Starbucks ceo Howard Schultz talking about his return as ceo
I can’t pass up another chance to listen to Starbucks ceo Howard Schultz talking about returning as CEO and the dynamics of things that happened as a part of the transformation. He’s motivating:
One of the questions that I’ve been asked throughout the tour last couple of weeks is, “Why did you come back to Starbucks? It didn’t seem like this is something you had to do. Or, what motivated you to come back?” And when I answer that question it is with a word that generally is not used to describe people in business, or for that matter a word that is used in business schools, and it is ‘love.’ And the only way I can say it, is that besides from my family, there isn’t anything I wouldn’t do to preserve and enhance the company, and our relationship with our customers, our shareholders, and doing everything that I can to exceed the expectations of our own people. But it is love and devotion, and when you love something as much as I love Starbucks, there is a great responsibility that goes with it.
Prior to coming back as CEO, I wrote this now infamous email, that was unfortunately leaked in February of ’07. It was not an email intended to be critical. It was an email to share my concern about the fact that I thought perhaps – even though the stock price was high and business was very good at time – that we were losing sight of the most important reason and core purpose of our business, and that is, the quality of our coffee, and putting the customer at the center of everything the we do, and doing everything we can to preserve the culture and values of the company.
Once that was leaked, in a way, in a perverse way, it created a level of honesty and transparency in terms of conversations that probably needed to happen a long time ago. And, post that email, a number of things began to unveil themselves, not the least of which is that business began to turn south at Starbucks. And in the weeks and months that transpired post email, it was clear we were heading into some issues that were, in many ways, self-induced. And even though I was not intending to come back, and there was no design for me to come back, the Board and I discussed the situation, and I came back in January of ’08.
When I came back, perhaps the first thing I did, in many ways, was to stand up in front of our people, and literally apologize, that in many ways, that I thought that we as leaders had let the company and their families down. And even though I wasn’t the ceo at the time, and I was the chairman, I was just as culpable as anyone else because I wasn’t paying as close attention as I should have. And then I began to look at how we were doing our work and our business, and I really felt like the honesty and the transparency and the authentic necessity of truth, both with ourselves, our people, and our customers, had to be the standard.
And as a result of that I thought that we needed to literally retrain our people because I thought the execution and the quality of coffee, and especially on the espresso side, was not as good as it once was. And we made the very unorthodox – perhaps unprecedented decision – to literally close every store in North America for retraining. You might remember that: at a very high cost – almost about seven million dollars. It was a very galvanizing event for the company because we were finally dealing with things that should have been addressed a long time ago. And we began to make a permanent promise to ourselves and our customers that the quality of everything we do would be proved in a cup of coffee: And if it wasn’t good enough, we were going to pour it out and not give it to you.
A couple of months after that it became clear that the cataclysmic financial crisis was also beginning to demonstrate that recession was upon us. So between the self-induced mistakes that we were dealing with – much of which was hidden because of the growth and success of the company – and now the financial crisis, it was the perfect storm.
In many ways, Starbucks became a poster child for what seemed to be ‘excess’ at the time, and people were making claims that were not true, about the cost of Starbucks coffee. And if you were drinking Starbucks coffee, you could be doing something different with your four dollars or three dollars, and perhaps you should go somewhere else. It was at that time I thought we should do something again that was quite unorthodox. And that I wanted to bring the most important person within our company together: and that was the store manager. So we literally had a meeting in New Orleans for 11,000 Starbucks store managers. Now before we had one minute of a meeting, we did something that I thought was very important, and in many ways it was reminiscent of the original business proposition of the company, which was to build a business model around the fragile balance between profitability and a social conscience. Doing well as a company and giving back: And so before we had one minute of a meeting in New Orleans, we committed five hours of each person – over 50,000 hours of community service – most of which was in the Ninth Ward, for those people who are being left behind, and literally suffering post-Katrina. And this was real work. People were really getting dirty and doing the things necessary to really help other people. And then we had our meeting.
In that meeting when I stood in front of 11,000 people, I really wanted to demonstrate the concern I had about the position we were in, but also provide a vision and a path for how we are going to transform our company. And what I asked our people in that meeting was the understanding of what it would mean literally not to be a bystander in your store, in which every aspect of customer service, every aspect of quality, every relationship we have with one another and our customers was measured at the highest level. And we would not allow mediocrity to ever enter the doors of Starbucks. But in order to do that, everyone had to make a commitment, that we were, as store managers, as district managers, as regional managers, not going to be a bystander. And specifically what I meant by that is that any issue, any problem, any inconsistency, you have to have a voice, or if you don’t, you are part of the problem.
In addition to that I wanted to convey, and ask people to understand what it means to take things personally, and to be personally accountable for the outcome.
I think what I was trying to do was to get everyone to understand that it’s not about Howard Schultz; it’s not about thousands of stores. It’s about one store, one extraordinary cup of coffee, and a comprehensive commitment by everyone who wears a green apron – the most important people in our company – to do everything we can to exceed the expecations of our customers.
And I think following New Orleans, and this emotional appeal, everyone understood their role and responsibility, and it was the first time in many many months that I really felt that we were in alignment: 11,000 people were all facing the same direction, and deeply deeply committed to preserving and enhancing the values of our company.
This audio cast is something that Howard did on April 21, 2011, as part of his Onward book tour. I have another segment of it that I highly suggesting listening to:
The webcast lasted about thirty minutes. The first portion was Howard Schultz speaking about returning as ceo, and themes in the Onward book. The above recording comes from the first segment of that webcast. Hope you enjoy it too!
On a different topic, many of my readers have heard in the news about Howard’s injured neck, and surgery scheduled in late June, with recovery in July. I think everyone loves a real get well card. I mean the kind made of paper, and not an e card. If you want to send him a get well card, send it to the Starbucks Support Center:
Starbucks Support Center
2401 Utah Avenue South
Seattle, WA 98134
Be sure to write ‘get well’ on the envelope of the card so that the good folks in the Starbucks mail room can quickly tell what it is! We can do two things: Shower Howard with get well wishes, and help keep the US postal service from going under. 😉
Please send a card, and share this article with anyone who might be interested.