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

  Eventually the line ended, the music stopped, and the partners who remained began filtering out of the room, bound for families, international flights, or rush-hour traffic.

  The summit had been a success. I felt it had inspired many of our people, and in the following days I received e-mails that said as much.

  Ultimately, the summit helped align our top global leaders around two very important pieces of paper: the Transformation Agenda, which outlined what everyone at Starbucks needed to do, and the mission statement, which reminded us why.

  Chapter 14

  Benevolence

  Inside a narrow Starbucks in Tokyo, the store's manager, Mayumi Kitamura, was telling me through a Japanese interpreter about the coffee-tasting parties that her store's partners host for customers who are visually impaired. Twice a year, a group of blind men and women join the baristas to cup coffee and learn about the beans’ origins. Mayumi's colleagues Chihiro Ogawa and Yukiko Fukuda came up with the idea after a blind customer came to the store and mentioned that he only orders drip coffee because that was all he knew to order.

  Realizing that their store is located near the Tokyo Metropolitan Welfare Association for the Blind, as well as the Japan Braille Library, Chihiro borrowed a Braille kit from a family member and hand-made a Braille menu, which is kept next to the register for use by customers with sight problems.

  I rubbed my thumb across the bumpy card and looked up, shaking my head. Extraordinary. “This is something I wish everyone at Starbucks could experience with me,” I said to half a dozen of our Japanese partners in green aprons who had gathered around the table.

  Seven days a week, Starbucks’ partners give of themselves in ways big and small. One of the most touching examples I'd heard of was when Sandie Andersen—a mom, wife, grandma, and Starbucks barista—found out that one of her regular customers, Annamarie Ausnes, was on the kidney transplant list. Sandie went and got herself tested. “I'm a match,” she said, grabbing Annamarie's hand when she came into the store for her daily cup of drip coffee. “And I want to donate to you.” Not long after, the two women checked into Virginia Mason Medical Center in Seattle. The transplant was a success. “Life is just too short not to live it,” Sandie explained when asked about her motivation. “And if I can help someone else do that, then it's a good thing. . . . It is the ultimate human connection.”

  Admittedly, the gifts our partners give usually are not organs, but their generosity of spirit comes from the heart. We have store managers who send their own Christmas cards to customers’ homes. Many baristas pen personal notes—”Christina rocks!”—on cups of morning coffee. Our partners’ attitude and actions have such great potential to make our customers feel something. Delighted, maybe. Or tickled. Special. Grateful. Connected. Yet the only reason our partners can make our customers feel good is because of how our partners feel about the company. Proud. Inspired. Appreciated. Cared for. Respected. Connected.

  I do not mean to imply that Starbucks is by any means a perfect place to work or the ideal retailer, somehow above reproach. We have made many mistakes over the years, and we will continue to make them. But we do aim high. And we do have high expectations of ourselves as we try to manage the company through the lens of humanity.

  Starbucks’ coffee is exceptional, yes, but emotional connection is our true value proposition.

  This is a subtle concept, often too subtle for many businesspeople to replicate or cynics to appreciate. Where is emotion's return on investment? they want to know. To me, the answer has always been clear: When partners like Sandie feel proud of our company—because of their trust in the company, because of our values, because of how they are treated, because of how they treat others, because of our ethical practices—they willingly elevate the experience for each other and customers, one cup at a time.

  I could not believe any more passionately than I already do in the power of emotional connection in the Starbucks Experience. It is the ethos of our culture. Our most original and irreplaceable asset. And every time I see it come to life, I ask myself if, as leaders, we deserve our people. People like Sandie.

  In my own work at Starbucks, I will never pull shots or pass drinks over the counter or create great experiences for our customers day after day. But I can pull the right levers to create great partner experiences, identify products, green-light new projects—or fast-track ones already in the pipeline—that will make our people feel good about the company they work for. Instinct, quite honestly, guides many of my choices about where to focus the company's energy, and it was especially so during my first few months back. But every customer-facing initiative we pursued, from Espresso Training to Pike Place Roast, was also intended to reconnect our partners, emotionally, to Starbucks. Trying to make our partners proud was constantly on my mind.

  Because of our founding mission to achieve the fragile balance of profit with social conscience, Starbucks has long had a reputation for being a “different kind of company.” But if you ask people about it, they'll be hard-pressed to identify exactly what we do. Yet we do so much! Our partners’ individual actions are accompanied by more concentrated, expansive efforts.

  After years of research with our suppliers, Starbucks began using hot-coffee cups in the United States and Canada that were made from material containing 10 percent postconsumer recycled fiber, saving an estimated 78,000 trees and removing three million pounds from the solid waste stream every year. This is significant because the Food and Drug Administration had never before given a company a favorable safety review to use postconsumer recycled fiber in packaging that comes in direct contact with food. On other fronts, the Starbucks Foundation has, over the years, given millions of dollars to support local initiatives in our retail and coffee-growing communities. For every bottle of Ethos Water sold in our stores, five cents goes toward providing children with access to clean water. In an unprecedented move, we extended health-care coverage to thousands of part-time workers. Starbucks is also one of the largest buyers of Fairtrade certified coffee in the world, supporting thousands of farmers and their families.

