Howard Schultz - Part 2 - Leading the Company Back from the Brink

Starbucks - Legends Report

By Jatinder Singh, Associate Partner, Lighthouse International

“I have said for 20 years that our success is not an entitlement and now it's proving to be a reality. We have built the most trusted brand in coffee in the world, and we have an enormous responsibility to both the people who have come before us and the 150,000 partners and their families who are relying on our stewardship.”

- Howard Schultz, Starbucks CEO

Following on from how Howard Schultz set-up Starbucks with his co-founders, this report explores how the company grew into a massive global brand and the challenges it faced in 2007 as the credit crunch started to hit. Howard stepped back from his role as CEO in 2000 returned in 2007 to steady the ship when he felt that their success was being taken for granted. It’s a great lesson on how great leaders take responsibility for those who are in their care, rather than looking for ways to blame others.

Treating His Employees Well

Despite the fact that customer service was at the heart of the restaurant industry, many companies paid their staff poorly and treated them equally as badly. Howard knew that he had to keep staff motivated and treat them as people, to the extent that he refused to franchise his model, allowing him to offer staff health care benefits which was a revolutionary move at the time. Howard knew that if he treated staff well, they would develop better relationships with customers who regularly visited that particular store. People and relationships were at the heart of Starbucks’ culture.

Howard also felt that treating staff well was a moral thing too. He never forgot the roots he came from, despite the wealth that was starting to accumulate. Howard had always been prepared to get his hands dirty cleaning tables.

Taking Success for Granted

By 2000 Starbucks was serving 12 million customers in 3,300 stores. Everything it touched turned to gold and Howard started to take a backseat and concentrate on other ventures. By 2007, Starbucks had over 13,000 stores worldwide.

Things were now beginning to slow down and the credit crunch started to hit around the globe. The company’s growth had been so strong and so many stores opened that customers were beginning to feel they were going to any other chain. Starbucks had lost its local appeal. Howard felt that Starbucks had lost its focus and its passion and was taking its success and it’s customers for granted. As a result, he returned as CEO to get his company back on track.

In this 6 minute video Howard talks about this period in Starbucks' life and his “love” for what he does and what the company is about, including his thoughts on a memo that was leaked to the press during that time period in relation to taking success for granted.

Howard Schultz video

Taking Responsibility

Howard, like many legends, took responsibility himself for the situation Starbucks was in. He didn’t pass the buck to those directly in charge of day-to-day operations and he wasn’t angry. In fact he complimented them for their hard work. His focus was looking for solutions and he even recognised that he was involved in decisions that were causing the problems in the first place. He just wanted to make the necessary changes because he knew that other people’s lives were at stake.

That’s the hallmark of a legendary leader - they take charge from the front and make decisions based on what is best for everyone involved.

Has Howard Schultz's story inspired you in any way if you have your own business or ideas to start one?

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Starbucks coffee image  courtesy of Nicola @ Flickr