Onward

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

by Howard Schultz with Joanne Gordon

ISBN: 978-1-60529-288-5

Published by Rodale

Description

In 2008, Howard Schultz, the president and chairman of Starbucks, made the unprecedented decision to return as the CEO eight years after he stepped down from daily oversight of the company and became chairman. Concerned that Starbucks had lost its way, Schultz was determined to help it return to its core values and restore not only its financial health, but also its soul. In Onward, he shares the remarkable story of his return and the company's ongoing transformation under his leadership, revealing how, during one of the most tumultuous economic times in history, Starbucks again achieved profitability and sustainability without sacrificing humanity. Offering readers a snapshot of a moment in history that left no company unscathed, the book zooms in to show, in riveting detail, how one company struggled and recreated itself in the midst of it all. Onward is a compelling, candid narrative documenting the maturing of a brand as well as a businessman.

Commentary

I have never actually tasted a Frappuccino, but, after reading Onward, by Howard Schultz, I am tempted to try it out the next time I am in the vicinity of a Starbucks. Onward is the story of how Howard Schultz came back to turn Starbucks around after its plummeting performance in 2007, the year in which the company's stock dropped 42 percent. A deeply personal account of the day-by-day deliberations, decisions and consultations that led up to Schultz's decision to remove the then CEO, Jim Donald, and reposition himself in the driving seat, and everything that followed up until late 2010, when Starbuck's was enjoying its "best financial performance in its almost 40 years history" with stock prices up 400% in two years, is compelling reading. Written in an easy narrative, sharing dilemmas, challenges and aspirations, this is Schultz's second book and continues the story of both Starbucks the company and Starbucks the man through all their different facets.

Building a Different Kind of Company

Schultz created the Starbucks of today when, in 1987, at the age of 34, he bought the Seattle-based Starbucks Coffee Company for $3.8 million, "determined to create a different kind of company… which would act through a lens of social consciousness". The original Starbucks sold coffee beans and ground coffee. Schultz had created a small chain of coffee bars modeled on the Italian coffee shop tradition. The new Starbucks was a blend of both.

Ultimately, for Schultz, coffee is a way of bringing people together. Starbucks' stores are a place for people to connect. The "Starbucks Experience" creates personal connections. "We are all hungry for community", writes Schultz. When, in 2007, seven years after Schultz had stepped down from the role of CEO to become Chairman, with a mandate to guide Starbucks' international expansion strategy, Schultz began to perceive that profit considerations and non-core opportunities to sell music, food, books, movies and more, were weakening the positioning of Starbucks in the U.S. market, moving the Company away from the true coffee-flavored soul of the business. Schultz wrote a memo, sharing his concerns at this mission drift. The memo, which was to become known as the "Commoditization of the Starbucks Experience", was designed for internal distribution but, when leaked to the press, it created a public debate about the essence of Starbucks and its strength as a business and role in society. In many ways, this was a catalyst for new insight about the relevance of Starbucks and its future path.

Transforming Starbucks

The revitalization of Starbucks was ultimately to rest on a "Transformation Agenda", propelled by Howard Schultz, which was framed around Seven Big Moves, which were:

1. Become the undisputed coffee authority: After the ultimate insult, when a Consumer Report taste test rated Starbucks' coffee behind McDonald's, leaving Schultz "stunned", Starbucks had to regain the upper hand in becoming known as the best coffee sourcer, roaster and brewer. This aspiration led to the decision to shut down Starbucks all over the U.S. for an afternoon in 2008, to spend time retraining 135,000 baristas on how to make great coffee. Apparently it's not as easy as it looks and closing stores to deliver synchronized training of every single employee, was quite an unprecedented and bold act.

2. Engage and inspire our partners: Partners, in Starbucks-speak, are employees. Schultz tells how employees were always given a decent deal at Starbucks, including full health insurance benefits, in a business context in which this was a long way from being the norm. Engaging employees in community service has also been a strong factor in the Starbucks culture.

3. Ignite the emotional attachment with customers: Improve customer service, making it ever more personal. The Starbucks Loyalty Program was to become a big winner. Free wifi also helped. Starbucks' regulars are treated to personal notes from baristas on their coffee cups. MyStarbucksIdea.com invited customers to help make Starbucks better, while social media was jacked up to best-in-class levels, supported by a corporate website that receives 12 million visitors each month. Improved store décor and more added to Starbucks new blend of customer-first thinking. A change in advertising strategy got the message out with greater clarity.

