What a difference a couple of years can make. Starbucks
So what does Howard Schultz attribute this success to? Dramatic cost cutting? International expansion? The death of the breakfast sandwich (may it rest in peace)?
No, Schultz says that it was his decision to take 10,000 store managers to a conference in New Orleans that made the difference. Upon arrival, the store managers performed community service throughout the city, contributing 54,000 volunteer hours, before getting down to the nitty-gritty of resurrecting Starbucks. Schultz states, "If we hadn't had New Orleans, we wouldn't have turned things around." He strongly believes that the event galvanized the leadership of the company and resulted in everyone becoming "personally accountable and responsible for the outcome of every single customer interaction."
This is just one of several fascinating insights that emerge from a recent interview with Schultz in Harvard Business Review. We also learn:
- He's very proud of not cutting health care even though Wall Street would have applauded him for doing so. He says that his goal is to "preserve the integrity of what we have built for 39 years....You have to be willing to fight for what you believe in."
- It was hubris that was responsible for Starbucks overlooking the competitive threat posed by such rivals as McDonald's
(NYSE: MCD) , Dunkin' Donuts, Green Mountain Coffee Roasters(Nasdaq: GMCR) , and Peet's Coffee(Nasdaq: PEET) . - Like Steve Jobs at Apple, he learned the importance of succession planning, and plans to get it right the next time around, even though he's "not leaving soon."
- His usual drink is a doppio espresso macchiato.
Perhaps the most striking thing that emerges from this interview is that Schultz still cares very deeply about Starbucks and its people. When asked about his legacy, he says the company's goal isn't to get bigger or make more money. Rather, it is to "celebrate the human connection that we have been able to create as a company, and to make sure people realize the deep level of respect we have for the work they do and how they act."
Now, it's not unusual for CEOs to talk about values and people and making a difference, but it's very rare, in my experience, for me to believe they mean it. And I truly believe that Schultz means what he says.
The novelist F. Scott Fitzgerald said, "There are no second acts in American lives." Fortunately for investors, employees, and customers of Starbucks, Howard Schultz has proved him wrong.
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