Authors: Howard Schultz & Joanne Gordon
Change management, leadership, rebuilding a brand, supply chain management
Howard Schultz’ very personal and open account of the difficulties that Starbucks ran into and why, in 2008, he decided to come back to the company as CEO. He had stepped down 8 years before. Schultz’s is very passionate about his company (this comes out even more in interviews) and the people that work for it. The book is even divided into five parts entitled Love, Confidence, Pain, Hope and Courage.
The book gives an excellent account of how an “iconic brand” reinvented itself, why Schultz was determined to ban hot breakfasts from the store, the importance of creating an ‘experience’ or an ‘atmosphere’ for the customer and how the company became profitable again. He is also quite honest about why certain products and strategies failed.
According to its CEO (he prefers, “ceo”, though if poor grammar made you a great leader there would be no need for any kind of schools at all!) Starbucks is more than just another company. Customers have a very emotional attachment to the store and they don’t just go there to drink a coffee; they go to read, blog, think or even to fall in love.
Schultz explains his decisions when he came back to Starbucks
On this less emotional side, if you are interested in supply chain management, you will also get an excellent idea of the day to day problems a company can run into when it doesn’t get this right. In 2008, only 3 customers out of 10 were actually getting the order they wanted. 2 years later it was up to 90%.
The only slightly irritating part of the book is the emphasis on many of the decisions being made “over coffee.” This comes across as being some form of subliminal advertising. Granted, he doesn’t actually say which brand of coffee they were drinking, but I think we can probably all guess!
Some facts you didn’t know
“Starbucks” is named after the first mate of the whale ship Pequod in Herman Meville’s classic Moby Dick.
60 million people walk into a Starbucks coffee shop each week (that’s the population of the UK or France.) It has over 16,000 stores in 54 countries.
The idea for Starbucks came to Howard Schultz while he was drinking coffee in Milan. Looking at the waiter he says he realized that it was “not his job… it was his passion.”
In February 2008, it made the decision to close ALL of its 7100 US stores for one day to retrain its staff.
Since its early days, Starbucks has banned smoking and asked its staff not to wear perfume or cologne “to preserve the coffee aroma.”
Starbucks was stunned in 2007, when a Consumer Reports taste test rated its coffee behind McDonald’s.
In his first month back as CEO, Howard Schultz received 5600 emails from staff and customers.
Interesting quotes from the book
“I have always loved this company. Love is why I had come back as CEO and why I feel so personally responsible for its failure and success.”
“I had resisted the idea of serving hot food from day one. While I encouraged innovation, I never envisioned people coming into Starbucks for a sandwich. And when they did, the sandwiches’ cheese would inevitably drip and then sizzle in the ovens, releasing a pungent smell. The breakfast sandwich became my quintessential example of how we were losing our way.”
“Icons disrupt themselves before others disrupt them. Enduring icons are willing to sacrifice near-term popularity for longer-term relevance.”
“Every organization has a memory, a history of achievements, mistakes, even unintended consequences that contribute to an ongoing dialogue as people mold an event’s meaning for themselves.”
“People did not just wake up one morning and decide not to go to Starbucks anymore. They were still coming, just less frequently.”
“The “$4 latte” – that untrue catchphrase that cast Starbucks as a symbol of excess in frugal times- was hardly the consumers’ enemy during this period of economic turmoil. But it sure was an easy target.”
“Innovation, as I had often said, is not only about rethinking products, but also rethinking the nature of relationships.”
Business School Grenoble EM International Affairs Higher Education ESC Grenoble Strategy Blog Global Ed Graduate Business School Mark Thomas
Other Book Reviews
Los Angeles Times: “For while Schultz constantly tells the reader how much he cares about Starbucks’ 137,000 employees, his treatment of Jim Donald — who served as chief executive for the latter part of a seven-year period during which Schultz gave up the top job but remained on the premises as an active chairman — comes off as appalling.”
Seattle Times: “Unlike most Fortune 500 CEOs, Schultz talks about his feelings and admits taking things personally. When he walked onstage for Starbucks’ annual shareholders meeting at McCaw Hall in early 2008, shortly after he resumed taking the helm of a troubled coffee chain, Schultz was floored by the long ovation.”
The Wall Street Journal: “Mr. Schultz, Starbucks’s largest individual shareholder, says he feared that Starbucks had lost its soul and was in danger of no longer being “a different kind of company,” meaning the kind that gives customers an emotional twitch.”
Related Blog Articles
Iterative Path: “Starbucks decided to raise its drink pricesby as much as 8% (5 cents to 30 cents), They are doing this just when customers are cutting back on their Starbucks trips and switching to cheaper alternatives from McDonalds and Dunkin Donuts.”
CBC News Blog: “The company is taking the step to give customers the ability to drink “within their desired calorie range,” said Mary Wagner, the vice-president ofStarbuck’s Global Research and Development, in a statement. “Starbucks believes that wellness is the journey to a happy, healthy life through daily choices, whether it’s a favourite beverage or a wholesome meal option.”
Meanwhile in China: “The furor over the Starbucks in Lingyin Temple was linked to an earlier business initiative by the coffee giant – in 2000, a Starbucks opened inside the Forbidden City in Beijing. Online microbloggers protested the lack of cultural sensitivity and respect for historical tradition. After seven years, the Forbidden City Starbucks bowed to public pressure and closed its doors in 2007.”
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