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

Page 38

by Howard Schultz


  Onward was primarily about Starbucks’ transformation period and thus the story heavily focused on our US business even though the company's ongoing success is also due to our joint-venture partners and licensees around the world, many of whom I have known and called friends for years: in Japan, Yuji Tsunoda of the Sazaby League; in Spain, Plácido Arango's Grupo Vips; in Mexico, Alberto Torrado of Grupo Alsea; Starbucks’ business partner for the Middle East, Turkey, and Russia, Mohammed Alshaya's M. H. Alshaya; in the Philippines, Jun and Menchu Lopez, owners of the Rustan Group; the Marinopoulos Group in Greece, Cyprus, Austria, Switzerland, and Romania, run by Panos Marinopoulos; in Hong Kong and parts of China, Michael Wu and the Maxim Group; in Taiwan and other regions of China, John Hsu of UniPresident Group; in Indonesia, V. P. Sharma of P. T. Mitra Adiperkasa; in Perú, Alfredo de Ferrari Morello's Delosi Group; and Henry McGovern of AmRest, Starbucks’ business partner for Central Europe. Also, Fred Hazelwood of the John Bull Group in the Bahamas; I. C. Hur from Shinsegae Corporation in South Korea; Russel Creedy of Restaurant Brands New Zealand; and in Malaysia, Francis Lee with Berjaya.

  Finally, not a day goes by when I do not think about Starbucks’ tens of thousands of partners. Their hard work and fortitude transformed the foundation of our business, and the values, the passion, and the ideas that they show up to work with every day are what makes us such a special organization. For all they do, my heartfelt thanks.

  From the coauthor

  In addition to the above, I would like to thank my parents, David and Virginia Gordon, for that little blue typewriter and a lifetime of unconditional love. My son, Theo, for his laughter and patience. And Matthew, for his support in every season of our lives.

  For helping me find my own balance, thanks to my loving sister Susan and her husband, Howard; my surrogate Seattle family Katie Bedford and Sherri, Tom, and Maggie Brothers; as well as dear friends Kim B., Adrienne K., Caroline R., Julie Z., Mary Anne S., Lynn H., Lori S., Jamie K., Cari S., Lindsay P., Leigh G., Sam K., Cate H., Ben D., Dan M., Lois W., Ilysa G., and, as promised, Ellen A. A special thanks to Tonya Kimbrough of Pronto on eight, whose smile brightened my days.

  I am grateful to my literary agent Stuart Krichevsky for years of wise counsel, commitment to excellence, and understanding. Stuart is a true professional in the publishing world.

  Finally, to Howard Schultz. His honesty, focus, generosity of spirit, compassion for others, trust in me, and desire to tell Starbucks’ story for all the right reasons made collaborating on his book one of the most rewarding experiences of my career. Howard gave me unfettered access to Starbucks’ partners, whose high standards, intelligence, and kindness are, I believe, reflections of his leadership. After more than a year of sharing Howard's past and present, I feel compelled to paraphrase the talented writer Dori Jones Yang, who worked with Howard on his first book: Howard Schultz truly is the man he set out to be.

  Photo credits

  Where it all began, in 1971

  1 Jeff Corwin

  2 Nick Gunderson

  3 James McFarlane

  Rwanda

  1, 5, 6 Jonathan Torgovnik

  2, 3, 4, 7, 9 Riccardo Gangale

  8 Chris von Zastrow

  The proof is in the cup

  1, 5 Geoffrey Ellis

  2 Paul J. Richards/Getty Images

  3, 4 Keith Bedford

  Returning to our heritage

  6, 7 Young Lee

  Ethically sourced coffee

  1 Jonathan Levine

  2 Martin Thiel

  3, 7 Michael Hanson Photography

  4, 9 Sam Knight

  5, 6 Stanley Hainsworth

  8 Starbucks Coffee Department

  The Starbucks Experience

  1 Young Lee

  2 Rob McDougall

  3a, 4b Aaron Leitz

  3b, 3c Major Cohen

  4a Armstrong Photo

  5a, 5b Touch Worldwide

  6, 7 Zhang Tong

  8 Kirsha Baldwin

  9 Martin Coles

  10 Árpád Földházi

  11, 12 Colm Pierce

  Taking it personally

  1, 2, 3, 6, 7, 8 Touch Worldwide

  4 Kevin Mazur/Getty Images

  5 Matt Peloza

  Reimagining our future

  1, 7 Rubin Photography

  2, 3, 5, 6 SYPartners

  4 Matthew Mar

  Innovation

  1, 13 Young Lee

  2 Aaron Leitz

  3, 4b Starbucks Coffee Company

  4a, 7b, 12 Armstrong Photo

  5 Geoffrey Ellis

  6 Haley Munro

  7a Courtesy of the Valencia Family

  8 Courtesy of Starbucks Japan

  9 Courtesy of Concord Music Group

  10 Iridio

  11 Ralph Alswang

  Onward. . .

  1 John Keatley

  2 Gregg Segal

  Automat photo (at front of book) Courtesy of the Hardart Family

  Index

  An asterisk (*) indicates that photos are shown in the insert pages.

