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

by Howard Schultz

  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.

  But then an old friend would pop a head into my office, or maybe I would walk into the original Pike Place store, and a scene or feeling from the past suddenly came alive for me, crystal clear, as if it had occurred yesterday. And in a way, it had.

  Everything that had happened as Starbucks grew, from my first Il Giornale store with its black laminate countertops to our stores in far-flung places, was a part of me. And even though, as a second-time ceo in 2009, more than two decades had passed and I had learned from mistakes and matured with experience, the core of who I'd been as a young entrepreneur remained the same: When I wholeheartedly believe in something, I can be relentless in my enthusiasm, passion, and drive to bring it to life.

  Without a shred of doubt, I believed that the instant coffee Don had originally shared with me—and that our partners had worked so hard and so long to perfect—would change consumer behavior. Why was I so absolute in my thinking? Because the best innovations sense and fulfill a need before others realize the need even exists, creating a new mind-set. Starbucks’ natural soluble coffee powder did just that, reminding me of the way Starbucks’ Italian-inspired espresso bars had shifted the way people around the world drink coffee and spend their time.

  Perhaps it was ironic that bringing instant coffee to market mirrored the start of the company. With instant as with espresso bars, the intent was to reinvent a commodity, to recast something tired and stale into something magical and fresh, an ambitious goal that was not about stealing market share from existing competitors, but about establishing a new market. Starbucks instant would convert the existing instant coffee drinker and also give a non-instant customer a value-added reason to become one. In the same vein that the third place fulfills a cultural desire for community, Starbucks’ “just add water” promise gave the new millennium's intensely mobile, on-thego population of discriminating coffee drinkers a single, delicious cup of coffee anywhere, anytime. More than 20 years before, I had believed that people would pay a premium for high-quality coffee paired with an incomparable experience. Again, I knew this to be true. And just as my early dream was not to open only one or two stores, but to build an enterprise, the current dream was not limited to selling one or two flavors of Starbucks instant coffee, but rather to build a brand platform from which other products would arise.

  In another irony, naysayers who bombarded me with reasons why Starbucks should avoid instant coffee also echoed the past. I remember investors whom I had approached to fund Il Giornale bluntly saying they thought I was selling a crazy idea. That I was out of my mind. Insane! “Why on earth do you think this is going to work? Americans are never going to spend a dollar and a half on coffee.”

  Doubters of instant coffee were just as vehement.

  “It's going to be a shelf puppy!” one of Starbucks’ most senior executives insisted as he stood in front of my desk, referring to products that sit idle on grocery aisles, collecting dust. Others predicted that launching something so radical before the company turned a corner, or launching it at all, would incite critics to characterize our entry into the instant market as a desperate ploy rather than a strategic growth strategy. I was warned that instant coffee would destroy the integrity of our brand. Some even doubted I was behind it. “If Howard knew we were doing this, he'd stop the project!” one partner in the field blurted out when he heard about our plans to put our name on instant coffee. The doubt that permeated Starbucks’ partner population is hard to overstate. While many people shared my enthusiasm, it is fair to say there were many who also wanted no part of it.

  I was willing to hear people out—the reasons behind their worries would inform how we marketed to consumers—but I refused to allow dissenters to derail my conviction.

  My wise longtime friend and mentor, Warren Bennis, the well-regarded scholar of leadership, once observed that 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. I thought of Warren often and spoke with him many times after I returned as ceo. It occurred to me that trying to save Starbucks during the company's crisis paralleled America's simultaneous struggle to survive the global economic crisis: Both company and country were, to paraphrase Warren, improvising without a net and working within a constantly evolving context. Flying somewhat blind.

  When it came to big decisions like launching instant coffee, I took heart in knowing that my belief in the product was rooted in knowledge. First and foremost, I knew the product performed. I also knew there existed a huge market for what we had created. Globally, instant coffee accounts for about 40 percent of all coffee consumption, with annual sales hovering at about $20 billion and a higher-end segment worth close to $3.4 billion. Any market that had not seen innovation for decades was ripe for renewal. If Starbucks was serious about expanding its consumer packaged goods business into more significant revenue sources, there was no bigger prize than instant coffee.

  My intuition, born of my years witnessing Starbucks’ winning over millions of customers, told me that doubters of Starbucks instant would eventually realize it was neither a compromise nor a ploy and, taste by taste, our partners would rally behind it with pride.

  Launching Starbucks instant coffee was also, back to Warren's point, in line with the company's overriding goals. If executed well, it stayed true to the seven pillars of the Transformation Agenda:

  Be the undisputed coffee authority.

  Engage and inspire our partners.

  Ignite the emotional attachment with our customers.

  Expand our global presence.

  Be a leader in ethical sourcing and environmental impact.

  Create innovative growth platforms worthy of our coffee.

