Plenary sessions
Thursday, 11/12, 8:30 am - Special guest presentation: Howard Schultz, Chairman, President and CEO, Starbucks Corporation, Ernst & Young Entrepreneur Of The Year award winner
Moderator: John A. Byrne, Executive Editor, BusinessWeek
Panelist: Howard Schultz, Chairman, President and CEO, Starbucks Corporation, Ernst & Young Entrepreneur Of The Year award winner
Two years ago, Starbucks was in crisis mode – fighting for respect, if not survival. The coffee giant made a series of self-induced errors, the economic slump was eroding sales, McDonald's was mounting a $1 billion challenge, and bloggers were calling Starbucks a poster child for excess.
Howard Schultz – an Ernst & Young Entrepreneur Of The Year award winner in 1991—couldn't watch the company he founded stumble. “Everyone said Starbucks best days were behind us and I just could not under any circumstances allow that to happen – not that I'm a healer.”
Schultz's process: refocus the company around its core offering and values. In a lively interview with BusinessWeek executive editor John Byrne, Schultz outlined the challenges he faced and the steps he took to reinvigorate the company. He became the company's CEO in 2008 for the second time and shunned the conventional wisdom to make a bold move breaking away from its past. “The worst thing we could have done is throw some Hail Mary pass,” he said.
Schultz determined quickly that Starbucks didn't need a new set of guiding principles. It needed love and nurturing. The company would prosper if it returned to its roots – providing a quality product with a sense of purpose and social responsibility. Restore the brand equity, Schultz said, and the loyalty of customers would follow.
Schultz spent millions of dollars bringing Starbucks managers to New Orleans to help rebuild the city destroyed by Hurricane Katrina. “We can't just be a gigantic corporation; we have to be locally relevant.” He closed shops for a day to retrain baristas to ensure the quality of beverages and customer experience was as good as it once was. He reemphasized the company's commitment to employees by maintaining costly health insurance benefits, even for part-time workers. Some decisions were painful, such as the decision to close 900 stores. “We had stretched our brand beyond our demography.”
More vital, he said, was reinvigorating a culture of innovation and entrepreneurship – helping push new products such as Starbucks new instant coffee, Via, which is far exceeding expectations. “Our resurrection and transformation is linked to innovation. I got our people excited about what it was like in the early days,” Schultz said.
Don't think that Schultz is resting on his laurels or basking in the glory (his stock did a 52-week high recently after tripling in value over the past year.) “There's no victory lap; there's no celebration,” he said. “We have to keep pushing and not allow mediocrity to come back into our work.”
Schultz said it's lonely – there's not a lot of people to talk to about coming back to take over the helm of a company, although he speaks regularly with Michael Dell. Schultz also said he's driven by the fear of failure. “I've had a fear of failure my whole life. Fear is a powerful motivator and it's brought out the best in me.”
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