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

by Howard Schultz

  3. Ignite the emotional attachment with our customers. People come to Starbucks for coffee and human connection. We would put our customers back in the center of the experience by addressing their needs, providing “value” in a manner congruent with the brand, and developing programs that recognize and reward our most loyal customers. In our stores, we would achieve operational excellence, finding new ways to deliver world-class customer service and perfect beverages while keeping costs in line and our retail partners engaged.

  4. Expand our global presence—while making each store the heart of the local neighborhood. We'd continue to grow our retail presence around the world—Starbucks had less than a 1 percent share of the global coffee market—but also strive to connect with and support the neighborhoods and cultures that each store serves. Enhancing our local relevancy would mean redesigning existing and new stores, offering new products that reflected the tastes of particular cultures, and reaching out by volunteering or fund-raising to support local programs and causes.

  5. Be a leader in ethical sourcing and environmental impact. Starbucks has led the way in treating farmers with respect and dignity, working directly with organizations such as Fairtrade and Conservation International. Now we would expand our efforts, strengthen those partnerships, and forge new ones, as well as reduce each store's environmental footprint. We also had to do a much better job of sharing with others our extensive efforts on this front.

  6. Create innovative growth platforms worthy of our coffee. Starbucks would grow not just by adding stores and selling coffee, but also by extending its brand and/or expertise to new product platforms expanding or complementing coffee, such as tea, cold beverages, instant coffee, food, and the booming health and wellness market. Innovation that was relevant to our core and values would be a hallmark of our transformation.

  7. Deliver a sustainable economic model. Without a profitable business model, Big Moves 1 through 6 would not be possible. It was imperative that as we refocused on our customers and our core, we also improved upon how we operated our business by reducing costs and building a world-class supply chain, as well as creating a culture that drove quality and speed and managed expenses on an ongoing basis. Big Move 7 would likely be the most painful, least sexy, and most difficult part of transforming the company.

  By discussing the agenda at the summit, we also hoped to put many previously announced initiatives into a larger context so they did not seem like random decisions from above, but rather thoughtful initiatives connected to a larger goal. Pike Place Roast and Clover, for example, were our answers to reinventing brewed coffee.

  The Transformation Agenda was no quick fix. It was a mind-set dictating the company's primary focus until we were in a healthy position, ready to refocus on profitable growth. It was also a one-page road map designed to be willingly and creatively followed.

  More than a business plan, the Transformation Agenda gave us all something concrete to believe in.

  The day before the summit, Starbucks made an announcement that took many of our people by surprise: The head of our damaged US operations was leaving the company—after only six months in the role—and her replacement was Cliff Burrows, then the head of Starbucks Europe, Middle East, and Africa. Cliff is an exceptional operator and an affable leader with a deep understanding of the retail business.

  But he had never lived in the United States, which had several people in the company and even on our board doubting my choice. How could a Brit who had never lived in America run America, the company's most important business, given that about 70 percent of the company's revenues came from our US business? But I'd spent a good deal of time traveling with Cliff since he had joined the company in 2001, especially in the past year, and had learned a lot about his character.

  Cliff had grown up doing the unexpected. Born in a small steel town in Wales, Cliff probably would have followed his father and grandfather to work at the blast furnaces had his parents not decided that they wanted a better life for themselves and moved to Zambia in southern Africa. At age 10 Cliff traveled, alone, 5,000 miles to the United Kingdom to attend boarding school, returning home only twice a year until his parents returned to the United Kingdom when Cliff was 13. Cliff ‘s father died in an industrial accident and, fiercely independent, Cliff shunned college after a semester for a career in retail. His very first job back when he was 15 had been at a Woolworth store where, every Saturday, he began the day in the basement peeling mice off the sticky mousetraps and ended the day setting the traps for the following week. By age 23, he was running his first store.

  I was impressed by the organizational clarity he had brought to the regions under his lead. To the United States, the region that demanded immediate attention, my intuition told me that Cliff could bring discipline as well as a skill set that we did not have: the ability to translate and execute our renewed coffee- and customer-focused strategy at the store level.

