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

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

by Howard Schultz, Joanne Gordon

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Overview

In 2008, Howard Schultz, the president and chairman of Starbucks, made the unprecedented decision to return as the CEO eight years after he stepped down from daily oversight of the company and became chairman. Concerned that Starbucks had lost its way, Schultz was determined to help it return to its core values and restore not only its financial health, but also its soul. In Onward, he shares the remarkable story of his return and the company’s ongoing transformation under his leadership, revealing how, during one of the most tumultuous economic times in history, Starbucks again achieved profitability and sustainability without sacrificing humanity.

 

Offering readers a snapshot of a moment in history that left no company unscathed, the book zooms in to show, in riveting detail, how one company struggled and recreated itself in the midst of it all. The fastpaced narrative is driven by day-to-day tension as conflicts arise and lets readers into Schultz’s psyche as he comes to terms with his limitations and evolving leadership style. Onward is a compelling, candid narrative documenting the maturing of a brand as well as a businessman.

Onward represents Schultz’s central leadership philosophy: It’s not just about winning, but the right way to win. Ultimately, he gives readers what he strives to deliver every day—a sense of hope that, no matter how tough times get, the future can be just as or more successful than the past, whatever one defines success to be.

Product Details

ISBN-13: 9781605292885
Publisher: Potter/Ten Speed/Harmony/Rodale
Publication date: 03/29/2011
Pages: 384
Product dimensions: 6.30(w) x 9.10(h) x 1.30(d)

About the Author

Howard Schultz is the chairman, president, and CEO of Starbucks and the author of the New York Times bestseller Pour Your Heart Into It.

Joanne Gordon is a former Forbes writer and contributing editor who has spent more than a decade profiling companies and business leaders for numerous publications including five previous books.

Read an Excerpt

Chapter 19: Reverence

Building a great, enduring company requires thoughtfulness and, at times, the courage to make very difficult decisions. For Starbucks, July 2008 was a moment when I had to make choices that I never, in my 26 years at the company, had imagined I would be faced with.

Six hundred.

Again and again I looked over the list of stores slated to shut: In Wichita, Kansas, a drive-thru that had been open barely one month. In Federal Way, Washington, a store that had served customers for 18 years. We would close 57 stores in Texas. Thirty-nine in New York. Twenty-seven in Minnesota. Arkansas would lose eight, Mississippi and Nebraska seven each, and North Dakota four. Twohundred and thirty- four drive-thrus. Seventy-two stores in malls. Fourteen percent of the stores to be shuttered were in California and 10 percent in Florida—not coincidentally, both regions were hubs of the subprime housing bubble and bust. Almost every major city would lose at least one Starbucks. Seven stores were located in our own backyard.

The choice about which stores to shutter was financially based. If we calculated that it would never provide acceptable returns even once we improved operations and the economy got back on track—which we knew it would, one day— then we most likely chose to close it.

At exactly 1:05 p.m. PST on Tuesday, July 1, 2008, five minutes after the stock markets closed on the East Coast, our press release hit the wires. By 1:15 p.m., the phones in our media affairs and investor relations offices were ringing, but Starbucks was in the mandated quiet period of the fiscal quarter for another month.

Our unavoidable silence provided a lot of room for interpretation, and the risks were huge. How could we maintain the integrity of our brand and the culture of humanity I espoused when we were disrupt- ing so many people's lives? We were committed to transferring as many displaced partners as possible into new roles—as many as 70 percent of those field and store partners could likely remain with the company. Second, we would give at least 30 days' notice to our people whose positions would be lost once a store closed, an unheard-of runway for mass layoffs, especially in retail.
At 1:17 p.m., my memo to Starbucks' partners was e-mailed companywide. I had striven for honesty, trusting our people to honor the realities of the situation Starbucks was in.

... we recognize that we must make decisions that will strengthen the US store portfolio and enable us to enter fiscal 2009 focused on enhancing operating efficiency, improved customer satisfaction and ensuring long-term shareholder value for our partners and customers….By far, this is the most angst-ridden decision we have made in my more than 25 years with Starbucks, but we realize that part of transforming a company is our ability to look forward, while pursuing innovation and reflecting, in many cases with 20/20 hindsight, on the decisions we made in the past, both good and bad.

By 1:45 p.m., Starbucksgossip.com was buzzing with rumors and anonymous opinions.