  Deliver a sustainable economic model.

  If I thought Starbucks had settled for an inferior product or that our instant coffee took us off course, I would not have had the fortitude to move forward with such a big bet.

  Perhaps no one understood this more than Sheri. She had been one of the only people outside Starbucks to experience Don's original creation. We had been on a trip abroad when I pulled out the package Don had given me and made Sheri a cup. She was astonished at the taste, and throughout the years, even during periods when its development took a backseat to other research, Sheri continued to urge me to have Starbucks introduce an instant product. As a coffee lover, a traveler, and an accomplished businesswoman, Sheri inherently understood the value of the product for consumers as well as for Starbucks.

  As always, Sheri's behind-the-scenes conviction fueled my own, which in 2009 was no less fierce than it had been back in 1985 when I had pounded the Seattle pavement trying to convince strangers to invest in my future.

  Now I had to do much more than raise money. I had to raise tens of thousands of spirits, engaging our partners in a shared purpose and then leading them toward a shared future. I recognized that many of our partners were burdened with fear. Fear of risk. Fear of public failure. And in an uncertain economy, fear for their own futures, which were tied to the future of the company. But I could not allow this fear to hold us back.

  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.

  One person's passion cannot successfully launch any Starbucks product. Like all effective leadership, mine is linked to the organization's ability to execute.

  Instant coffee would be the biggest and most complicated product introduction in Starbucks’ history. We were launching an entirely new category, worldwide, that required all the company's departments and experts to solve problems and work together in a manner they had never needed to before.

  To oversee the effort, we appointed Aimee Johnson, a bright, tal
ented emerging leader who had come to Starbucks from Campbell Soup Company. Starbucks instant coffee would be unique from all of our other beverages, including bottled Frappuccino, because it could be sold in thousands of venues where Starbucks did not yet have a presence, such as at outdoor gear retailer REI. Selling a product at so many points of distribution around the globe would be impossible without Peter Gibbons’ ongoing overhaul of Starbucks’ supply chain; before his changes, the company could not have dreamed of successfully manufacturing, warehousing, and distributing something so ambitious.

  And from a marketing perspective, every aspect of the product had to brazenly defy instant coffee's stigma.

  First, we had to find the perfect name.

  More art than science, naming a product is akin to going on a treasure hunt without a map. There is no guaranteed route. We hired outside experts. We sat in rooms and brainstormed. We e-mailed each other in the middle of the night. How about Sidekick? Spark? Café Cadabra? SB Kazam? Little Hero? Or why not just sub-brand it Starbucks Instant? At its peak, the list of possible names neared 500, which was whittled down based on evolving criteria. At one point, our internal creative studio added one. VIA. It made the short list of names.

  Via, it turns out, is Italian for “street” or “route,” and could connote “on the go” or “between places.” Not only did it speak to my original Italian inspiration for Starbucks, but it also communicated the intended nature of the product. Portable. Readily available. VIA was also tight and easy to pronounce. The word itself, when printed in all capital letters, looked elegant. The marketing team's vote was almost unanimous.

  “We have it,” Aimee and Michelle said when they entered my office. I heard it and hesitated, taking a moment to digest it. VIA. Eventually it hit me:

  VIA.

  ValencIA.

  I thought of Don and smiled.

  We really had discovered the perfect name.

  I was extremely disappointed.

  It was a Friday afternoon, just days before VIA's packaging had to be finalized, and I was not at all happy with the generic, rainbow-colored designs I was being shown. Something was missing. The boxes that held the coffee's single-serve sleeves lacked an all-important nonverbal appeal that would convince consumers that VIA was not their grandmother's instant coffee—but rather a revolutionary yet familiar drinking experience. I knew the creative team behind the designs had tried hard. And I knew it was the 11th hour as the clock ticked toward VIA's scheduled launch date. But still I shook my head. I couldn't do it. I could not approve the creative even though a redesign risked disrupting the schedule. Too many people had worked too hard and for too long, and too much was at stake, not to get every detail pitch-perfect.

  While VIA's package would not in and of itself lead to the product's success, the wrong design could kill it. I knew it could be better. No compromises. So rather than sending it back for a redo and hoping for the best, I did something I would have done during Starbucks’ earliest, most entrepreneurial days.

  “Come to my house Sunday,” I told only Aimee and Michelle. I did not invite anyone else from Starbucks or explain why until they arrived.

  “This is Jack Anderson.” I proudly introduced Aimee and Michelle to the cofounder of Hornall Anderson, one of Seattle's oldest strategic branding and design firms. Jack had worked with me during Starbucks’ earliest years, when his firm had designed the identity for Frappuccino as well as the stores’ first shopping bags and catalogs, bringing a much-needed warmth and earthiness to the brand. This was one of those times when Starbucks’ transformation demanded attention from someone who inherently understood my language and the gestalt of the brand.