  I offered Cliff the job over lunch at a popular Vietnamese restaurant near Seattle's Starbucks support center, and he, like others, was a bit surprised but clearly intrigued. As I talked about what he would be doing—I assumed he would accept the offer—Cliff was pondering just how he would tell his wife back in Amsterdam that they were about to move halfway around the world to Seattle, a city many Americans still considered off the grid.

  This shuffling of senior leaders was further proof that I would not hesitate to make significant changes at all levels of the organization, and it no doubt contributed somewhat to the angst and uncertainty that hung in the air at the beginning of the summit. But over the next two and a half days, that tension dissipated as the company's new strategy became clear and partners were given opportunities to hear directly from me and share in the Transformation Agenda's evolution.

  Our leaders spent the majority of their time at the summit actively participating. Just as a smaller group of us had done a few weeks earlier, they ventured out of the conference room and into Seattle's most inspiring retail shops. Pike Place Market. Beecher's Handmade Cheese. Rocky Mountain Chocolate Factory. Zanadu Comics. Their instruction during this “seeing” exercise was to consider each retail experience not as a merchant or an operator, but from the point of view of a customer. What did they witness, smell, and hear? What nonverbal cues enhanced the experience? All the partners had notebooks to record their observations in, which they later shared with each other.

  That journey helped put our leaders back in customers’ shoes, providing an enlightening and for some emotional exercise that underscored just how critical it was that all of us place the customer at the center of every meeting and business decision. If we had any hope of reigniting their emotional attachment, we had to replace our compsat-any-cost mind-set with a customer-centric one.

  By late Thursday afternoon, the summit's tours, working lunches, and breakout sessions were over. We'd spent three days together talking about reinvention, fine-tuning the Transformation Agenda, and discussing how to execute it at the operational and regional levels. We had also stepped outside ourselves to see great customer experiences in action, and we had heard from two inspiring individuals—Marty Ashby and Bill Strickland—who nurture the human spirit in their own ways. Through jazz. Through social change. By seeing potential in people and giving them opportunities to excel. All in all, it had been an emotional, intellectual journey. Many people in the group were rightly exhausted. Exhilarated, but a bit wiped.

  From side conversations I'd had over the three days and snippets of conversation I'd overheard, I sensed that something had taken hold, that most of our people recognized the scope of change required and what they needed to do. My optimism about Starbucks has always come from knowing that when we relegate responsibility to our partners and give them the right tools and resources, they will exceed expectations. After watching our top people work together and embrace our new agenda over the past few days, I felt more optimistic than ever and could only hope that others had been similarly moved and were ready to rec
ommit to Starbucks’ future.

  There was only one more thing to do before everyone went home.

  I walked back onto the stage, informal in jeans and a dark gray sweater, and took a seat on the first of several red-cushioned chairs. On the seat of the stool to my left, I placed some important papers. Behind me, as a backdrop, was an oversized version of the Transformation Agenda—our Aspiration statement, the Seven Big Moves outline, and the tactics that we would execute—updated with changes from the past few days. I sat back comfortably, rested my forearms on my legs, and clasped my hands in front of me:

  When we started here two days ago, I said that the key to all this is to embrace the work that we have done over the years but at the same time recognize the need for constant innovation and to challenge ourselves not to embrace the status quo and push forward.

  The pressures of today—economic and competitive, local and regional, national and global—are substantial, and we have to, I think, look within ourselves and try to be different types of leaders and demonstrate a different view of the world than we have in the past.

  So, over the last few weeks, when we examined all the things that we wanted to talk to you about these last couple of days, we began to look at a piece of paper that has been in place now for 25 years, and that is the mission statement of Starbucks.

  Starbucks’ mission statement had never been just some framed piece of paper posted on our offices’ walls. Perhaps more than any other company, we had for years used our mission as a touchstone to make sure the guiding principles of how we run our business are intact and as a measuring stick for whether or not the company is aligned with its founding purpose, which at the highest level is to inspire and nurture the human spirit. Our mission provided guardrails for the company as we ventured down new roads, and every once in a while we looked in the rearview mirror to make sure we were being consistent.

  It was from our mission that we had strayed:

  Thinking about the transformation, we came to a consensus that the mission needed to be updated, and updated in a way that would capture the passion we have for the future and the respect we have for the past, but give the people who are with us today as well as new people who will join us in the future a new way to look at the company.

