Leadership 7th Edition by Andrew DuBrin, Ann Fisher, Andrew DuBrin

Exercise 20

The roots of Starbucks trace back to 1971, from a single roaster and retailer of whole bean and ground coffee in Seattle, Washington. Forty years later, Starbucks had over 17,000 stores worldwide in 50 countries, with about 11,000 stores in the United States. Despite the size of the operation, when Starbucks managers are about to initiate an idea, they might say, "What would Uncle Howie think?" The uncle in question is CEO Howard Schultz, who bought the company when it was a six-store coffee chain. He still contributes heavily to decisions about matters such as how frequently coffee beans should be roasted in a store and the look of the Starbucks logo.
Despite the growth of Starbucks into one of the world's most recognizable brands, the company has faced a few rough patches. The company experienced a substantial sales decline during the Great Recession. Outside analysts said that consumers were shifting their restaurant coffee purchases to lower priced alternatives, particularlyDunkin' Donuts, McDonalds, 7-Eleven, and Tim Horton. Schultz insisted that many Starbuck customers were simply buying less coffee outside, not shifting to the competition.
To help the company rebound, Schultz who had been serving as chairman only for eight years, returned to his CEO post. Schultz was concerned that Starbucks had lost its way: It had become too big, too bureaucratic, and stores had lost of some of their ambience. Schultz wanted to take the company back to its roots and to be loved again. One of his first steps was to modify work processes to assure that customers could hear the whir of grinders and smell the aroma of coffee all day. Schultz was concerned that the switch to preground coffee had taken the romance and theater out of a visit to Starbucks. He wanted Starbuck partners to put their feet in the shoes of customers and enhance the customer experience.
Although Schultz did not want to be like other business corporations, he took major steps toward profit improvement. He shuttered 800 stores in the United States and laid off approximately 8,000 employees. Schultz also spearheaded efficiencies in coffee preparation. For example, it was discovered that baristas were pouring millions of dollars of leftover milk down the drain. To help solve this problem, etched lines were placed in the steaming pitchers so the baristas would know precisely how much milk to use for each size drink. Schultz, who makes heavy use of stories and metaphors to inspire his partners (a.k.a. employees) said, "The celebration of that line in the halls of Starbuck has become a metaphor. How many other lines can we find?"
An important part of the Starbucks comeback has been through heavy participation in the social media. Schultz heavily endorsed social media presence as a way of rebuilding trust in the company and communicating company values. At one point, Starbucks had 20 million Facebook connections and 1.4 million Twitter followers.
Schultz took great pride in how well the company had implemented the changes he proposed and how well it rebounded from the Great Recession. He told his partners in 2011, "We're sitting today with record revenue, record profit, and a stock price at a five-year high. This isn't an accident."
Write a bulleted memo to Howard Schultz telling him what changes you think Starbucks should make to enhance the company success even further.