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

by Howard Schultz

  The first day of the brainstorming summit neared its end, but instead of sending us home or back to the office, we were split into smaller groups and sent out into various corners of the city to visit some of Seattle's most compelling homegrown retailers. Our assignment was to observe and report back on what we saw, heard, tasted, smelled, and felt. The merchant in me was hungry to explore.

  In the Fremont neighborhood, Theo Chocolate is a cozy store connected to the company's only factory in a flat brick building. The smell of warm chocolate wafts through nearby streets, while factory tours and free candy bar tastings let customers experience confections like Coconut Curry and Vanilla Salted Caramel. Plus, Theo's status as the only organic, Fairtrade certified, bean-to-bar chocolate factory is inspiring to customers and a source of pride for the staff we met.

  We also crowded into Top Pot Doughnuts, where a two-story, floor-to-ceiling wood bookcase, coupled with the shop's slogan, “hand-forged doughnuts,” elevated sugary cake to a level beyond fast food.

  And in Pike Place Market I ventured inside Beecher's Handmade Cheese, where founder Kurt Beecher Dammeier makes natural cheese on the premises. I love cheese, and chatted easily with an enthusiastic woman behind the counter. “How did you get to be such an expert on cheese?” I asked, and was floored when she told me that she had known nothing about the subject before she was hired—just six months earlier!

  Leaving the cheese shop, which is located just yards away from the very first Starbucks, I couldn't help but think about our baristas. About how knowledge can breed passion. And about how our company had to do a much better job of sharing our coffee knowledge and communicating our mission. Pride in purpose would help give our partners a sense of ownership. These were not new insights, for me or for most of my colleagues, but revisiting them helped us—or at least it helped me—see our priorities more clearly. My eyes were wide open.

  My thoughts wandered back to the iconic nature of The Beatles, as a band and as a brand. What courage they had had, staying true to their musical talents while maintaining relevance in the world. One reason I believed that the Starbucks brand would be resilient was because our founding values still resonated, perhaps now more than ever as anxiety and distrust seeped into the popular zeitgeist, and not just in the United States. In addition to our values, Starbucks’ core product would also continue to be relevant. Coffee will never lose its romance. It will always bring people together and be part of conversations in every language, even as the conversations change. Coffee will forever connect.

  Our ongoing challenge is to creatively nurture coffee's essence, keeping it personal despite our size. I do not want Starbucks to be defined solely by its thousands of stores or millions of customers. More than our scale, the brand can and should be defined by the quality of its coffee as well as its values. Community. Connection. Respect. Dignity. Humor. Humanity. Accountability.

  It is our mission to make sure the world sees us through those lenses.

  The retreat did more than just spark creative thinking. It also took us to a new level of decisiveness. One thing in particular was absolutely clear to me: Starbucks had to advance its position as the undisputed coffee authority. Without great coffee, Starbucks had no reason to exist. In the weeks ahead, I would intensify our focus on coffee quality and innovation. Espresso Excellence Training was already in motion, and at the retreat we locked in on more specific initiatives that Starbucks could move forward with immediately, including projects already under way inside the company.

  Two projects in particular intrigued me, but if they were to have a material impact, each needed to be seized, accelerated, and amplified, ideally in time to share with investors at the annual shareholders’ meeting.

  Chapter 10

  Playing to Win

  Starbucks’ top coffee experts watched with bated breath as I tasted their newest coffee blend for the first time.

  I put my nose to the cup and inhaled deeply before bringing the liquid to my lips. Next, in traditional coffee-tasting fashion, I made a loud slurping noise as the coffee sprayed across my palate. My eyes opened wide. The taste was significantly different from anything Starbucks had ever brought to market.

  “It's smooth, like butter,” I remarked. “Really balanced. Somewhat acidic and bright. Drinkable. Easy.”

  While the flavor was a bit light for my personal preference, I thought it was fantastic because of what the coffee represented: Starbucks’ renewed effort to play to win as opposed to playing not to lose. For the past few years, Starbucks had been acting out of fear, mainly a fear of failure. So much of what the company had done was defensive, done to protect itself. Our primary goal had been to avoid missing our earnings projections rather than to actively engage our customers. As ceo, it was my job to reignite our partners’ courage and to foster an aggressive desire to once again swing for the fences—as if our lives depended on winning.

  This mentality had been ingrained in me as a kid.

  Growing up on what was literally the wrong side of the tracks in Brooklyn, my afternoons and weekends were usually dedicated to playing sports. It was an era before video games. Before Wii and the Internet. A time when, from dawn until dusk, if kids weren't in school, they were at the school yard playing every kind of ball. Baseball. Basketball. Football. Punchball. Slapball. These were the games of my youth, and I took them quite seriously.

