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Onward: How Starbucks Fought for Its Life without Losing Its Soul

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Onward: How Starbucks Fought for Its Life without Losing Its Soul

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Highlights & Notes

No business can do well for its shareholders without first doing well by all the people its business touches. For us, that means doing our best to treat everyone with respect and dignity, from coffee farmers and baristas to customers and neighbors. I understand that striving to achieve profitability without sacrificing humanity sounds lofty. But I have always refused to abandon that purpose—even when Starbucks and I lost our way.

One Tuesday afternoon in February 2008, Starbucks closed all of its US stores. A note posted on 7,100 locked doors explained the reason: “We’re taking time to perfect our espresso. Great espresso requires practice. That’s why we’re dedicating ourselves to honing our craft.”

There are moments in our lives when we summon the courage to make choices that go against reason, against common sense and the wise counsel of people we trust. But we lean forward nonetheless because, despite all risks and rational argument, we believe that the path we are choosing is the right and best thing to do. We refuse to be bystanders, even if we do not know exactly where our actions will lead.

“Life is a sum of all your choices,” wrote Albert Camus. Large or small, our actions forge our futures, hopefully inspiring others along the way.

This is the gift and the challenge entrepreneurs face every day. The companies we dream of and build from scratch are part of us and intensely personal. They are our families. Our lives.

Work should be personal. For all of us. Not just for the artist and the entrepreneur. Work should have meaning for the accountant, the construction worker, the technologist, the manager, and the clerk.

Companies pay a price when their leaders ignore things that may be fracturing their foundation. Starbucks was no different.

But we were not pushing ourselves to do things better or differently. We were not innovating in lasting ways.

Rather than looking back and casting blame, I wanted to lean forward with concrete strategies and tactics.

But to achieve long-term value for shareholders, a company must, in my view, first create value for its employees as well as its customers.

No doubt about it. Coffee’s journey from soil to cup is quite amazing.

Only 3 percent of the world’s highest-quality arabica beans are good enough to make it into one of our burlap bags.

Most coffee companies mix different types of beans together as a way to mask inferior coffee, but Starbucks has always used blending as an opportunity to elevate coffees from different parts of the world.

In any well-run retail business there is, by definition, a maniacal focus on details. Especially in the beginning. Young companies must produce results every day or risk closing their doors. Anything with the slightest potential to add or detract from sales or earnings—the quality of each item, every customer interaction, the attitude of each employee, every dollar spent—is attended to with steadfast concern.

“The world belongs to the few people who are not afraid to get their hands dirty.” I

As with all new beginnings—a marriage, a baby, a presidency—the inevitability of future hardship was buried by the momentum and possibility of it all.

“Protect and preserve your core customers,” he told our marketing team when I invited him to speak to us. “The cost of losing your core customers and trying to get them back during a down economy will be much greater than the cost of investing in them and trying to keep them.”

I refused to give in to increasing external pressures and focused on anything that would keep the company moving forward, even if at times it felt like we were going the wrong way in a wind tunnel.

There was a disconnect between effort and result.

In short, a Starbucks store was essentially the equivalent of a $1 million-a-year business, yet an iPhone had more business application power than our stores’ technology.

  • damn!

Success is not sustainable if it’s defined by how big you become. Large numbers that once captivated me—40,000 stores!—are not what matter. The only number that matters is “one.” One cup. One customer. One partner. One experience at a time. We had to get back to what mattered most.

Starbucks Increases Number of U.S. Company-Operated Store Closures as Part of Transformation Strategy Approximately 600 Underperforming Stores Will Be Closed; Company Takes Significant Step Toward Improving Long-Term Profitable Growth

I can see the light, I know what we have to do. We have to show up. We have to do the work. And doing the work means we have to find answers to tough problems. We have to be highly focused on the things that matter and stop wasting time and money on things that are irrelevant. What matters is that we push for answers for the problems in front of us and are curious about the things we do not see, and look for ways to get better, smarter, more efficient, and push for reinvention and innovation. This is a true test of the company and a true test of the individuals who are assembled here. The reason we are going to succeed is the same reason we have succeeded in the past. Not the stock price or the press. We succeeded because of what we believe in and what we stand for. I believe in the future of our company because I believe in all of you.

I was no silver bullet and, like any leader, I needed to surround myself with strong talent who would bring new ideas and, with courage, challenge the old as well as challenge me. This meant watching some people leave the organization, which was never easy whether or not it was my decision.

“When you give up,” said a slim older man whose home we rebuilt, “you might as well lay down and die.”

A store manager’s job is not to oversee millions of customer transactions a week, but one transaction millions of times a week.

“These are interesting times,” Bono began. Howard has brought me to talk to you in interesting, strange, unsettling times. For Starbucks. For America generally. Times of crisis. Times of chaos. Times of opportunity… . The sight of your stores closing—well, a sign of the times. Historically, though, it is times like these, times of disruption, where America seems to discover its greatness.