  At that very moment, I realized that, of all the people in the room, only one had been with me, with Starbucks, when the original mission statement was written in 1990. Dave Olsen. I always refer to Dave as the conscience of the company, and for more than two decades Dave's pride in and knowledge about our coffee and roasting processes has inspired thousands of partners and customers. Dave lives our mission in every way, the quintessential Starbucks partner.

  I was pleased to see his face as the company introduced a new, bolder mission that reflected our heightened ambitions in a world that had changed so much since Dave and I had first begun working together.

  I would like to try, in a serious way, to share with you the words that we believe are right for this time: our new mission that will replace the existing one. And I think that when you hear it and read it and live with it for a while, you will agree that the group of people who have been assigned the very important responsibility for rewriting it have done it very well, representing the value and the history and the heritage of the company in a way that is consistent with our past and present, but most importantly the future and where we are going.

  I picked up a paper from the chair next to me. “I am going to read to you the overarching theme that will frame the document, and then I'm going to get some help from others.” I stood up and read the first line aloud.

  The Starbucks mission: To inspire and nurture the human spirit one person, one cup, and one neighborhood at a time.

  Then, without a cue, a vice president of store design stood up from her chair in the audience and read the next line of the mission statement into a microphone. Her smooth voice filled the room.

  Our Coffee: It has always been and will always be about quality. We're passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.

  As she sat down, our UK vice president of partner resources stood up and read the next line aloud in a distinctive Scottish accent.

  Our Partners: We're called partners, because it's not just a job, it's our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard.

  Then, one by one, four more partners stood up, took a microphone, and read aloud.

  The president of Asia Pacific: Our Customers: When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers—even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It's really about human connection.

  The director of marketing for Canada: Our Stores: When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It's about enjoyment at the speed of life—sometimes slow and savored, sometimes faster. Always full of humanity.

  The vice president of our south-central region in the United States: Our Neighborhood: Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action—bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility—and our potential for good—is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.

  A partner from our Hong Kong field office: Our Shareholders: We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks—and everyone it touches—can endure and thrive.

  I didn't smile as each piece of the mission was being read, but rather listened as if I were hearing it for the first time, pondering this transitional moment in our history. At the end of the reading, I stood up and offered a somber “Thank you.” There was applause, but it was an emotionally subdued moment. I even saw several people crying. We would not reveal the new mission to the entire company until the timing was right; for now, it had to sink in with our top leaders.

  Then, in the back of the room, huge sliding panel walls slowly opened to reveal a scene that no one had expected or knew quite what to make of at first glance. SYPartners had created a remarkable interactive display that took the words we had just heard to another level. “Please, walk through it and enjoy,” I said gesturing toward the back of the room, “and hopefully embrace it, because it is ours.”

  People rose from their seats and, with The Beatles’ “Lady Madonna” playing over the speakers, walked curiously toward seven 11-foot-high, three-dimensional displays constructed of stacked cardboard boxes and words in black type that simply yet viscerally represented each of the mission's themes.

  For the display representing “Our Partners,” excerpts from letters and e-mails I had received from our people were posted next to a stack of green aprons and photos of baristas working in our stores.

  At the “Customers” station, more than 100 grande coffee cups had been attached to the display wall in perfect alignment. On each cup was written a hypothetical moment of connection that anyone might experience over a cup of Starbucks coffee. “I felt like someone understood me,” read the sentiment on one cup. “I worried about the future.” “I came up with an idea for dinner.” “I played peekaboo with a wandering child.” “I wrote a love letter.” These kinds of moments are what Starbucks is all about.

  People mulled the larger-than-life displays as if at a museum, talking in hushed voices or silently studying the words. They pulled out cameras and snapped photos. People smiled to themselves. />
  What happened next was one of the most unexpected and touching events I've ever had at the company. Someone approached and asked me to sign his copy of the new mission statement. Then another person asked. Then another. A line began to form. Rich Nelsen, a regional vice president of the mid-America region, was fourth in line. Behind him was Rossann Williams, a three-year partner who had relocated to Amsterdam from Texas. With all of the requests, I shook hands with and thanked partners old and new. In the end, I must have written my signature on more than 150 mission statements, the entire time somewhat slack-jawed at the emotional display of commitment unfurling in front of me.