Outside the company, investor sentiment was unfolding and the public dialogue was taking shape. Tomorrow's coverage would be widespread as negative momentum fueled itself. Starbucks' closures could be cast as progress toward the company's commitment to transformation, but it was likely that some would frame them as a nail in our coffin.

Six days after the announcement, on July 7, 2008, our stock fell to a 52-week low of $14.95 a share. Wall Street wanted to see much more from Starbucks than just store closings.

"The first step is admitting you have a problem," wrote Morgan Stanley's John Glass. "The rationalization is welcomed, but does not negate near-term fundamental challenges. While we believe the brand is and will remain relevant to the U.S. consumer, there is no quick fix to turn around this company."

The coverage by almost every major newspaper, business website, and national broadcast news outlet confirmed our predictions about the media's focus and tone.

"Starbucks Goes from Venti to Grande," wrote Time.com in one of the more neutral headlines.

"Is the Global Domination of Starbucks Finally on the Wane?" asked an opinion piece that first appeared in the United Kingdom and was reprinted in the Seattle Post-Intelligencer.

At Forbes.com: “Starbucks' Dark Side.”

In Fortune: “Starbucks Has a Bitter Plan.”

A Motley Fool syndicated newspaper column claimed that a "tag- team of doughnut shops, fast-food joints, and quick-service diners" was crowding us out of the market, while the San Francisco Chronicle argued that our 600 store closures was proof that the US economy was in a recession. "Americans have decided to give up their $4 lattes," it read. "In 2008, a better definition of 'recession' may not exist."

Then this from the Christian Science Monitor: “Why Starbucks Lost Its Mojo.” The piece hypothesized that Starbucks got into trouble because we created a sense of "cool" for customers by "giving middle- class Americans exactly what they thought they wanted," a way to generate envy or status. Narrow viewpoints like the Monitor's aggravated me because they overlooked or perhaps begrudged Starbucks' mission and very real social contribution: human connection. Yes, this raises cynics' eyebrows, and yes, for some customers Starbucks is an aspirational brand or even a token of pride, but the latter is an unintended effect of what we originally set out to do.

Starbucks never set out to be cool. We set out to be relevant!

And few things were more necessary, were more relevant, than human connection, especially as the world was going through such upheaval and uncertainty. Starbucks never encouraged our baristas to be cool, but rather to be friendly and knowledgeable about our coffee and to engage with, laugh with, and reach out to their customers. The company does not make investments in health coverage and ethically source our coffee because these things are "cool." They are the right ways to conduct business.

The company's hard times could not be reduced to one cause or the death of some pop-culture trend. As I was learning every day, the story of our trials and tribulations was just not that simple.

On July 9, 2008, The Wall Street Journal picked up on a national phe- nomenon that we were dealing with back in Seattle: “Not knowing whether their local Starbucks will stay open is making customers and employees jumpy,” began the article.

In Starbucks stores around the country, not only were our baristas worried about their own store's fate, but our regular customers also feared their daily routine was about to be disrupted, and they came at baristas with a barrage of questions our people could not answer: "Will you close?" "When?" "What will you do?" "Where will I go?" A blog speculating which stores might get the ax sprang up, and as anxiety grew, Starbucks was widely criticized for not publicizing the complete list of closures.

Clearly we'd underestimated the anxiety that would result from not identifying which stores were scheduled to close, and once we recognized the degree of public angst, we very quickly changed course and released the full store list. Then, in an ironic twist, something unusual occurred. After refer- ring to Starbucks as a pricey extravagance, public discussion shifted as our customers and communities around the country pleaded "Save Our Starbucks." Their calls came in many forms. E-mails. Letters. Even petitions piled. On one independent website Saveourstarbucks.com—the posts rang with emotion. "Starbucks is more that just a coffeehouse," wrote a woman vying to save a store in Chino Hills, California. You go to Starbucks to meet friends; bring the kids for some cold drinks on a hot, sunny day; study; work on the computer; read, or just enjoy some quiet time in a comfortable armchair. This Starbucks has really become a part of our little community and we want to do what we can to help.

From a gentleman in Niles, Ohio: Please don't close our North Common Starbucks. My wife and I go there every day for our drinks. We know the staff and they know us. They have become our friends.

From an Indiana resident: PLEASE PLEASE PLEASE DO NOT close the Starbucks here in Portage, Indiana, on Rt. 6!!!! This is the BEST Starbucks we have EVER been to. Not only is it clean and the staff, ALL the staff, is always friendly but they seem to take pride in the store. . . . We ALWAYS go to this location. . . . We love everyone who works there. They really go the extra mile to make everyone happy. . . . PLEASE reconsider!!!!!!!

