Onward: How Starbucks Fought For Its Life Without Losing Its Soul by Starbucks ceo Howard Schultz (the company uses lowercase in listing its company’s officers) with Joanne Gordon serves as a journey of a ceo’s mission to revive, reinvigorate and reinvent a company without losing the essence of what the company was originally built on.
The book starts with a history lesson on how Howard Shultz discovered his passion for amazing coffee in Italy. From that passion, he had a vision of giving every customer the perfect shot of espresso. He found himself inspired by a coffee shop during his trip to Milan, watching a barista work his magic. At the time, Howard worked for the original Starbucks, which only sold coffee beans – no beverages. Upon Howard’s return to the States he left Starbucks. Looking back on his trip, he thought about opening a coffee shop that emulated the pageantry and atmosphere created by the baristas of Milan. He opened Il Giornale and later acquired Starbucks. Howard grew the business under the Starbucks banner providing premium coffee drinks as well as keeping the original Starbucks business model of selling premium coffee beans and grounds.
One of the many things I learned from this book is that when a person’s dream becomes their company, it is like a child to them. That person has a vision of how the company should be. To them, it’s not business, it is personal. They are the parent and the company their child.
As the business grew, it became more than just a coffee shop but a promising investment for its stockholders. At the time, Starbucks could only make money. There was no reason at the time to change and Howard felt it was time to move on. No longer the ceo of Starbucks he handed the reigns over to someone else to handle day-to-day operations. Howard stayed on as chairman of the board, and watched his company grow even more. Starbucks were popping up at a rate that seemed like one every five minutes. Some were even just a couple blocks from another shop. Starbucks could do this because the revenue stream only got larger.
Even with all its financial success, Starbucks was losing its soul. Similar to other companies making money, Starbucks did not see the cracks that started to form. That all changed with the economic downturn. Starbucks started to lose financially and the cracks became more noticeable. At this time it would mark the beginnings for a return of a CEO.
During the economic downtown, Shultz contemplated his return as ceo of Starbuck. While on a family vacation he consulted with Michael Dell who was vacationing in the same place. Dell gave Schultz some advice and shared some of the things that he went through with his own return as CEO of DELL. Dell told Shultz two words that would make the transition smoother: Transformation Agenda. This would be the blueprint to righting the ship.
Being The Undisputed Coffee Authority
Igniting The Emotional Attachment With Our Customers
Expanding Our Global Presence – While Making Each Store The Heart of Local Neighborhoods
Being The Leader In Ethical Coffee Sourcing And Sustainability
Delivering A Sustainable Economic Model
When he returned as ceo, Shultz was not sure how he would be received. For the most part, his return was accepted with excitement and uncertainty. Now the real work had to be done. The company needed to bring its brand to where it once was and beyond. It would not be an easy task. There was no single silver bullet that would turn things around. There were decisions that bucked conventional thinking (i.e. closing shops to retrain employees), but there were also more conventional calls made to help the company find its soul such as introducing new products, upgrading equipment, innovating while trying to maintain core Starbucks values and sticking to the “Transformation Agenda”.
There were some ideas that were successful and there were others that did not turn out as planned. There were changes to the operational infrastructure at Starbucks, which led to shops closing, and layoffs. During this time the stock lost value almost every day.
Against this backdrop, Shultz wanted Starbucks to be more than just a financial turn-around story. For example, Shultz wanted Starbucks to host a massive partner conference in New Orleans to reinvigorate the management. There were some who thought this was not a good idea because of the amount of money that needed to be spent for such a conference. Another reason was that New Orleans just got through hurricane Katrina and a lot of businesses were not seeing the city as a desired destination. However, the conference in New Orleans went as planned and the presence of Starbucks helped to contribute to the revival of the city. Not only did Starbucks bring ten thousand partners, they brought $1 million dollars worth of suppliers. During the conference 2000 partners joined one of six organizations volunteering in any capacity for five hours. Many stayed and worked longer during the four day conference. This conference was the moment that galvanized the company, and at the same time Shultz stewarded Starbucks back to its soul.
As time passed the company stayed the course and began to see the profits grow again in the US. Starbucks in the positive financial position in the US once again, Starbucks could focus in growing the brand in China. With China came the potential revenue from 1.3 billion consumers. (On a side note, while I was in Beijing, China I found it interesting that right next to a section of the Great Wall there was a Starbucks).
Shultz’s return brought about the change necessary for Starbucks to evolve with the times and the profits followed. Starbucks found its soul “One cup, One Customer, One partner, and One Experience at a time.”Google+