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

by Howard Schultz

  I asked him directly why he came to Starbucks so often.

  “I could just as easily go to a 7-Eleven,” he said matter-of-factly. Then he shared a conversation that he and his wife had had at their kitchen table that past weekend as they reviewed their family's budget, just as millions of other families had been doing of late. “My wife asked whether I could give up my daily Starbucks.” Standing there in the back room, he recounted his reply. “Let me tell you why I cannot give it up. Because it's not about a cup of coffee. I have a tough job. I see things on a daily basis that no one should see and experience. But the one good thing I can count on every single day is how the people in that store make me feel.” Then he addressed me directly. “I want to tell you about your employees. They know my kids’ names. They know where I go on vacation. They write notes on my coffee cup. I could be seventh in line and they start making my drink.” The baristas knew he took his grande nonfat latte with two Splendas, extra hot with no foam.

  He added that, as a police officer, he understood the importance of treating every person he came in contact with in his job with respect. “You never know what's going on in people's lives when you serve them,” he paused. “For all you know, it could be someone's last day on earth.” Coming from a detective who had seen his share of trauma, this was not a statement made in jest. “This is my little escape,” he said he had finally told his wife. “You just have to allow me that.” And with that, Officer Kevin Coffey—I swear that was his name, Kevin Coffey—thanked us for our time, hugged Clara, and walked out.

  It is one thing for me to espouse the importance of human connection. But hearing it from a customer was just the boost I needed before meeting with the board.

  Chapter 23

  A Galvanizing Moment

  One month after Wall Street's September 2008 meltdown and a few weeks before Starbucks would announce shockingly reduced profits for the fourth quarter, I was being pressured to cancel Starbucks’ leadership conference, a once biennial meeting the company holds for all North American district, regional, and store managers—about 10,000 people. But I refused. From the moment I came back as ceo I was steadfast in my decision to hold this event.

  As local leaders, Starbucks’ store managers were keys to the company's transformation. All the cost cuts and innovation meant nothing unless our baristas understood their personal responsibility to connect with customers and unless our store managers felt personally accountable for operating profitable stores. The in-store experiences our partners created would carry the brand—wherever we decided to take it—and as our sales and our stock and the economy fell, I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake.

  Some former attempts to bring our managers together had been canceled, one because it fell on the heels of the September 11 terrorist attacks and another because it was deemed an unnecessary expense. Now, in the fall of 2008, there was no question, at least for me. Starbucks was in dire need of an event that would educate our partners and reinstill confidence in the company's purpose.

  Almost every major US city wanted to host us. The food and lodging revenue alone—a significant piece of the conference's $30 million price tag—would be a windfall for any local economy.

  But we chose New Orleans.

  To some people this seemed absurd. We had never held the conference outside Seattle, and coordinating travel and lodging and meals and programs for tens of thousands of people in a hard-to-reach city that was still recovering from 2005’s devastating Hurricane Katrina would be a logistical nightmare. But the reasons against going to New Orleans—that spicy southern city known for jazz and Mardi Gras and hospitality—were the very reasons we had to go. After our July layoffs and store closings (none, however, in New Orleans), Starbucks was losing not just money but also partners’ trust. Unless we rallied our store managers around our new mission and taught them how to more profitably operate their stores, our company would drown. I was sure of it.

  But reigniting people's hearts and minds had to be done in person. For all the promise of digital media to bring people together, I still believe that the most sincere, lasting powers of human connection come from looking directly into someone else's eyes, with no screen in between. And at this tenuous juncture, our partners needed to connect with me, with other Starbucks leaders, and with one another not online, but in New Orleans.

  At that time, no other US city's experience seemed like such a natural extension of our values as well as our crucible. Historically, there is a coffee connection. New Orleans straddles the Mississippi River before it pours into the Gulf of Mexico and was the first port to bring coffee into the United States. But more relevant was that we identified with New Orleans because of the city's ongoing uphill battle to recover. The massive storm was one of the five most deadly hurricanes in US history, and when it hit land the powerful floods from failed levees destroyed thousands of homes, schools, possessions, and livelihoods; almost 2,000 people were killed, and thousands more were rendered homeless. At one point, 80 percent of New Orleans was underwater. The city lost well over 100,000 trees, and when the storm was over, the physical destruction it left amounted to 37 years worth of garbage, all generated in one day.

  Most appalling, however, had been the slow emergency response and recovery assistance and the utter lack of attention from government agencies that New Orleans received. Like other organizations and individuals around the country, Starbucks, in part through the company's foundation, pledged $5 million to the city right after the hurricane. And Sheri and I donated another $1 million. But three years later, the city was still struggling, and when Craig Russell and Sherry Cromett, the leadership conference's organizers, met with city leaders to plan the event, a captain from the New Orleans police department broke down describing how his family had suffered through Katrina. The manager of one national hotel chain teared up at the thought that Starbucks would bring its business to his city.