A few lines from a woman in Minnesota summed up so much of what we were hearing: "I can't believe that 'my' Starbucks is closing. You never know how important a place is until you are about to lose it."

My personal mail was filled with more of the same.

Most notably, the spontaneous flow spoke to our role in communities and the high quality of our store managers and baristas who provided the Starbucks Experience every day. From where I sat, I saw our customers' sentiments as proof that our store partners were succeeding and that I was not the sole or even the most important ambassador of the brand.

Back in Seattle, our people held conference calls with mayors, at least one governor, and city officials from around the country and also talked one-on-one with partners at "safe" stores who were standing up for fellow partners at closing stores. It was challenging for everyone to keep emotion out of the work that needed to be done, and for every single store we received a letter about—every single one— Mike's team conducted another financial review. But rarely, if ever, did the numbers justify reversing a decision.

It wasn't easy for them to stick to their guns, but Mike and his team kept the bigger goal in mind: Rightsizing Starbucks' retail portfolio as quickly as possible would, in the long term, secure the health of the company's future and of the 6,500 US stores that would remain open.

For months Mike and his six-person team of real estate experts, with backup from lawyers and outside consultants, camped out in a conference room, perpetually on the phone with any one of hundreds of landlords, unwinding our legal obligations and leases. It was difficult, detailed work.

For more than 20 years, Starbucks had been a desirable tenant, and a traffic- generating magnet for other tenants. Because of the financial strength of our company, developers often felt more secure signing a lease with Starbucks than with other retailers. Now our landlords, many of whom Starbucks' partners had established relationships with, were seeing another side of the company, and their reactions ranged from calm cooperation to intractable rage. Each developer or management company faced its own economic challenges. Huge public real estate developers, real estate investment trusts, had to answer to their own shareholders. For the independent landowner, a single vacancy at a strip mall might mean not being able to pay the bills or delaying retirement. We tried our best to strike fair deals and spent millions of dollars to make the best of a bad situation for all. Trying to put ourselves in the shoes of the landlord and act accordingly expedited the process.

When a member of Mike's team got off a particularly harsh negotiation call, Mike reminded him that the typical retail tenant who breaks a lease rarely goes as far as Starbucks was. "Most just walk in, throw the keys on the desk, and walk out."

Yet there was only so much our company could do to ease the inevitable sting, and some outraged individuals took their cases to local newspapers, claiming that Starbucks was unfair and not living up to its own standards. Some went as far as suing the company. My per- sonal e-mail account received its fair share of stormy sentiment. The backlash hurt, but our partners and landlords were hurting more.

Again, I saw a silver lining. The push-back from our customers, our people— even the reaction from landlords—affirmed that Starbucks was a positive force, a mainstay, in many communities. Never before had so many people inside and outside the company stood up and so passionately, so spontaneously, championed our existence.

"Would people go this berserk if the local Dunkin' Donuts closed?" wrote Daniel Henninger, deputy editor of The Wall Street Journal's editorial page in an op- ed piece. "What is going on here? It can't be about the coffee." Henninger's op-ed really captured the nuance and delicate balance at the heart of every Starbucks store:

A friend said that the Starbucks stores' bitterenders reminded her of the protests against the closing of the neighborhood Catholic churches. True. The stores are like secular chapels. No sign on the wall says you must be quiet, polite or contemplative, but people are. Ritual abounds. So too with the refusal to walk two blocks to a nearby Starbucks. Back in the glory days, when cities had a church every 10 blocks, no one would go to a church blocks away with the same service. They wanted their church. But they'd drop into a Catholic or a Presbyterian Church anywhere in America, knowing the feeling would always be the same. . . . I don't go to Starbucks that much. I don't go to the Baptist church either. But I'm glad that we've got one just about everywhere.

I took some solace in Henninger's analogy, pleased that there were some outside the company who recognized the unique value Star- bucks brought to communities. And I was reminded of our value when I read every letter and when I visited dozens of stores during the coming months on a listening tour, holding town hall meetings with partners and customers.