  For the rough-and-tumble boys in my neighborhood, team sports were a chance, often our only one, to escape our cramped apartments and the stress of struggling families. Few kids would grow up and make it out of Canarsie, but every time I smacked a baseball high and clear across the asphalt yard and crossed home plate, or powered my way to a touchdown, passing boys who were bigger and stronger and faster than me, anything seemed possible. These neighborhood victories were among the few times I tasted glory and felt the potential of my life, and I always took big, bold swings. I wanted nothing less than a home run.

  The coffee I had just sipped had the potential to be just that.

  On any given day in a warehouse adjacent to one of Starbucks’ five roasting plants, rows of 154-pound burlap bags are stacked floor to ceiling, waiting patiently. Inside each bag are hundreds of thousands of raw green coffee beans shipped by boat, plane, or truck from all over the world. Running my fingers over the sacks’ thick, prickly fabric, I can still feel a twinge of amazement knowing that, not long before arriving at our door, the beans had been at a coffee farm in a remote village, perhaps on an island or atop a mountain.

  No doubt about it. Coffee's journey from soil to cup is quite amazing.

  Coffee beans come from a coffee cherry, a red-skinned fruit that, when ripe, is not much larger than a cranberry. Inside every cherry are two green coffee beans, each made up of hundreds of compounds whose composition—and potential flavor—varies based on where and how the cherry was grown. Harvest coffee atop a steep mountain in Latin America, for instance, and its friendly flavor is reminiscent of nuts or cocoa. Coffee grown in other regions can be more assertive, earthy, and herbal in the mouth.

  Wherever the location, the best beans—the ones with enchantingly complex flavors and compelling characters, known as arabica—grow under some degree of stress, like high altitudes, intense heat, or long dry periods. Such harsh weather conditions can produce high-quality beans, but also fewer beans per tree. This makes arabica coffee more costly, which is why most mass coffee producers opt to buy cheaper robusta beans. Produced in more predictable and mild climates, robusta beans are less expensive because they deliver a higher yield per tree. But most robusta beans also taste harsh and rubbery, sort of like sucking on a pencil eraser.

  In its almost 40-year history, Starbucks Coffee has never used a single pound of robusta beans in our products.

  Once the cherries are picked by hand, one of two things happens. Their skin is either removed and the remaining fruit and bean are fermented, or thousands of cherries are laid out on concrete patios to dry naturally before their beans ar
e extracted. Then, prior to being packed in sacks, our coffee experts taste, or “cup,” small batches of coffee to ensure that their flavor meets our standards.

  Only 3 percent of the world's highest-quality arabica beans are good enough to make it into one of our burlap bags.

  While most companies have access to the same high-quality arabica beans that Starbucks insists on purchasing, it is what happens to beans after they are harvested that further sets coffee companies apart from one another. No organization has the same combination of original technology and knowledge as Starbucks, and thus none can match the uniqueness and consistency of the coffees that we roast, blend, and serve on a global scale.

  Roasting coffee beans is a delicate process requiring a thoughtful, exacting balancing act of time and temperature. Any coffee producer that truly cares about quality has a roasting philosophy, and at Starbucks our philosophy is to roast every bean to its peak of flavor in a manner that extracts its maximum potential. This means Starbucks roasts beans for longer than most commercial roasters for a so-called Full City roast that pulls out the beans’ honest richness, flavor, and acidity, or brightness.

  Our professional roasters are constantly refining our roasting process. Over the years, they have customized our machines and developed proprietary software to help control and replicate their techniques. We take tremendous pride in knowing that no one in the coffee business has more control over the roasting process than Starbucks.

  Like roasting, blending specialty coffee is also an art form, and our blenders’ culinary talents are akin to those of master chefs. Most coffee companies mix different types of beans together as a way to mask inferior coffee, but Starbucks has always used blending as an opportunity to elevate coffees from different parts of the world. Sometimes, in order to capture each bean's peak flavor, we won't even roast different beans together; only after roasting do we combine them. And when beans from multiple regions are blended just right, they create a unique symphony of flavor that does not exist by itself.

  By 2007 our dark roast and original blends had created legions of loyal fans, and most days our stores rotated their brewed coffee offerings so customers could experience different types. Unfortunately, as we eventually learned through market research, many people did not realize that our stores switched brewed coffees daily. So, if someone ordered a “tall drip” each morning on the way to work and the coffee tasted different every day, that person may have assumed our coffee was inconsistent. Other people thought Starbucks’ coffee was too intense, especially compared to the lesser-quality coffees they'd grown up drinking in diners and restaurants or at home. This was a reason many longtime brewed-coffee drinkers in the United States perceived Starbucks’ coffees as “burnt” instead of bold. But just as a master chef would not change the ingredients to his signature recipes if a few customers disliked them, Starbucks could not abandon what made Starbucks Starbucks: that signature bold experience.

