Starbucks' CEO Talks Business

you no company is immune from the impact of the recession not even the one-time darling of Wall Street start about 37 years of growth Starbucks is struggling to put the low back at its Joe the number one threat facing America Starbucks can recover coffee and they want you to buy a sandwich and a book and a TV in a managed was top executives Howard Schultz admitted changes have led to a dilution of the experience and a loss of the romance and theater of Starbucks opening the door to competitors this must be eradicated yesterday it was concluded that I would be coming back as chief executive I can see the light I know what we have to do we have to show up we have to do the work and what doing the one needs is that we have to find answers to tough problems I apologize if anyone in this room feels that we have fractured the culture and values of the company by what has happened over the last few weeks it's a decision that we had to make together we have to turn this page we have to go forward we want to go back to what we really stand for and we want to provide our customers and our people a sense of pride and confidence in the authenticity of the Starbucks experience we have a lot of work to do but our research tells us we're making real progress on every measure of customer satisfaction there will be more stores in the next year that'll be very very different but much more exciting and obviously much more relevant than the stores we built ten years ago Starbucks best days I truly believe are in front of us we have some of the finest people in the world serving our coffee in our stores we are ethically sourcing the highest quality coffee in the world I know that to be true we have built one of the most recognized and respected brands in the world and I believe sincerely in the future of our company because I believe in all of you the president chairman and chief executive of Starbucks Howard Schultz thank you thank you thank you welcome to London some of our former business secretaries may not know who you are I can assure you we do and it's a privilege okay to have you with us today let's just put a little bit of context on where we are Starbucks is 40 years old this year you have almost 17,000 stores and 200,000 employees over 60 million people in more than 50 countries pass through the doors of Starbuck every week you have annual revenues well in excess of 10 billion dollars you recently announced record fiscal second quarter results stating that your cells traffic and customer trends all point to the expanding power of the Starbucks business Starbucks has an extraordinary history and we're going to explore some of that history today but I want to start by looking at where you started and I'd like you to tell us a little bit about what it was like growing up in the projects in in Brooklyn in the 50s and 60s okay thank you good morning and thank you all for coming I really appreciate it very much my my story I think has been well told in that I grew up in what is is entitled in America the projects which is federally subsidized housing really literally on the other side of the tracks my dad never made more than $20,000 a year he was a blue-collar worker and I think I saw as a young child the fracturing of the American Dream in that unfortunately my parents were not educated and they didn't have the resources to take advantage of what America really had to offer and I think that really did shape how I would see the world if I took you to where I grew up the odds on me getting from there to here is not something you would have bet on and and I think I was very fortunate to be to put myself in a position to succeed but also I've had a lot of luck a good foot fortune but I do say in the book and when I speak to young people I think something that happens along the way is that people are somehow encouraged that perhaps they're dreaming too big or their dreams can't come true and what I try and encourage young people to avoid is don't allow anybody friends family even your parents to tell you you're aiming too high because if you look at my story it's not a Hollywood movie it's real it's authentic and it happened to me I'm not smarter than anyone else and it can happen to you business is a team sport it's not about one person and I think I learned that in on the sports field and specifically what I mean is success is best when it's shared you have to be willing I think to share the spotlight with others and if you look at the entire history of our company what we've tried to do essentially is build a company that would balance profitability with a social conscience and that started with our people and what we've tried to do I think more than anything else is recognize that you can't exceed the expectations of your customers as an enterprise unless you exceed the expectations of your people first now use a word in the book that you say is not a word widely used in business you use the word love yes tell us about your love for Starbucks well you know I I've been giving pretty formal speeches in the last couple of weeks mostly in the US and I start off my first sentence is I want to talk about love now I've talked to business schools I've talked to business people I've talked to CEOs and they you know when I say the word love I think they must think you know what is going on here and and what I what I want to try and and say is that I want to explain to the audiences that I've spoken to that I love Starbucks Coffee Company almost as much as I love my family there was an anything I would not do to defend the company to preserve it and to try and enhance it and I want people around me who have that same level of commitment now i also linked it to something else which is the word humanity because i think that somehow along the way maybe because of the the pressure of Wall Street or other shareholders that we've come to believe that the sole responsibility of business is to make a profit now I certainly believe that there is a deep fiduciary responsibility for every business to make profit but I think it's a pretty shallow goal if that is your singular focus and that is all that you stand for and I also believe that you can't attract and retain great people if that's all you're in business to do so the love and humanity is also about