One day, at a store in Lakewood Towne Center near Tacoma, Washington, an older woman wearing a purple turtleneck raised her hand. "I have a couple of comments," she said. "First and foremost, I have a 161/2-year-old granddaughter in Madison, Mississippi, and when she knew I was going to be seeing you tonight she said, 'Grandma, get down on your knees and beg, don't let him close the Madison store!'" Then the woman stood up and, to a background of applause and supportive laughter from other customers, she got down on one knee in front of me. What could I say? I smiled and vowed to look into the Mississippi store. And we did. But tragically, like so many others, it too could not sustain itself.

My heart was heavy, but my belief that Starbucks was about so much more than coffee had never been stronger.
# # #

Table of Contents

Introduction xii

Part 1 Love

Chapter 1 A Beverage of Truth 3

Chapter 2 A Love Story 8

Chapter 3 Surfacing 14

Chapter 4 Nothing Is Confidential 26

Chapter 5 Magic 33

Chapter 6 Loyalty 39

Chapter 7 Believe 47

Part 2 Confidence

Chapter 8 A Reservoir of Trust 55

Chapter 9 A New Way to See 69

Chapter 10 Playing to Win 81

Chapter 11 Elevating the Core 88

Chapter 12 Get In the Mud 96

Chapter 13 A Reason to Exist 102

Chapter 14 Benevolence 116

Chapter 15 Beyond the Status Quo 123

Chapter 16 Bold Moves 128

Part 3 Pain

Chapter 17 Whirlwind 139

Chapter 18 A Lethal Combination 147

Chapter 19 Reverence 155

Chapter 20 No Silver Bullets 164

Chapter 21 I Know This to Be True 170

Part 4 Hope

Chapter 22 Truth in Crisis 183

Chapter 23 A Galvanizing Moment 192

Chapter 24 Nimble 208

Chapter 25 Plan B 217

Chapter 26 Stay the Course 224

Part 5 Courage

Chapter 27 Innovate 239

Chapter 28 Conviction 250

Chapter 29 Connecting Dots 262

Chapter 30 Balance 271

Chapter 31 Conscience 287

Chapter 32 Winning 296

Chapter 33 Ni Hao 302

Tribute 313

Acknowledgments 329

Photo Credits 333

Index 335

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Onward 3.8 out of 5 based on 0 ratings. 128 reviews.
TheAurickle More than 1 year ago
I worked for the company 10 years ago and to this day I still tell people that it was one of the best companies I have EVER worked for. I left before the economy went sour but I continue to be a Starbucks customer to this day. There is a chapter where Howard mentions that the atmosphere of Starbucks had changed and what they did to turn things around. This should be a lesson to heads of business everywhere. Part of the reason why Starbucks is such a powerful brand is that it constantly monitors how customers and staff react to changes. This book may have limited appeal to people who aren't familiar with Howard Schultz, but it should be very interesting to entrepreneurs and CEOs who find themselves in a rut and could use some inspiration to navigate their business.
JodyHR7 More than 1 year ago
I have always said that no one will take care of your creation better than you and Howard Shultz shows it. This is a great read. Very much inspired me to take a completely revitalized look at my own small business.
Anonymous 8 months ago
A+comeback+from+adversity+is+always+a+good+read.+++Probably+many+didn%27t+make+so+dramatic+a+turnaround+after+2008+crisis.+%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A%0A
Anonymous 9 months ago
Swartyforce on LibraryThing More than 1 year ago
I adore Starbucks coffee, and so I picked this up almost as soon as it hit shelves. I liked that I was able to learn more about the company's history and the tracks it has set itself on for the future. It was a good introduction to how much further behind the scenes Starbucks goes than the barista preparing your drink. I would recommend this for people who want to learn more about the coffee industry, or just Starbucks itself, because it does a great job introducing the variables that Schultz has to balance in the company and different coffee making technologies that aren't obvious to those of us on the other side of the counter.I disliked the writing style because it was hard to wrap my brain around the book as a whole. It seemed to be organized by Schultz' stream of consciousness, which would pull me out of the story that seemed most relevant to that chapter and towards past events and corporate buzzwords. I prefer to have one topic explained before moving on to the next, so this made it difficult for me to read the book and understand the order that things happened.
porch_reader on LibraryThing More than 1 year ago
Howard Schultz returned as CEO of Starbucks in 2008, after serving as Chairman for eight years. His return was precipitated by financial declines and a belief that the company had moved too far from its core values. This book describes Schultz's decision to return as CEO and Starbucks' subsequent transformation efforts. In telling Starbucks' story, Schultz addresses many common management problems. He discusses the challenges that growing organizations face in maintaining a focus on core values and purpose. He reiterates Starbucks' commitment to their partners (as Starbucks calls its employees), but admits difficulties in keeping them engaged throughout the transformational efforts. We see Schultz balancing his ongoing passion for Starbucks' core business while recognizing the need for change. One of Schultz's lessons is that organizations must tell their own story, not let others tell the story for them. It's clear that this book is part of Schultz's effort to tell Starbucks' story. While Schultz is relatively open about the parts of the transformation agenda that did not work as planned, he puts a relatively positive spin on the events. Despite this one-sided perspective, Schultz tells a story that interested both the coffee aficionado and the management professor in me.
