Schultz Has Left the Coffee Shop. Wake-up & Smell 3 Leader Lessons
The business world has watched Howard Schultz slow departure from Starbucks. He stepped down as CEO in April 2016 and as of this month transition to chairman emeritus. Many believe he will now turn his attention to brewing up a U.S. Presidential candidacy in 2020 (Fortune).
Upon his departure, I think it useful to spend a few minutes looking at what we can learn from the long-term steward of the coffee behemoth and his tenure as CEO.
Whether you gladly hand over $5 a day to your favorite barista for a Venti Skinny Vanilla Latte with Soy or limit yourself to a $.99 cup of joe at your local gas station, we can all agree that Starbucks has brewed up impressive results over the last several years.
(BTW – the puns contained herein are all free of charge!)
Here are three leadership tenets you can learn from him before he goes…
Starbucks hit a low point in 2008. Making poor investments, allowing underperforming stores to flounder, and most importantly losing sight of its core business. Fortunately, they woke up & smelled the coffee, and Howard Schultz reclaimed his CEO role in an effort to turn the company around.
In 2008-2009, Starbuck’s stock price fell below $8 per share (market cap $7.34 billion). Today the stock is at just above $50 per share (market cap in the neighborhood of $72B).
Even the most pessimistic person would say the cup of coffee is half full. Nonetheless, every leader can learn something TODAY from Schultz, Starbucks latest move, and its overall turnaround.
What’s the eye-opening leadership lesson?
Every bold move Schultz has made appears grounded in three key leadership tenets.
My hope is that whether you are going through a performance grinder or not, you can benefit from Starbucks’ approach and commitment to a few key leadership tenets.
Leadership Tenet #1: Foundational Values
“A distinctive set of values has always shaped how we engage our customers, our partners, and the communities where we do business.” – Howard Schultz
Values matter and it’s important for an organization to clearly define what it values. Performance might be a ticket to the game, but values are what allows someone to stay around for the long-term. If employees aren’t living your values, you need to filter them out of the organization.
Much more than a plaque on the wall, values are represented in the policies and programs of an organization, how it expends its resources, what it rewards, and how employees behave. Schultz understands this. Under his leadership, Starbucks has focus on profits while demonstrating value for its employees (healthcare, education, and diversity), communities (volunteerism and hiring of veterans), and the world (sustainability efforts).
- What does your company value? What evidence exists of these values?
- Do you have people in your midst who are not on board with the organization’s values? If so, what are you doing about it?
Leadership Tenet #2: Innovation and Operational Excellence
“Our laser focus on disciplined execution and robust innovation was key to the success we experienced across our business this past year.” – Howard Schultz
Starbucks has worked to build billion dollar brands through the stores that it operates, license agreements, and a growing consumer packaged goods (CPG) market. Focusing and delivering results like these doesn’t come naturally. In a world brimming with good initiatives, projects, or efforts to take on, an organization can be easily distracted. However, Schultz has remained committed to his turnaround strategy.
Along the way, the company has added to its offerings both organically and through acquisition. In the past several years, Starbucks acquired Teavana, created the Evolution Fruit product line, and placed a growing selection of products into grocery and big box stores. (Oh yeah, they have also managed to figure out a way to add Pumpkin Spice to everything!)
All of these efforts have a strategic connection to Starbucks overarching strategy.
- How laser focused is your organization? Do you have a few clearly defined and well understood goals OR a laundry list of things you kinda want to get done?
- Are you looking for ways to put into practice the behaviors of your top performers in order to raise everyone’s performance?
- What trends should you be paying attention to in order to remain relevant in the marketplace?
- Is your organization designed to innovate? Are you hiring the right people, challenging them accordingly, and allowing them the ‘space’ to innovate?
Leadership Tenet #3: Responsible Growth
“To realize our ambition of ranking among the world’s most admired brands and enduring companies, we understand more than ever what it means to grow responsibly—with fiscal discipline grounded in our guiding principles.” – Howard Schultz
In 2008-2009, the company slowed expansion efforts to focus on the quality of existing stores. Changes were made to store design and decor. They famously ‘stood down’ for several hours to train every barista in an effort to further ensure quality of both product and service.
In addition to store improvements, Starbucks has worked to actively engage customers online. The company created an online forum for customers to provide ideas (100s of thousands of ideas have been submitted), established an active social media presence (Facebook alone has 28 million visits), and built a loyalty app that allows customers to pay from their smartphones, collect ‘stars’ toward free products, and receive messages about special offers. Starbucks knows the lifetime value of a single customer and is working hard to increase that value as it gains customers. And it’s working. The top 20% of Starbucks customers thrive on a Starbucks caffeine high and visit a store at least 16 times per month.
- Have you grown in directions that are not sustainable or are undercutting your overall efforts? Might you need to pull back on something?
- Are you creating sustainable relationships with your customers? What efforts should you put in place to increase your customers engagement?
- Do you know the value of your top customers? The cost of your most taxing customers?
Photo by Hans Vivek on Unsplash
Patrick Leddin, PhD is a speaker, global leadership consultant, and The Wall Street Journal bestselling author of The Five-Week Leadership Challenge. Patrick is an Associate Professor at Vanderbilt University with a thriving leadership blog and podcast, and 25-years of leadership experience. He offers an unparalleled mix of academic rigor and real-world experience.