Better Than New

Howard Schultz Returns to Starbucks — What Does He Do For an Encore? by morepete
January 8, 2008, 12:41 am
Filed under: Innovators


Interesting news out of Seattle this afternoon. After several years with his hands relatively off, Starbucks visionary and Chairman Howard Schultz has agreed to resume full CEO duties at the company he transformed from a regional coffee bean seller into an international coffee house titan.

Starbucks has taken a beating in the stock market and the media of late, largely because of perceive gains McDonald’s has made in starting to roll out its “McCafe” services, which include cheaper versions of lattes and cappuccinos than Starbucks is willing to sell. Just today, the Wall Street Journal reported on the possibility that McDonald’s could make further gains on Big Green, and that Dunkin Donuts will be tough to stop as well.

For his part, Schultz remains as inspiring and charismatic as ever. From his memo about the return, courtesy BusinessWeek:

Twenty-five years ago, I walked into Starbucks’ (SBUX) first store in Seattle’s Pike Place Market, and from that day forward we have taken the road less traveled. Working with an exceptional group of people and summoning all the courage we could muster, we created a new kind of place—one that served the kind of coffee that most people had never tasted, an environment that didn’t look like any other store, and hiring people who were fanatically passionate about coffee and celebrated their interaction with customers. To do this, we focused every ounce of our beings on creativity and innovation. Over the years, together we have built one of the most recognized and respected brands in the world. When we went public in June, 1992, we had 119 stores. We now have more than 15,000 stores and a significant and growing presence in 43 countries, serving 50 million customers a week. These customers have placed their trust in us, and for them and for each other we need to ensure that our future is as exciting as our past.

If we take an honest look at Starbucks today, then we know that we are emerging from a period in which we invested in infrastructure ahead of the growth curve. Although necessary, it led to bureaucracy. We will now shift our emphasis back onto customer-facing initiatives, better aligning our back-end costs with our business model. We are fortunate, though, that the challenge we face is one of our own making. Because of this, we know what needs to be done to ensure our long-term future success around the world.

In the meantime, I want to thank you for your dedication to Starbucks and for your commitment to earning the trust of our customers every day. Our success is up to us. We know what we need to do to win, and we will do it.

I’ll be interested to see what Schultz does in his second run at the top for Starbucks. If nothing else, it will provide another proving ground that it can be as hard to survive the departure of a charismatic visionary as it is wonderful to work for one when he or she is in power. Schultz is a genius, there’s no question of that. But in spite of all he has done to make everyone in Starbucks understand what the company represents, which goals matters, and how to make the Starbucks experience real, the organizations went awry when he stepped away from day-to-day leadership. His return might well prove as fruitful as the second coming of Steve Jobs at Apple (though Starbucks is far from as messed up as Apple was in the mid-’90s), but the question remains: What will either company do when its inspiring entrepreneur is really gone? What are they doing to make their cultures endure.

As a colleague of mine often says: “How do you do the job without Jobs?”

Image via BizWeek


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