marycrear on LibraryThing More than 1 year ago
I was really excited to read this book when LibraryThing sent it to me on a ten disc CD which was listened to between business trips and an apartment location in Chicago. Howard Schultz's passion and vision is evident and his direction is Onward considering the very difficult period in our economic history that he faced. Finishing this book, my thought was that I could have listened to the final disc and reached the same conclusion. Onward is self indulgent with the readers time. I really wanted to come away moved but became impatient with name dropping and other indulgences. I still admire his vision, ethics, and environmental choices. It takes a tremendous ego to build an empire but it requires heart to take it Onward..
JimSerger on LibraryThing More than 1 year ago
This book too me is way more than Starbucks, it is about and individual taking a stand for something he/she believes in. It is about going against the tide, instead of just ridding with it. Howard did this in a time where people/managers just look for the quick buck. Howard is a leader that all people/workers should look for when it comes to thier best intrest. So many bad things are heard in the news today of CEO's-- Howard himself has set the bar for all future leaders both at the top of companies and at the bottom of them. This audio book was really listened too throughly on my daily travels too and from work. I even have took a few of his ideas and shared them with my employees, and they as well enjoyed the passion he had for his bussiness. Doing what he did takes a real leader, a real platton sargent--this audio book was just given too my dad to enjoy for he loves coffee, but this book is way more about how to get out of a rut, how to lead people back to success, how too share passion and zest.
pennyshima on LibraryThing More than 1 year ago
It took a while for me to get into this; I received it as an audio book through LibraryThing Early Reviewers program and it is no longer easy for me to play audiobook CDs in a convenient manner. In my work with small businesses (many of them solo operations) I try to find ways to relate what they are hearing in the media about larger enterprises to their own situations. While much of what Schultz discusses is to the concerns of a large global organization, there were some sparks of interest to all organizations and leaders, no matter what size. It is not an easy road to travel but with passion, an open mind, and a group you can rely on to delegate responsibly and some to help bounce ideas off of, leading an organization can be quite the experience. I thank Schultz for sharing the journey. Overall, Onward was interesting to listen to and I'd like to reread it as paper one day because it does not quite flow in a coherent manner when listened to as an audio book, or at least it was impossible for me to easily flip back and reread something mentioned earlier. Additionally if I was educated in Starbucks history some of the bouncing would have made more sense to me and the name dropping became repetitive and annoying at times, but I understand Schultz's need to do so.
Anonymous More than 1 year ago
I am not sure I can put into words how good this book is. Every leader should read this book to learn how a true company should run. It couldn't hurt government officials to read this book. Any book about business that makes me cry is worth its weight in gold! I was one of those skeptics that thought that Starbucks was a company just out for greed. I rolled my eyes every time I heard of a new store opening. With that said I was also one of those people standing in line for my Frappuccino. Starbucks was great but I thought they were just out to grab your last dime. This book needed to be written to show the love that Howard Schultz has for his company, his people and the people of the world. I can't do the book justice by any review I give. You just have to read it for yourself!
AdventureswithBrianne More than 1 year ago
I really enjoyed reading this book. It was interesting to read about one of the founder's of Starbucks and how he came about making the decisions he made as CEO and founder to keep the core values Starbucks has as well as making it keep up with the times. It is a book I would not mind reading again to gain even further knowledge on what it takes to run a successful business. Great read and would recommend to anyone who is itching for a good biography.
Anonymous More than 1 year ago
"Where've you been?!?!"
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Very cool story that shows the passion of the author. Gives the interesting history of how Starbucks became the icon that it is today.
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Very interesting and informative
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ISIDROP More than 1 year ago
Entertaining and a handful of business and customer service insides, highly useful for retail people
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