  When I walked the streets of the Ninth Ward with Cliff a month prior to the conference, I too was stunned. We saw neighborhoods still in tatters and homes barely standing, like wood skeletons rotting in the sun. Parks, playgrounds, schools were all still broken. Empty. Entire neighborhoods were flattened and emanated the numbing atmosphere of a cemetery. It was unimaginably tragic. After the storm, many citizens left New Orleans to live elsewhere, but those who stayed were determined to rebuild. They loved their city. In some respects, their attitude reminded me of villages in Rwanda that exuded a palpable combination of desperation and fortitude and hope and self-reliance as they tried to recover from the 1994 genocide. I knew that when Starbucks’ almost 8,000 store managers, 900 district managers, 120 regional directors, 250 international partners, dozens of senior leaders, and support staff converged on the city for a week in October, we would do much more than help ourselves. We would help the community.

  If done right—and it had to be done right—a leadership conference in New Orleans would be a galvanizing event, raising our company's level of passion and performance where we needed it most: in front of our customers.

  But if the week felt like a rah-rah, feel-good corporate party, it would fail.

  If it was a self-indulgent trade show, a tense lecture, or a boring training seminar led by talking heads, it would fail.

  It had to be visceral. Interactive. Genuine. Emotional. Intelligent.

  Our week in New Orleans could not feel like a shallow extravagance during a time of cutbacks, but an investment in the company's people and our transformation, a sincere reminder of what Starbucks stands for and a transfer of tools and knowledge so each manager would be excited and incentivized to return to his or her store and run a better business.

  If done right, a week in New Orleans would be an invaluable, reinvigorating deposit in the evaporating reservoir of trust between our people and the company.

  A lot had to happen in New Orleans.

  On Sun
day, October 26, 2008, I left Seattle and traveled with Michelle, Vivek, Wanda, and Valerie to the conference. At the same time, thousands of partners were leaving their homes and their stores, boarding planes, and racing to make connecting flights to meet us there. None of us could predict exactly how the week would pan out, including Craig's small team of seven, who had been planning the conference for months.

  The degree of logistical coordination required to house, feed, teach, and inspire almost 10,000 people—in a manner that was both safe for our partners and respectful to our hosting city—was staggering. We would fill 38 hotels. Serve 33,000 meals each day, make dinner reservations at 32 restaurants and banquet halls, and usher everyone through breakfasts and lunches at the city's massive convention center, where the staff was not big enough to serve all our needs. We wound up recruiting folks from local homeless shelters to help us out.

  We had to prepare about 10,000 welcome bags and almost 10,000 different agendas since every partner followed a unique schedule for the week. They included participation in five major activities:

  Informational sessions, roundtables, panels, and educational electives

  Four huge interactive galleries designed to bring Starbucks’ mission, values, operations, and store-management skills to life

  Community volunteer events rebuilding and refurbishing some of the city's most devastated public spaces and neighborhoods

  A closing general session, the one time all of us would gather together for the same presentation, during which we would make two surprise announcements that, I knew, would bring our people to their feet

  A four-block street fair organized for Starbucks’ partners and featuring hundreds of local restaurants, artists, musicians, and entertainers

  I had been involved in the planning and yet still was hard-pressed to imagine exactly what the conference's look and feel would actually be. I knew what we needed to achieve, but the costs had added up, even beyond what I had estimated, and as the plane began its descent, my nervousness heightened. The New Orleans leadership conference was possibly Starbucks’ riskiest move since January, more costly and questioned than Pike Place Roast and Clover and Sorbetto. I was feeling pressure to deliver on the investment even though we would never be able to formally measure the return.

  Immediately upon landing at Louis Armstrong New Orleans International Airport, I felt the energy. A marching band was on hand to meet our partners, and the drive to our hotel took us down streets where, hanging from streetlamps, large blue and green banners declared “BELIEVE.” Michelle explained that Starbucks had sent hundreds of these banners and posters to the New Orleans Chamber of Commerce, which had distributed them throughout the city as welcome mats for our partners. Amazing. We also drove past the devastated Ninth Ward, where some families were still living in government-provided trailers because their homes were uninhabitable. The level of poverty and despair was beyond my comprehension.

  I was so proud of the reasons we had come to New Orleans, but those reasons also made my stomach churn.

  Arriving at the hotel, my mood shifted yet again. I could not check in fast enough! I felt like a kid going to Disneyland for the first time, propelled by insatiable curiosity and anticipation. I paced in the hotel lobby waiting for Michelle and Vivek. “Let's go, let's go,” I clapped with a smile. I was anxious to get to the convention center and view the galleries. SYPartners, the strategy and design firm that had come to know our company so intimately since our very first Beatles session in Seattle earlier in the year, had conceptualized the four different galleries based on specific takeaways that Cliff and Michelle wanted our store managers to absorb. Touch Worldwide, a design and production company, brought SYPartners’ ideas to life. In the car, Michelle described what I had only seen in drawings: Each of the four 100,000-square-foot galleries had a different theme—coffee, customers, partners, and stores. I wanted to walk through and experience each just as our partners would.

