Monday, April 4, 2011

How Howard Schultz Managed To Enhance Starbucks´ Soul

Howard Schultz is visible everywhere now. At least from three reasons. Starbucks celebrated its 40th birthday on March 30th. Howard recently released his second book "Onward. - How Starbucks Fought For Its Life Without Losing its Soul" and thirdly because he is a true leader who is able to lead by example and generate a buzz around the Company he restarted for success after he returned to the CEO role in 2008.

Starbucks became under his leadership the World´s largest coffee store company. But back in 2007 successes covered up mistakes. Starbucks - as many other growing Companies - lost its focus on the customer. Instead it put all the efforts on the compliance with Wall Street. The pressure to deliver the growth expectations led to over expansion and loosing the Company soul.

Hard work had to be done, tough decisions had to be taken. Starbucks had to downsize and to reclaim its original customer centric values, vision and mission, while aggressively innovating and building on the opportunities arousing from social media landscape. Priority was to maintain the loyalty of Starbucks´s core customers at all costs. "Maintaining a focus on core customers during crisis is what helped weather a downturn," said once Howard, "While winning them back later would be too hard."

Howard understood well, that the Starbucks brand has to be unique and authentic. It has to resonate with the customer. People want to support only those brands and companies, whose values are comparable with their own. These values have to be inspirational, the staff and shop ambient have to breathe them. But a true brand has to go beyond its own distribution outlets.

This was the reason why Starbucks intensively started to emotionally engage with customers outside the coffee stores. Starbucks found the recepie to become one of most relevant brands to customers on Facebook, Twitter or Foursquare. It has developed itself into an iconic modern brand, often used as a benchmark, not just in the coffee business.

Howard underwood well that "Employees want to work for a Company they are proud of." But as well that "We are not in the coffee business serving people, we are in the people business serving coffee." For him the most important people at Starbucks are those wearing the green aprons. That is why one of the first steps Howard had done as returning CEO was unprecedented closing of all the North American stores for three hours to retrain employees (at costs of 6mil. USD) and then hosting a comprehensive off-site with 10,000 retail store managers (at costs of 30mil.USD). He apologized himself to all the staff for the decisions Starbucks leadership had made that had put the Company into the negative position. "The most important characteristic of a successful CEO is building trust with everyone in the organization. We can´t exceed the expectations of our customers if we can´t exceed the expectations of our own employees."

"Success is not an entitlement. It has to be earned.".Once you have the loyalty and trust of customers, you have to continue to earn it," as Howard once said. Starbucks is now on the rebound with its stock up more than 350% from its 2008 low. Though the challenge will be to keep the momentum and avoid the mistake of sleeping on the laurels again.

Howard Schultz personal mission:
"Dream more than others think practical. Expect more than others think possible."

Howard Schultz on vulnerability of a CEO - more in my other blog post:

No comments:

Post a Comment