creating a value system in which the company stands for something in addition to making money doing great things for the people that it employs and the communities it serves and and I've gotten into trouble a little bit about that especially when I start speaking about the growing responsibility of business because of the pressure on local state and federal governments in terms of their ability to sustain the level of giving that they've given in the past either to citizens or social service organizations and I think as a result of that and this is not a u.s. phenomenon businesses are going to have to do more and they're going to be called on to do more I also believe that that those businesses that do the right thing in the right way will make more profit as a result of doing the right thing and now you had an interview with The Times and The Times described you as the man who sells 11 million cups of coffee a day it describes you as an emotional insomniac full of nervous energy is that an accurate description I don't think so I don't I don't sleep a lot and somehow people have run with that in a way that is you know this great myth of but no I I I think I have a level of curiosity about our company and the world that is greater than the the the sandbox that I'm in and so you know I open the book as an example with an experience that I had that probably a thousand people would have walked by but something there was a twinkle of what I saw in the windows of that store that I had to investigate and this was all the Lorenz E's cutlery store in Milan and I opened the book with that because being an entrepreneur I think you've got to be open to the world and you have to understand that there's so many things out there and you never know that there could be something a little something that could provide you with a whole new way of thinking a whole new roadmap and when I met Aldo Lorenzi and sat down with him it here was a guy who's close to 80 and he has one store but that store is a shrine to what it means to being a merchant and I wanted to sit down with him despite the language barriers and just be at the foot of the master for as who ever hoped for however long he would allow me just to talk to him and and it's that kind of thing I think that I don't want to avoid being curious and I don't want to and I want to avoid thinking that Starbucks coffee company and all of our people have all the answers because the consumer has so many choices and the consumer is walking by all of these stores and they're seeing all these things and my interest is how could we advance the company how can we get better and what else should we do in the future that leverages the infrastructure and the capabilities that we have beyond what we're doing today is it true that on a typical day you will work out at 4:30 in the morning yes not today that's a lesson for all of us I don't think my team opens until 6:00 actually I have one at home is it true that you drink five cups of coffee a day yes that's true and and presumably like all your customers to drink fireworks if I would like that a lot okay I would like to ask you about your decision in 2000 to step down as chief executive looking back do you regret that what was the decision-making process behind it at the time well that the truth was that Starbucks since we went public in June of 1992 for 15 consecutive years was basically on this magical carpet right in that everything we touched almost new products new cities new stores everything just seemed to turn to gold and and what I write in a book was that we were never that good and in fact the growth and success of the company in many ways covered up mistakes now I left in the year 2000 and as CEO when things were extraordinarily good and up until around 2005 2006 things continued that way but I began to sense that we were measuring and rewarding the wrong things and in fact growth our relationship with our stock price in Wall Street had somehow become integrated into the core purpose of the company and I wrote a memo to the then CEO very good guy in the leadership team at the time and I should say I wrote hundreds of memos over the last 20 years and it was not meant to be an indictment or a criticism but actually to display my passion and love of the company and my concern about what was going on a few days after that email was sent there was a knock on my door and my world basically was completely turned upside down because the memo was leaked and after it was leaked it created a firestorm of negative publicity comput tition employees everybody just it was involved in this swirl where the headline was Schultz in Deitz the management of the company and has lost confidence in the leadership of Starbucks and that really wasn't the case however in the weeks and months that followed the cataclysmic financial crisis was approaching and the things that I had written about began to surface and to make a long story short the board and I determined that I would come back as CEO and in January of 2008 so tell us about the transformation agenda and how that perhaps was the sort of antivirus to start the change well as I write in the book one of the first people I told that I was coming back because I couldn't tell many people was I was on a bike ride with a friend of mine Michael Dell and and and he had come back a year before so he had been through all of this and he said to me I want to show you something and he gave me a document which was entitled transformational agenda and his document had multiple pages on it but it gave me the idea that we should produce one page and that one page should be the transformational agenda of the company over the next 12 to 18 months and whether you were a 20-hour part-time barista or a president of a division you could look at this document and understand with great granularity exactly what it is we were going to try and do how we're going to do it in your role and responsibilities in it and that transformational agenda basically became the blueprint for transforming the company but we had to reduce the focus and the attention to the lowest common denominator and and we also I think you know we are in a non tech business Starbucks has no technology anyone can open up a coffee store and everyone has and so we've got to create an understanding