  Still, some people at Starbucks wanted to reconcile our taste standards with consumers’ perception of inconsistency and the fact that Starbucks’ coffee did not appeal to every palate. The need to address this issue took on new urgency when, in 2007, a Consumer Reports taste test rated Starbucks’ coffee behind McDonald's. I was not the only one stunned. How could an organization that goes to such lengths to procure and produce high-quality coffee be bested by a fast-food chain?

  In the fall of 2007, our coffee and marketing departments went out and conducted their own taste tests to gain a definitive understanding of what many consumers really wanted in lieu of a bold brew—not what we assumed they wanted, which was a weak, inferior coffee. What we heard, what many people told us, was that they wanted Starbucks to sell a more consistent, balanced brewed coffee. Every day. Some of our partners became convinced that we could deliver without compromising our brand.

  Not all of our partners agreed. Many coffee purists—as well as partners who had come to appreciate the special nuances of a darker roast—worried that selling a milder roast was kowtowing to inferior competitors, diluting our brand. Yet no one could deny that Starbucks was losing potential customers. The time had come to create a coffee with the right balance—and then hit it out of the park.

  In November 2007, a team of coffee and roasting experts, led by Andrew Linnemann, one of our most talented master blenders, wiped their schedules clean and buckled down to develop a more well-rounded blend. They dug deep, taking all of their passion and knowledge, and, using Starbucks’ roasting technology, tried to create a unique blend that was bold and authentic, yet more approachable. A smoother taste that a population of brewed-coffee drinkers would embrace and that was worthy of our heritage. A coffee Starbucks would be proud to serve. As Andrew would say, “The more you know, the better your technology, the more you can tweak.” He fervently believed that no other coffee company had the capability to achieve the balanced flavor profile his team was after—and then replicate it worldwide. A brewed coffee our customers could count on day after day.

  The project's code name was Consistent Brew.

  They'd set up camp in the tasting room across from my office on the eighth floor, and through the room's large viewing window anyone could stop and watch their trials. For two weeks, shot glasses were lined up along countertops as our tasters blended, roasted, cupped, and commented on sample after sample. Their first coffees used beans from Colombia, Guatemala, and Sumatra, which they roasted at a combination of temperatures to discover the perfect match between time and heat, a relationship called the roast curve. During the first two weeks, the team created more than a dozen combinations.

  Some were too tart or sour.

  Others metallic or aggressive, papery or acidic.

  By the end of the month, after experimenting with almost 30 recipes and roast curves, most had been eliminated.

  Then, in a consumer taste test on December 3, one sample stood out as superior. Consistent Brew 19 was round, smooth, and balanced and exhibited a mild, sweet finish. Jackpot . . . almost. It was not yet perfect, so throughout the 2007 holiday season, right up until New Year's Eve, the team roasted Consistent Brew 19 again and again and again.

  Finally, in January 2008, they hit the mark with a flavor profile that did not abandon Starbucks’ roasting philosophy but, whether it was served black or with cream and sugar, delighted more people's palates. The winning blend was balanced but rich in flavor.

  We named it Pike Place Roast, after our first store. I thought the name should be as symbolic as the coffee. In theory as well as in flavor, Pike Place Roast was a nod to our past while embracing our future. It was one of the most transformative blends we had ever created, in part because it spoke to an audience that had yet to become part of the Starbucks community. And we were excited to welcome them.

  Our challenge, however, was to elevate Pike Place Roast so it would not be perceived as just another new product. No, Pike Place had to come out of the gate screaming not only that it was a new brew, but also that Starbucks was back and dead serious about recapturing our coffee authority.

  We positioned Pike Place Roast as nothing less than our reinvention of brewed coffee, and to further back up that claim we did indeed reinvent our brewed experience.

  Once again we would grind beans in our stores, a ritual we'd abandoned in order to serve customers more quickly. Now, in lieu of being ground at the plant and delivered to stores in sealed bags, all beans for brewed coffee would arrive whole and be scooped and ground by baristas. To further improve upon freshness, no more would batches of brewed coffee sit for up to an hour before being served. Thirty minutes was the new maximum “hold time.” Any coffee that remained after half an hour was to be thrown out. Finally, to give customers the consistency they desired, Pike Place Roast—regular and decaffeinated—was to be the first brewed coffee we would offer every day, 365 days a year, always alongside a rotating bolder alternative.

  These were significant changes that were sure to jolt our operations in ways that we could
prepare for but not fully predict. Our roasting plants needed to adopt Pike Place's new roasting technique. Our supply chain had to establish a new system for packing and delivering whole beans, and our baristas needed to be trained how to scoop, grind, and introduce customers to the new roast, effectively communicating its special qualities. Meanwhile, the marketing and communications department had to coordinate a coast-to-coast coffee-tasting campaign for the scheduled launch day, April 8, 2008. We only had a matter of months, and our partners went to work to deliver on their respective mandates.

  Losing was not an option.