  We pulled up to the massive Ernest M. Morial Convention Center, entered through a wall of glass doors, and quickly made our way to the exhibition hall that featured the coffee gallery. Inside, I stopped abruptly, awestruck by the scene sprawled out before me. The at least two-story-high pavilion looked like nothing you'd see at a typical trade show, but rather a stage set with dramatic scenes from a play about coffee's journey from soil to cup. There were nearly 1,000 actual coffee trees representing our coffee beans’ countries of origin. There was a mock drying patio like coffee farms have, where anyone could run his or her hands through a bushel of green coffee beans or grab a rake to churn thousands of beans strewn across the floor as if to dry in the sun. A huge coffee roaster had been assembled so several of our roast masters could take store managers on a virtual tour of a roasting plant. Oversized posters and photos and videos illustrated what it means to source coffee ethically, how Starbucks works with farmers, as well as the enormity and untapped potential of the global coffee market. The gallery culminated with the beans’ “last 10 feet,” where ground coffee is put in the hands of the barista for brewing and, finally, is poured into a customer's cup. Dub Hay, among our most-esteemed coffee aficionados, would end this gallery's tour with a coffee tasting.

  It was unbelievable.

  In another pavilion, this one housing the customer gallery, every set was designed to put our partners in our customers’ shoes. At one towering display I could pick up a coffee cup, hold it up to my ear (like the old-fashioned children's game “telephone”), and listen to actual recordings of people who had called in to our support center with praise or critiques of their store experiences.

  A hilarious video reminded our people to treat every customer with the same level of respect and attention, from the überloyalist who knows every barista's name (we affectionately called this composite customer “Bob”) to the first-time Starbucks visitor who doesn't know the difference between a grande and a venti (known internally as “not Bob”).

  In a quieter exhibit, partners could walk among a three-dimensional photomontage of candid shots of people in our stores. Each photo and its caption was a reminder that every Starbucks location is a rare place where people who increasingly live their lives in front of screens and behind steering wheels can physically interact with others. The pictures reinforced how much a barista's job matters given that he or she quite possibly might serve up the only human connection in a customer's day.

  The partner and store galleries—also 100,000 square feet each and divided into thematic sections—were equally as grand and powerful. Almost every item used in the galleries as a prop was recyclable, reusable, or something we could take back home with us to avoid leaving a big footprint at the convention center. I was amazed by the resourcefulness, the creativity, and the nonverbal cues of the entire experience. Each gallery was interactive. It was emotional. It was multisensory. It was storytelling!

  Ultimately the galleries created an immersive experience that had the power to positively change our partners’ behavior. When people can see things, feel things, interact with things, that is when their minds actually begin to shift. I believed that our store managers would, as we had intended, walk away from the conference with new skills for managing their teams, treating customers, and running their stores—even for the way they understood and talked about coffee. I simply could not wait for them to experience each gallery.

  Standing near a doorway, taking in the magnitude of what had been created for our people, a sense of calm washed over me. I spoke just above a whisper. “Okay,” I said, more to myself but loud enough for Michelle to overhear. “We're going to be okay.”

  “How many people are you bringing?”

  “Ten thousand.” Even through the phone, Craig Russell could see people's stunned expressions. Months before we arrived in New Orleans, Craig's team had contacted several nonprofit community and nongovernmental organizations—NGOs—to let them know Starbucks’ leadership conference was coming to their city and that our people wanted to help. Although
the groups were grateful, it quickly became clear that they simply had no precedent for hosting thousands of volunteers all at once. The NGOs did not have enough supervisors. There were not enough shovels! So, in addition to bodies, we bought our own shovels and hammers and other supplies, $1 million worth, enough to fill two rental trucks.

  Each day of the conference, from Monday through Thursday, about 2,000 partners joined one of six organizations for five hours to do whatever needed doing in New Orleans. In City Park—a 1,300-acre public sanctuary that had suffered millions of dollars in landscaping damages from Katrina and had to reduce its 260-person staff to just more than 30—our partners planted 6,500 plugs of coastal grasses, installed 10 picnic tables, and laid four dump truck loads of mulch. At Tad Gormley Stadium, a popular venue for high school football games, partners scraped and painted 1,296 steps, 12 entrance ramps, hundreds of yards of railing, and a half-mile-long fence. In the Gentilly neighborhood, two playgrounds were constructed. In Broadmoor, 22 city blocks of street and storm drains were cleaned. In Hollygrove, partners did construction and leveled dirt for New Orleans’ first urban farm. We collaborated with the Crescent City Art Project to paint, in one day, 1,350 murals at 25 public school grounds, and with Hike for KaTREEna, we planted 1,040 trees.