4. Expand global presence: With less than 1 percent of the global coffee market, Starbucks had to make itself relevant in other countries and exploit great growth opportunities. China became a target market and localized innovation even included specialties such as Black Sesame Green Tea Frappuccino.

5. Be a leader in ethical sourcing and environmental impact: Working with Fairtrade and Conservation International, Starbucks needed to strengthen these partnerships in order to gain true value for the company. By 2009, Starbucks was the largest purchaser of Fairtrade coffee in the world. LEED-ification of stores reduced energy and water consumption significantly. Hooking up with Product RED gave Starbucks an additional social benefit by contributing to AIDS HIV relief in Africa.

6. Create innovative growth platforms: Everything from the design of new espresso machines, the development of a new Pike Place Roast coffee flavor, Starbucks instant coffee, and new food offerings were rolled out at a pace.

 

7. Deliver a sustainable economic model: Returning to pre-crisis profitability, including closure of hundreds of stores, employee layoffs, revamping the entire supply chain and introducing new technologies for store management and communications, plus aggressive cost-cutting in many and varied ways, contributed to Starbucks' increase in operating margins.

Telling the Story

By far, the greatest appeal of this book is the way the narrative is driven by Howard Schultz's personal account of all the dilemmas he faced, combined with insights from Starbucks' employees in letters they sent to Schultz. As CEO, Schultz instituted an "open inbox' policy, whereby employees can write to him and get a response, time permitting. A regional director of operations wrote: "I can't begin to tell you how proud I am to be a partner". A district manager in Canada wrote: "I have absolute faith that fantastic things are ahead." A district manager in California wrote: "You can be sure that the Spirit of Starbucks is alive and well in San Diego!" The ability of Schultz to inspire with a vision of creating emotional connection through the Starbucks brand appears to have worked internally as well as externally.

In addition to sharing insights from employees, Schultz describes in detail the relationships he struck up with mentors, which included Michael Dell of Dell Corporation, and communications agencies, organizational specialists and more. Schultz's knack for hand-picking his own leadership team as well as engaging external specialists appears to have been pivotal in executing the Starbucks' transformation. The blow-by-blow account of the way Schultz put in place the right people to deliver his renewed vision is well worth reading.

Values First

At all times, Howard Schultz takes pains to reiterate the importance of values and the way conflicts were resolved in the organization from a values-based standpoint under his leadership. While this book is clearly written from the Schultz autobiographical perspective, which at times is rather rosy, it is an engaging account of turning around a global business with a sustainability focus. Schultz is not usually the first name that springs to mind when people talk about sustainability visionaries of stature from the business sector – Anita Roddick, Yves Chouinard, Ray Anderson, and Ben and Jerry, and a few others, generally make the list. Schultz doesn't usually figure. However, in Onward, Schultz stands out as a visionary and a person of principle, striving to make his business as relevant and valuable to society and environmentally sustainable as have any of the other business sustainability celebs. Another demonstration of this is the way Starbucks confirms its impacts on society and accepts accountability through the transparent reporting practices of the Company.

There are lessons for CEO's and many others in Onward. It is certainly a gripping, entertaining and worthwhile read.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via www.twitter.com/elainecohen   on Twitter or via my website www.b-yond.biz/en

Reality-Based Leadership

Reality-Based Leadership: Ditch the Drama, Restore Sanity to the Workplace and Turn Excuses Into Results

By: Cy Wakeman

ISBN: 978-0-470-61350-4

Publisher: Jossey Bass

This review was first published on CSRwire.com on March 8, 2012


Book Description

Recent polls show that 71 percent of workers think about quitting their jobs every day. That number would be shocking -- if people actually were quitting. Worse, they go to work, punching time clocks and collecting paychecks, while completely checked out emotionally.In Reality-Based Leadership, Cy Wakeman reveals how to be the kind of leader who changes the way people think about and perceive their circumstances-one who deals with the facts, clarifying roles, giving clear and direct feedback, and insisting that everyone do the same, without drama or defensiveness. Filled with dynamic examples, innovative tools, and diagnostic tests, this book shows you how to become a Reality-Based Leader, revealing how to:

• Uncover destructive thought patterns with yourself and others.
• Diffuse drama and lead the person in front of you.
• Stop managing and start leading, empowering others to focus on facts and think for themselves.

