Howard the Merchant Helps Revive Starbucks
Howard Schultz to the rescue. That’s the current picture
of Starbucks’ CEO, who stepped back in to run the company in January 2008 after
watching the chain struggling with same-store sales declines and fumbling to
find its way.
Mr. Schultz, who describes himself as a “merchant,” said the decision
to return and lead the company was simple. “I love this company. I love its
180,000 people. I feel a responsibility to them and to the shareholder base,"
he told the Financial Times.
After taking over at Starbucks, Mr. Schultz
took dramatic steps to cut costs and that meant the closing of 600 underperforming
stores with over 12,000 employees finding themselves out of work.
He also went
to work trying to reestablish a point of difference between Starbucks and
its competitors. Mr. Schultz believed the chain had become too much like other
coffee houses and decried what he called the “commoditisation” of Starbucks.
Mr. Schultz, the task of transforming Starbucks was not only about product
selection and customer experience but also corporate culture. He wrote in memo
a to company employees, "We are and will be a great, enduring company, known
for inspiring and nurturing the human spirit. I will lead us back to the place
where we belong, but I need your help and support … My expectations of you
are high, but higher of myself."
In October 2008, Financial Times reports, Mr. Schultz took
heat from flying in 10,000 U.S. managers to New Orleans for a three-day
conference. Part of the experience for attendees was to volunteer 50,000 hours
with non-governmental organizations to help repair homes and clean roads in
a city devastated by Hurricane Katrina.
Mr. Schultz describes the New Orleans
event as “one of the smartest things we did to reinstall the values of the
After his interview with the Financial Times, Mr. Schultz had
a meeting with 50 managers and told them, "We can’t allow mediocrity to creep
back into the business. The worst thing we could do is not understand what
happened three years ago."
Discussion Questions: Do you agree that Starbucks has transformed itself in the past three years? Where do you see its biggest challenges and opportunities ahead?