools and effort needed to get there.
Secondly, strategy is not “best practice” – trying to be better than what’s gone before. Best practices are backward looking; they do not make that sea-change towards the brave new world. What are needed are processes that differ from the past. Processes that are built on foundations aligned to the future.
Strategy is the smart allocation of limited resources to activities that outperform the competition in servicing customers.
Schultz created a Transformation Agenda beginning with a compelling strategic vision.
“To become an enduring, great company with one of the most recognized and respected brands in the world, known for inspiring and nurturing the human spirit.“
Following the vision Schultz created seven goals each with specific tactics for achieving it.
- 1. Be the undisputed coffee authority.
- 2. Engage and inspire partners.
- 3. Ignite the emotional attachment with customers.
- 4. Expand global presence — while making each store the heart of the local neighborhood.
- 5. Be a leader in ethical sourcing and environmental impact.
- 6. Create innovative growth platforms worthy of our coffee.
- 7. Deliver a sustainable economic model.
Key thought: Failing to plan is akin to planning to fail. Action is a four letter word DO-IT.
Lesson 6: Uniqueness: The Tao of Starbucks
Schultz firmly believes each Starbucks store has its own fingerprint. They appear and sound alike — the music, the hues, the menu — and the Starbucks you visit on vacation may feel as familiar as the Starbucks in your hometown. But it’s also true that, like any local café, every Starbucks is a little bit different. The reason? The people.
Starbucks’ best store managers are coaches, bosses, marketers, entrepreneurs, accountants, community ambassadors, and merchants all at once.
Success is not sustainable by how big you become. According to Schultz, the only number that matters is “one.” One cup. One customer. One partner. One experience at a time.
Schultz has brought Starbucks back to its original position, in a marketplace potentially saturated by competition using actions that can assist your company:
- Grow with discipline.
- Balance intuition with rigor.
- Innovate around the core.
- Don’t embrace the status quo.
- Find new ways to see.
- Never expect a silver bullet.
- Get your hands dirty.
- Listen with empathy and overcommunicate with transparency.
- Most importantly, tell your story, refusing to let others define you.
- Use authentic experiences to inspire.
- Stick to your values.
- Hold people accountable but give them the tools to succeed.
- Be decisive in times of crisis.
- Be nimble.
- Find truth in trials and lessons in mistakes.
- Be responsible for what you see, hear, and do.