Commentary

Leadership accountability is one of the most underplayed themes in sustainability today. This shows up when heads of companies receive massive bonuses that are not directly tied to corporate performance. It shows up in the way employee performance is evaluated – using inputs (what people do) rather than outcomes (what results they deliver). It shows up in the fact that 31 percent of employees are actively engaged in their jobs (and 17 percent are actively disengaged). It shows up in the fact that "71 percent of workers think about quitting their jobs every day." It shows up in the fact that far too many underperforming people remain far too long in organizations in which they are not positively contributing (and in some cases, they are actually causing damage).

Sustainable Reality-Based Leadership

Wakeman’s book was, perhaps, not written for the sustainability bookshelves. It was written for the Business Leadership, Management and Human Resources sections of business literature. However, its relevance for sustainability is compelling. Business sustainability requires leaders who deliver sustainable results through people. A business cannot be sustainable when only a third of the workforce is engaged or two thirds are thinking about how to get out. Here are some of the issues Wakeman lists as holding organizations back through lack of effective leadership feedback:

• Tenured employees whose skills are not current – leaders must raise the bar for performance and decide who makes the grade and who doesn’t.
• Employees at the top of their pay scale who no longer deliver top value – this happens when "leaders over-reward and under-coach employees over the course of their careers".
• Righteous top performers – "great employees whose performance is compromised by their righteousness and judgment of others."

Stop Managing, Start Leading

Effectively addressing these issues requires executives to stop managing and start leading. First of all, Wakeman writes, they have to "stop arguing with reality." This means relating to the facts of different situations at work, rather than the stories we tell ourselves or making judgments. An example might be when a coworker receives a promotion – you tell yourself that it's not fair, you should have received the promotion, you work harder than the coworker, you deserve it etc. This line of thought is judgmental and reflects "entitlement" thinking.

Instead, if "you embraced reality, you would note that a promotion occurred and do the appropriate thing in such a situation: congratulate your coworker, offer to help and resolve to learn how to deliver what the company values. You'd be high on professionalism, low on drama and investing in better relationships and mutual support in the future…You are arguing with reality whenever you judge your situation in terms of right or wrong instead of fearlessly confronting what is."

Reduce the Drama

By the same token, instead of trying to keep employees happy, leaders should focus on helping them understand reality, while empowering them to build their capabilities to deal with all situations that arise. If you want to evaluate the behavior of the people you lead, you can take Wakeman's Freak-Out Factor test, which will show you how your organization or team measures up in terms of level of drama in the workplace.

"Empowerment without Accountability is Chaos"

Restoring sanity to the workplace is about the adoption of leadership behaviors that drive accountability. The problem with employee engagement surveys, writes Cy Wakeman, is that they don't measure accountability. They are simply "invitations for people to critique their reality". All you end up with is a list of "what would need to change in order for your staff to grace you with their performance". However, one can never create a perfect working environment which meets everybody's aspirations. Engagement surveys are setting leadership up for failure. Instead, Cy Wakeman recommends two questions for employees:

1. What is the one thing you need to be more productive in your work?
2. What are the three things you are willing to do to get it?

Such an approach eliminates the "victim factor" and builds accountability, while enabling leaders to understand what they need to do to truly empower their teams.

Work with the Willing

In leadership, playing favorites is "fair game," Wakeman observes. "Too many leaders I work with have surrendered to the idea of mediocrity in order to never, ever offend anyone. Some leaders are so concerned with treating everyone the same that they are hesitant to give honest feedback". Leaders should spend most of their time coaching the employees who are delivering the best results. In reality, leaders spend "on average 80 extra hours per year thinking about and working with a single person who's in a state of chronic resistance". These people won't change and worse, the best employees will be dragged down by a negative office culture. The idea is to "compensate value, not effort" and give your focus to the employees who deliver. " You will have problem employees for as long as you continue to hire them and put up with them".

Everybody's Opinion Counts. Not.

Wakeman says your workplace is not a democracy. Ninety percent of the people in any organization at any given time are not key decision makers. Leaders need to set clear expectations and goals and focus the energy of their teams on working towards the desired results, rather than wasting hours complaining about why certain decisions are made. Offering constructive feedback is positive. Fighting against decisions that are not yours or your team's to make is futile.

Reality–Based Leadership contains practical, mindset-changing and entertaining advice, anecdotes, tools, and recommendations that anyone who leads people in organizations should read. Just as sustainability relies upon a realistic assessment of business impacts on people, society and the environment and the formulation of appropriate strategies to improve these impacts, so leaders must confront the realities of how they behave in organizations, how accountable they are and how they leverage reality-based tools to ensure their sustainable contribution.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via www.twitter.com/elainecohen   on Twitter or via my website www.b-yond.biz/en