  At my request, Jack had come with one of his most talented designers, David Bates, and the firm's vice president of strategy, Laura Jakobsen. They did not know Starbucks was about to launch an instant coffee named VIA or that I wanted them to redesign the package.

  I could not have been more resolute or eager in my explanation. “This product will be so foreign to our customers and our partners that, to get people to believe in it, to try it, it must have a certain look and feel that is reminiscent of a Starbucks product but still connotes innovation.” As I knew he would, Jack got it, and within the week his team and Aimee's were collaborating.

  News that I'd brought in an outside firm under the radar met with some inevitable frustration. It was never my intent to undermine anyone, but there were moments throughout the transformation—and for that matter throughout Starbucks’ history—when I had to make tough choices, at times deciding that the best interests of the organization were contrary to the interests of an individual or group. 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.

  Bringing Jack and his colleagues back into the Starbucks fold proved a wise move. In a simple yet brilliant design, the firm met the packaging challenge by transferring the quality and trust associated with beverages sold in Starbucks stores to VIA. On the front of each small box that contained VIA's narrow, single-serve foil packets was a cutout with the distinctive profile of a Starbucks coffee cup. Also on the package, on an inner panel behind the cutout, was an adaptation of the check boxes that appear on every white Starbucks hot-coffee cup; these are the squares baristas mark to indicate customers’ drink preferences—decaf and shots, syrup, and milk. The visual representation of our iconic cup and the boxes were analogues of Starbucks’ in-store experience, referencing the heritage of the company while simultaneously validating the new product's quality. Subtle yet straightforward. Sophisticated without being gimmicky. Utterly authentic.

  Hornall Anderson also helped us better articulate VIA's unique, simple promise in a tagline: Never be without great coffee. With VIA, it was now possible for people to enjoy a high-quality cup of natural, ethically sourced coffee in places and at times when the option had not been available. A sachet of VIA in a purse, pocket, or backpack, for example, meant enjoying Starbucks coffee when hiking. On any airplane. On a job site. In a foreign country. In a dorm room, at other people's houses, or in one's own home in lieu of brewing a full pot.

  The greater marketing challenge, however, was figuring out how to talk about the product so people immediately understood that VIA was not just another instant coffee, but the game changer many of us believed it to be. I never forgot another sage piece of advice I heard from Costco's Jim Sinegal, who encouraged me not to run away from the word “instant,” but to embrace it. There was a lot of debate internally about this. Should we even associate VIA with instant, given its negative connotation? Was our new coffee even in the same category as instant? Eventually, our creative studio crafted a simple, elegant turn of phrase that effectively reframed the way the product was viewed. A phrase that connoted a new beverage as well as a new behavior. The line—”Starbucks coffee, in an instant”—said it all.

  The positioning. The packaging. The name.

  Each of these elements would help recast public opinion about what instant coffee could be. But for VIA to succeed, our partners had to view it with the same respect they had for every other Starbucks coffee. Overcoming the company's own bias was a top priority, and again I could not do it alone.

  In their own efforts to build consensus, Aimee and her colleague Brady Brewer, a vice president of marketing, had discovered a solution. If partners knew VIA was an instant coffee prior to trying it, then they brought to the experience negative assumptions that tainted their perception. So we fooled them. At one meeting, every partner received two small paper cups and was told that he or she would be tasting two different brewed Starbucks coffees. As people sipped and discussed the flavors, no one questioned the samples’ authenticity. But when it was announced that both cups were Starbucks’ new instant coffee, the collective evaporation of bias was almost palpable. The element of surprise had displaced suspicion.

  This trick was played out
again and again in our offices and conference rooms, in stores with partners, even in my own dining room at dinner parties when I secretly served VIA to guests. The surprise taste test created a snowball of acceptance.

  Rather than fearing skepticism, we were using it, a tactic that would help turn the tide when we launched VIA publicly.

  At first, however, our fears did come true.

  On February 13, 2009, four days before the official public announcement that Starbucks would enter the instant coffee market, this headline ran on the investment website the Motley Fool: “No, Starbucks, Please Don't!”

  The news about VIA—but not VIA itself—had been leaked to Advertising Age, and a rash of bloggers had responded by criticizing a product they had never tasted. The Fool column wrote about Starbucks’ “plans to delve—or is the word devolve?—into the world of instant coffee” and blatantly asked, “Is Howard Schultz panicking, getting desperate to show that management's doing something, anything?” Other bloggers harped on how we were “trading down” to instant coffee despite its reputation for “poor quality and so-so taste,” as one blogger put it, adding, “How many aspiring poets, musicians and philosophers will go to Starbucks to think profound thoughts and guzzle instant coffee?”