Some people say, “Come on, markets are not about morals, they are about profits.” I say that is old thinking. That’s a false choice. The great companies will be the ones that find a way to have and hold on to their values while chasing their profits, and brand value will converge to create a new business model that unites commerce and compassion. The heart and the wallet… . The great companies of this century will be sharp to success and at the same time sensitive to the idea that you can’t measure the true success of a company on a spreadsheet—

Opportunities to authentically galvanize people are few and far between. These moments cannot be invented. They must be real and above reproach and exist on their own merits.

Boards of directors do not exist to manage companies, but rather to make sure companies are managed well. Boards are at their best, I believe, when directors have complete transparency so they can provide informed guidance, offering an outsider’s experienced perspective to push a company’s management further than they might otherwise go.

When it comes to working with their boards, chief executives are at their best when they frequently communicate the good news as well as the bad, and when they listen to the experience and advice of board members. A CEO does not need to do everything a board suggests, but unless we open our ears to directors’ perspectives, we miss opportunities to self-correct.

The Starbucks Experience For the nearly 60 million weekly visitors to Starbucks stores in fifty-four countries, we continue to recreate the coffeehouse experience with architectural features, environmentally friendly elements, and regional flavors that reflect local communities as well as balance sustainability with the comfort and essence of the “third place.”

In short, a new idea’s execution had to be as good as the idea itself.

Like straining to remember the sound of your child’s voice as a toddler as he or she heads off to college, Starbucks’ nascent days got more elusive as the company grew.

Because the best innovations sense and fulfill a need before others realize the need even exists, creating a new mind-set.

a core capacity of leadership is the ability to make right decisions while flying blind, basing them on knowledge, wisdom, and the ability to stay wedded to an overriding goal.

So I put a stake in the ground. Starbucks was going to be courageous. We were going to do what people said could not be done and build a billion-dollar business on instant coffee.

Sacrificing people’s feelings, and more than once even a personal relationship, for the good of thousands of partners is one of the most painful elements of my job as Starbucks’ chief executive.

But I do think effective leaders share two intertwined attributes: an unbridled level of confidence about where their organizations are headed, and the ability to bring people along.

But in business as in life, people have to stay true to their guiding principles. To their cores. Whatever they may be. Pursuing short-term rewards is always shortsighted.

Innovation, as I had often said, is not only about rethinking products, but also rethinking the nature of relationships.

“Lean” is a generic term for a nontraditional way of managing and working that claims to reduce redundancies and waste while making conditions easier for employees and improving product and service quality for customers. Lean has its roots in the assembly lines of the automobile industry, and for decades its principles have been adapted by other industries.

The more our managers and baristas were asked to pay closer attention to the details of their daily activities, the more shortcomings they noticed, voiced, and solved, and the more customer service improved.

“We were spending so much of our time fixing moments, but not actually solving problems. But fixing moments, like mopping a dirty floor, only provides short-term satisfaction. But take the time to understand the cause of the problem—like how to keep a floor from getting so dirty in the first place—solves, and maybe eliminates, a problem for the long run.”

How leaders embody the values they espouse sets a tone, an expectation, that guides their employees’ behaviors.

Harriet Beecher Stowe: When you get into a tight place and everything goes against you, till it seems as though you could not hang on a minute longer, never give up then, for that is just the place and time that the tide will turn.

At its core, I believe leadership is about instilling confidence in others,

I’ve said often that every enterprise and organization has a memory. And those memories create a path for people to follow.

Grow with discipline. Balance intuition with rigor. Innovate around the core. Don’t embrace the status quo. Find new ways to see. Never expect a silver bullet. Get your hands dirty. Listen with empathy and overcommunicate with transparency. Tell your story, refusing to let others define you. Use authentic experiences to inspire. Stick to your values, they are your foundation. Hold people accountable but give them the tools to succeed. Make the tough choices; it’s how you execute that counts. Be decisive in times of crisis. Be nimble. Find truth in trials and lessons in mistakes. Be responsible for what you see, hear, and do. Believe.

we have to maintain balance on many fronts. Balance between the emotional and the disciplined. Between instinct and information. Between global and local. The personal and the professional, and, of course, between profit and humanity. Doing so will not be easy as we expand our brand and businesses around the world.

Some people wondered why I returned to Starbucks as ceo. And why I stay. “He doesn’t need to do this. Why is he so motivated?” Quite simply, I love this company and the responsibility that goes with it.

Growth, we now know all too well, is not a strategy. It is a tactic.

Moments like this are among my favorite. When the past and the present overlap. When I am at the heart of Starbucks’ operations. And when I cannot contain my smile because I am quite literally witnessing the magic that happens behind the scenes. Times such as this, surrounded by people who think of each other as family, solidify my belief that Starbucks’ best days are ahead of us.

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