I'm not sure how many of you frequent Starbucks here in India, but Howard Schultz, Chairman and CEO of Starbucks, is an inspiration. To read about some of the things that he has done, to look at some of the decisions that he has taken, are just so good in terms of the boldness, the enterprise, the innovation of the man, right from the time that he got into coffee, captured by this whole notion of finding a community place between home and office that people could come to and just sit and enjoy coffee and conversation with each other. Out of that birthed the Starbucks coffee houses. But also before that, going to Italy, going into coffee places there and seeing the way coffee was dealt with in Italy and trying to do the same thing in the US. This all spoke for his heart in creating a wonderful community that would be based around sipping coffee.
Yet, as we look at his life, if seems that as he got into Starbucks first as Director for Operations, left and came back again as CEO and then actually bought the company through local investors and was its Chairman for many years. When he gave up as CEO, he stayed on as Chairman. But right around 2007-2008, as Starbucks began to increase beyond any plan that they previously had – they were starting 7 new stores a day – they were mushrooming all over the place. Howard Schultz realized that they had lost their initial capacity to engage both the partners, or the baristas as the employees are called at Starbucks, but also the community, the consumers who were coming. He said that it almost seemed that there was a sense of loss in terms of what Starbucks had initially started out to do.
So he came back to Starbucks as CEO, took over and made some very important decisions at that time. Nancy Koehn, professor of Business Administration at Harvard Business School and studied Starbucks for 20 years writes about this time when he came back and says this: "It was a severe test to his leadership skills and to see whether there was something that could be done and that he could do it for Starbucks. The easier thing to do was to go after the low-hanging fruit and just make some changes and appear to try and change things around." But he didn't do that. He really went in and said that there are some things that need to be changed. He said, "There are a couple of things that we have to get back to," and he named them at a gathering in March 2008 to 200 senior-level company leaders, called the Big Moves. He said: "We must…
1. Be the undisputed coffee authority;
2. Engage and inspire our partners, who are the workers;
3. Ignite the emotional attachment with our customers;
4. Expand our global presence – while making each store the heart of a local neighborhood;
5. Be a leader in ethical sourcing and environmental impact;
6. Creative innovation growth platforms worthy of our coffee;
7. Deliver a sustainable economic model.
These were the things that they called the Big Moves, but in 2008, it was a huge year for Starbucks, because it came with new initiatives that Schultz was bringing in that he felt were going to be needed in Starbucks to turn it around, but also to get back to their roots.
In February 2008, he took a major decision by closing 7000 stores throughout the United States, taking away 135,000 baristas. Baristas, as you know, are the people who serve the coffee and are able to use the espresso machines. But he said, "We're going to take these 135,000 baristas away for 'Espresso Excellence Training', and make sure that they can pour a perfect espresso shot and steam milk properly." That is what he did in February 2008.
Then in October 2008, much to the board's dismay (he actually fought the board on this) because it was a time when the fourth quarter profits were down 97% from the same quarter the previous year. But he pushed the board to spend $30 million to send 10,000 store managers to New Orleans for a 3-day conference. There he worked with them, got them involved in community work that was needed after Hurricane Katrina. He had team building exercises, all to let them know that they needed to come back to the place that they once were in Starbucks. His main point was this: "That we need to make Starbucks a wonderful place for our partners to work at. They need to be proud of the place that they work at. They need to inspire people who come there and then create a wonderful community." Till today, people at Starbucks will hold to this, that anyone who comes in and buys a cup of coffee can sit there the whole day and never be asked to leave. That's the kind of offering that they give – that they wanted to create this community between office and home, where people could just come and rest over a cup of coffee and enjoy a conversation or a business deal or anything like that.
But what really inspired me was this – the year 2008 in Starbucks' history. This was a time when Howard Schultz realized that something needed to be done. It wasn't sufficient to go after the low-hanging fruit. And sometimes, that's the easier thing to do. As salespersons will say, "it is easier to go after customers that they already have and get more business out of them, than it is to increase the customer base which is harder but will be more sustainable in the long term. Sometimes low-hanging fruit is what we focus on. Sometimes we look to use a Crocin to take care of fever, when indeed we ought to be taking an antibiotic to deal with the infection. The Crocin will reduce the fever and help us to go on, but what we really need to do is to find out what is the cause of that fever. Or we put a Band-Aid where we really need a surgery.
This made me think about you and me. What are we doing in our lives? What are we looking at today that really needs deeper intervention? Yet we are going after low hanging fruit because it's letting the cash come in. it's easier to manage. But really for something to happen, for change and a turnaround to happen, we really need to go after other things than low-hanging fruit. It could be anything in our lives; it could be the place where you are, what you are doing. Maybe it's time to step away and move into something that needs further education, something that you need to spend a couple of months away to be able to get into that place. Or maybe it's something in your own work, that you've been managing to get the things going, but deep down you know that you're just going after low-hanging fruit. Maybe we need to take a leaf out of Howard Schultz' book and say, "However difficult it's going to be to either sell it to my superiors to the people I work with, this is what's going to turn us around for the future. This is what's going to make us a market player if we take hard decisions right now." I wonder whether this is the time for that – the time to search deep and say, "What's the beat thing that I can do? It may not be the easiest thing. It may be the hardest thing that you've ever done, but it needs doing."
I've been inspired by Howard Schultz. Maybe you are too. Maybe I'm speaking to something that you've felt for sometime, that it's time to stop looking at low-hanging fruit and really go to where things need to be sustainable over a long period of time. For that, it requires more hard work. Maybe today's the day for that decision. My prayer for you is that if it is, that you would have the conviction to be able to go for it, to take that hard decision and to see change in your life that will have far-reaching consequences, good far-reaching consequences, in the years to come. Just as Starbucks looks back to 2008 and says that was the year we were turned around, we too can look back to this day as the day that we took the decision that changed my life. My prayer is that you would.
Can I pray with you? Almighty God, every once in a while, there comes a moment in time when we need to take a hard decision. If by some chance, there are some on this call or who would read this on an email or on the website, who need to make that call, I pray that they would. Inspire them, motivate them, strengthen them and give them the courage to take it. I ask this in Jesus' precious name. Amen.
• Julia Hanna, "Starbucks Reinvented." http://hbswk.hbs.edu/item/7593.html (Nancy Koehn)
• Howard Shultz, https://news.starbucks.com/leadership/howard-schultz
• F. John Reh, "Picking Low Hanging Fruit." http://management.about.com/od/planning/a/Picking-Low-Hanging-Fruit.htm
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