  I am proud of these and other initiatives, but too few people inside and outside the company appreciate our efforts. We do good, but we have not done a good job of telling this chapter of our story. Our marketing department had been trying to fix that, and in 2008 it was on the cusp of formulating a campaign that would, with a singular, cohesive voice, publicize our ethical sourcing, environmental stewardship, and community support. But the campaign had yet to launch.

  As ceo I recognized just how critical our social and environmental stewardship was to recapturing our partners’ pride in the company, so on January 10, 2008, I met with Ben Packard. An intelligent, mild-mannered partner, Ben had been one of those kids who loves the outdoors. Every job he'd held since college had focused on conservation, and after earning an MBA and a certificate in environmental management, he joined Starbucks in 1998. I felt lucky to have his passion and expertise working for us.

  “Ben,” I urged when I named him our interim chief of corporate responsibility that day, “we have got to tell our story!” There was a lot to accomplish, but right away I asked Ben to firm up our flatlining relationships with Conservation International and Fairtrade.

  Ben left my office and, with Terry Davenport, our senior vice president of marketing, set their first meeting with Conservation International. Our 10-year relationship with the environmental nonprofit had lost its relevance, and in the meeting, the first high-level one between us in a long while, Conservation International's people enthusiastically explained their most pressing concern: climate change.

  Unfurling a map, they pointed to geographic regions clustered around the equator; all were endangered areas that are home to irreplaceable plant and animal life. These biodiversity “hot spots” are climate change's ground zero. The trouble is not only that these ecosystems are at risk for destruction by human deforestation, but also that the burning and clearing of forests contributes 20 per
cent of the world's carbon emissions—twice as much as all the world's vehicles combined. Twice as much!

  Coincidentally, these hot spots are also located in areas where farmers grow some of Starbucks’ most precious coffees.

  A lightbulb went off. A new deal was in the works.

  Starbucks would re-up its partnership with Conservation International with a $7.5 million commitment over three years. In this next phase of our partnership, we would, one, measure the impact of our C.A.F.E. Practices to ensure that we were making a positive difference for the people and places we intended. Two, we would link small farmers to global carbon markets. And three, we would stand shoulder to shoulder with Conservation International and more actively and vocally share our efforts.

  I was thrilled. With just a few strokes, Starbucks was ready to launch another powerful catalyst to use our scale for good. I knew our partners would be extremely proud, and I was eager to tell them as well as our customers what we were up to. But the news would, I felt, be more appreciated if it came from someone else. I picked up the phone and called Conservation International's well-respected cofounder Peter Seligman to ask if he would personally announce our enhanced relationship.

  When it came to reigniting emotional connections to our coffee, the bold moves I asked our people to make required courage. The company's biggest financial and logistical bet to date, however, was upgrading our almost 20,000 espresso machines. A prototype had been years in the making and was almost ready to roll out. Someone just had to hit the switch.

  The debate over manual versus automatic espresso makers can get pretty heated. Independent coffee shops covet their manual espresso machines, but for a company with Starbucks’ high traffic flow, superiorly engineered semiautomatic machines provide an unmatchable level of consistency, delivering high-quality shots millions of times a day despite multiple variables—temperature, humidity, barometric pressure—that affect espresso's quality from bean to cup.

  Manual espresso machines have a rich, romantic history, and our much-beloved La Marzocco machines were part of the Starbucks Experience and had a passionate following. But as more and more customers crowded into Starbucks and espresso orders increased, the repetitive motions our baristas had to perform with the manual machines caused some physical issues for them. I will never forget a meeting I had with several store managers in our boardroom. They were insistent, and rightly so, that we go to a more automatic machine. The choice was clear. Changing to semiautomatic machines was the right and only option. Our challenge would be to preserve the quality of the shot.

  In 2000 our stores swapped the La Marzocco for the Verismo 801, a state-of-the-art semiautomatic machine manufactured by Thermo-plan, a family-owned Swiss company in Weggis, Switzerland, a quaint little town of less than 5,000 on the green, sloping shores of Lake Lucerne. I had come to know the generous, hardworking owners, Domenic and Esther Steiner, who began Thermoplan in 1974. Thermoplan is a respected force in the small community, donating funds for buildings, parks, and even a temporary arena for the Brazilian national soccer team to train in before the 2006 World Cup, a move that brought Weggis international attention.

  Thermoplan's Verismo 801 is a fantastic piece of technology, but I had always been frustrated by how high the machines sat on our counters.