that our business is based on creating an enduring emotional connection with one another and our customers and and as a result of that we had to recreate the experience in our stores now we also made some very tough decisions and made some specific highly unorthodox decisions and one of the biggest unorthodox decisions we made at the height of our problems is we decided to close every store in America to retrain over a hundred thousand people at a cost of 7 million dollars now I can't tell you what people were saying in anticipation of this decision they wanted to hang me from the roof you know and then once the media got a hold of this it was the beginning of the end and the headlines were that you know the bloom is off the rose Starbucks is over there retraining their people but again we were no longer deeply committed to the core principles of how we started and as I said earlier we were measuring and rewarding the wrong things and one of them was transaction speed and we're not in the transaction speed business we're in a business literally of enhancing people's day by producing the world's best coffee and we had to retrain our people but the act of closing our stores and admitting to ourselves forget the rest of the world that we had work to do and we feel so strongly about this that we're going to go back to the beginning and back to the core I mean this would be like you know I don't know what the analog would be but you know a company that produces a car saying we know we got to go back to the assembly line and understand how to how to construct an automobile I mean this this was it was it was unseemly at the time but again this was the beginning of transforming the company because we were going to have direct honest conversations with ourselves and this was a galvanizing moment for those hundred thousand people in the US let me read you let me read out the mission and I guess some cynical people in the audience might think this could actually be a religion so the Starbucks mission is to inspire and nurture the human spirit one person one cup and one neighborhood at a time tell us why that mission is as invigorating to you now as when you opened your first store it was said not by me but it's a great line and it's been evangelized inside Starbucks that we've never been in the coffee business serving people we've always been in the people business serving coffee and I mentioned earlier that unlike most consumer brands the brand was really built by the experience if we were in Kuwait five or six weeks ago and we walked into a store in Kuwait and different language people were dressed differently different politics but we walked in and it was a mirror image mirror image of what was going on at the same time of day at my local store in Seattle or many of the stores here in London what's going on what's going on is that we created a place for people to come to that has created value in the marketplace now I'm not saying that we have some cure for some disease but I am saying that as a result of the things that we've done we've enhanced the lives of many people who perhaps would not have anywhere to go if Starbucks did not exist we've also created the kind of company that our customers and our people know that when we succeed we are going to be actively engaged involved in giving back to the communities we serve now those communities are not only the physical neighborhoods where we have stores those are the 30 producing countries in which we buy coffee those are social services all over the world that we feel significantly that we want to be engaged in and I think we want to create the kind of company that people can look at and say they're not better than anyone else but they I think they got it right and and I think the mission statement is is not about anything other than giving our people an understanding of why we do the things we do and also trying to put it in a way where whether you are a 20 hour a week barista or again running a large division at Starbucks you can see yourself in the mission and understand how you could participate now I'll give you an example the month of April which was the 40th anniversary of Starbucks we basically were engaged in 2000 community service projects and over two hundred thirty two hundred thousand hours now no one had to do that people had to volunteer we were in in Shanghai a week and a half ago and this kind of activity is not generally associated with businesses yet in China and yet we had hundreds of Starbucks partners and customers who volunteered to be with us to clean up a neighborhood that basically had been left behind and the spirit that we would that existed in that three four hour period is something that you can't buy and it's real and it's tangible and it's not there were no cameras there it's not about marketing it's about trying to build a business that has a conscience how is your boy from Brooklyn you've achieved more than anyone might have thought ever possible what is your ultimate motivation what keeps you going even now I'm still that kid from Brooklyn you know I I still have aspirations and dreams about the company and about what I want to achieve and as I said this is no time for celebration the economic environment is still very fragile here and in the US and we still have a lot of work to do and I still believe that our responsibility to communities we serve and our people is greater in the future than it is today that's what keeps me going how would you end your book by saying Starbucks best days are ahead one cup one customer one partner one experience at a time it seems you have got back to what matters most and we wish you continued personal and commercial success and happiness we please join me thank you and saying a huge thank you thank you very much how ridiculous thank you let's go thank you thank you thank you thank you you

Channel: London Business Forum

Views: 590,856

Keywords: business talk, CEO speech, leadership development, highlights, personal development, leadership, business speech, CEO talks, coffee, business, Howard Schultz, london business forum, onward, business interview, CEO interview, CEO talk, inspiration, London, Short, motivation, 948010725001, starbucks, business talks

Id: 83yInyY1KLs

Length: 23min 2sec (1382 seconds)

Published: Tue Feb 12 2013