  For a while, a small team in our equipment development department, headed by Paul Camera, had been collaborating closely with Thermoplan to invent a next-generation espresso machine for Starbucks. They set high standards, and during our company's growth-focused period the development process was fraught with delays and false starts. But by the end of 2007, they were very close, and before my return as ceo, I had seen a prototype. In January 2008, I approved its rollout, but because I wanted our espresso machines to be a more prominent, elegant part of Starbucks’ in-store coffee experience, I asked that it be more artfully designed.

  Thermoplan delivered with a beautiful espresso machine called the Mastrena.

  With its dusted copper and shiny metal skin and ergonomic design, the Mastrena is truly elegant. On top, a clear chalice holds fresh espresso beans waiting to be ground. Inside, every component had been engineered with Starbucks’ beans in mind. The Mastrena also, to my great joy, sits four inches lower on our counters, so baristas and customers can visually and verbally connect. What's more, the Mastrena gives our baristas a sense of control. By perfecting the coffee's grind size and pour time, a barista can proudly “own” every shot. A retooled steam wand also lets him or her slowly ease a pitcher of milk into steaming to create the dense, creamy foam our customers love.

  Being a barista is not an easy job. On their feet for hours, juggling multiple, complex drink orders as the line at the register grows longer, baristas do strenuous, exhausting work. That's why it's imperative that they take pride in the process. With the Mastrena's world-class technology at their fingertips, I truly believed they would.

  I was antsy to announce the Mastrena to the marketplace, but the time to share it was not yet quite right. The Mastrena's introduction, as well as news of our stronger relationship with Conservation International, would have to wait.

  Chapter 15

  Beyond the Status Quo

  It was December 23, 2007, just weeks before I returned as ceo, and Michael Dell and I had just finished the 30-mile bike ride we took with a group of friends almost every morning in Hawaii over the holidays. More than just exercise, these daily rides had become therapeutic for me, especially as Michael and I got into the habit of talking about our individual challenges at work.

  This was the morning I finally revealed to him, in strictest confidence, my intent to return as Starbucks’ ceo. When we went back to his home after the ride, Michael first took me through Dell's Transformation Agenda, which I would soon adapt for Starbucks. He also showed me a site he called up on his computer screen, IdeaStorm: “Where Your Ideas Reign.”

  The Dell site invites PC users to post their ideas for the company. Michael explained that Dell built IdeaStorm to reengage with its customers online—the very place, it occurred to me, where Starbucks also needed to show up. I was intrigued.

  I've always believed that innovation is about rethinking the nature of relationships, not just rethinking products, and as Michael explained how IdeaStorm was helping Dell listen to customers and improve its products and services, I nodded. There was definitely something here for Starbucks. A chance to reconnect with customers we had lost touch with.

  Michael immediately e-mailed Marc Benioff, the founder and CEO of Salesforce.com, the company whose customer relationship management applications were the foundation for Dell's site. Marc was also vacationing with his family in Hawaii, and the next morning, even though it was Christmas Eve, he and I met for breakfast. I was impressed by Marc's intelligence and foresight as he gave me a cursory education in the power of online customer communities, and we agreed that there were definitely elements of IdeaStorm that could benefit Starbucks.

  By the end of breakfast, I had taken the conversation with Marc as far as I could, but I knew who could take it further. I grabbed my cell and dialed a Seattle phone number.

  Inside our company, there is a standing joke. Whenever a partner tells someone he or she works for Starbucks, the other person's response is, more often than not, a to-do list. “You know what you guys should do?” is followed by a litany of new ideas. Everyone, it seems, has a suggestion for us. Capturing this instinct, it seemed to me, was another way to reignite our emotional attachment with customers.

  While it seemed bizarre to some of our people that a brick-and-mortar coffee company might get a lot of traction from online social networks, we would have been foolish not to explore their hidden opportunities. The barrier to entry was not that expensive, almost nothing compared to national advertising, which Starbucks historically avoided. The risk with social media was showing up inappropriately; if not done thoughtfully, it could damage our brand.

  Starbucks did, of course, have a website, but it represe
nted a status quo that we needed to move beyond. Our real journey into the virtual world—and in developing our own social media and digital muscles—began December 24, 2007.

  Back in Seattle, it was already dark when Chris Bruzzo's cell phone rang. A dedicated, energetic leader, Chris had recently come to Starbucks from Amazon.com to help us better understand the web. “Hello?”

  “Chris, this is Howard. Do you have a minute?”

  Hearing adrenaline in my voice, Chris generously excused himself from a family gathering and went into his home office. “I just had a fantastic meeting with Salesforce.com's Marc Benioff,” I explained. “Chris, you've got to talk to Marc. Today!” My tendency to let enthusiasm morph into impatience was a trait widely known throughout the company—generally appreciated, but occasionally a cause of frustration. But Chris got it. He had helped Amazon build its interactive community beyond its book and product reviews by finding new ways for customers to participate on the site. Chris knew a movement was already under way as more and more consumers connected with their favorite brands online. And he understood that Starbucks’ customers were already inclined to share their thoughts, ideas, and experiences with the company, as well as with each other.