  * * *

  A

  AdAge.com, 259–60

  Advertising

  decision to be proactive, 211–12

  election-themed ad, 208–11, 212–16

  multichannel marketing campaign, 298

  traditional, 211

  Allaire, Paul, 71

  Alshaya, Mohammed, 222

  Alstead, Troy (senior leadership team),* 95, 225–26, 228, 230, 299

  Ames-Karreman, Jennifer (partner), 10

  Analyst conference. See Biennial analyst conference, 2008, 2010

  Analysts. See Financial analysts Andersen, Sandie (partner), 117–18

  Anderson, Jack, 256

  Annual shareholders’ meeting, 2008

  author's backstage thoughts about, 128–30

  author's opening speech at, 130–35

  Clover presented at, 135

  Conservation International presentation at, 132–33

  description and importance of, 129, 136

  K. D. Lang's appearance at, 129

  Mastrena espresso machine demo at, 131–32

  MyStarbucksIdea.com presented at, 135

  Pike Place Roast presented at, 135

  rewards program presented at, 133–34

  Apple, 32, 146, 321

  Arabica coffee beans, 8, 20, 83, 242, 291

  Arango, Plácido,* 272

  Ashby, Marty, 110

  AT&T, 146

  Ausnes, Annamarie, 117–18

  Automat, 33–34

  B

  Bank of America, 89, 184

  Baristas. See Partners Barnes & Noble, 18

  Barr, Tom (partner), 327

  Bartiromo, Maria, 262–64

  Bass, Barbara (board member),* 220

  Bates, David, 256

  BBDO

  election-themed ad by, 208–16

  multichannel marketing campaign with, 298

  relationship established with, 211–13

  Bean Stock. See Stock options Beatles, The, 70, 73–75, 79, 103

  Beecher's Handmade Cheese, 79, 110

  Behar, Howard, 40

  Benioff, Marc, 124–25

  Bennett, Tony, 129

  Bennis, Warren, 252–53

  Bernash, Amy (partner), 281–83

  Bernstein, Jeffrey, 146

  Biden, Joe, 209

  Biennial analyst conference, 2008

  author's closing speech, 235–36

  as opportunity to regain credibility, 223

  planning for, 226–29

  positive outcome of, 235

  presentations at, 229–31, 233–34

  Biennial analyst conference, 2010, 326

  Binjiang store, Shanghai, China*

  Blizzard Entertainment, 267–68

  BloggingStocks.com, 141

  Board of directors*

  author's relationships with members, 222–23

  further store closings suggested by, 153
–54

  initial consideration about return as ceo, 41

  members’ background and experience, 220–21

  Plan B, role of, 219, 223

  request for financial modeling of negative comps, 218

  store closings, role of, 152–54

  Bobo, Carol, 129

  Boggs, Paula (senior leadership team),* 178

  Bono, 202–5

  Bradley, Bill (board member),* 220, 229

  Braille menu for visually impaired, 116–17

  Brainstorming retreat

  Beatles theme at, 70, 73–75, 79

  participants in, 73

  SYPartners, 72–73

  visits to Seattle retailers during, 78–79

  Breakfast sandwich, 36–38, 89–90, 231

  Brewer, Brady (partner), 257

  Broadmoor neighborhood, New Orleans, 199

  Brotman, Adam (partner), 268–70

  Brotman, Jeff, 222

  Bruzzo, Chris (partner), 125–127, 135, 142, 146, 215, 269

  Buckley, Joe, 65

  Budapest store, Hungary*

  Burrows, Cliff (senior leadership team),* 73–74, 108–9, 140, 142–43, 145, 149, 151, 158, 160, 161, 167–69, 173, 178, 189, 190, 194, 197, 205, 213, 219, 225–26, 228, 233, 248, 284

  BusinessWeek, 70

  C

  C.A.F.E Practices, 20, 120, 291, 323

  Camera, Paul (partner), 121

  Camus, Albert, 7

  Casey, Michael, 131, 225–26

  Charitable efforts. See Social responsibility

  Charles, Ray, 21

  Chenghuang Miao store, Shanghai, China* China

  entrepreneurial spirit in, 305

  expansion in, 322

  innovation in, 306–8

  as largest market outside US, 305

  newspaper copies given to author, 311

  open forum in Shenzhen, 303–5

  speech in Hangzhou, 309–10

  Starbucks stores in,* 17, 103, 305

  Christian Science Monitor, 159

  Circuit City, 223

  Citigroup, 89

  City Park, New Orleans, 199

  Clinton, Hillary Rodham, 209

  Closing of stores, 152–163, 263

  Closing of stores for espresso training,* 3–6, 78, 104

  Clover coffee machine,* 91–95, 135, 142, 309, 319

  Coffee

  Arabica versus Robusta, 83

  aroma in stores, 24, 36–37

  author's experience in Milan, 9–10

  Clover coffee machine,* 91–95, 135, 142, 319

  customization of, 134

  Espresso Excellence Training,* 3–7, 78, 104

  espresso machines, 24, 120–22, 131–32

  ethical sourcing of,* 19–20, 132–33

  farming, skills required for, 288–89

  journey from soil to cup, 82–84, 197

  manual versus automatic espresso machines, 120–21

  in mission statement, 112

  Pike Place Roast,* 81–82, 85–87, 135, 142–44, 319

  “Responsibly Grown. Ethically Traded. Proudly Served.,” 133

  roasting and blending coffee beans, 84–85

  in Seven Big Moves, 106, 319, 323–24

  Tribute Blend, 313–14, 327–28

  Coffee cherry, 83

  Coffey, Kevin, 190–91

  Cohen, Major (partner), 279

  Colbert, Stephen, 6

  Colette, Paris, 34

  Commerce Center store, Vancouver, WA, 281

  “The Commoditization of the Starbucks Experience” memo (February, 2007)

  drafting of, 9, 23–25

  leaking of, 26–27

  lessons of, 28, 31–32

  media reaction to, 27, 29–31

  partners’ reactions to, 28–29

  press statement about, 27–28

  Community. See also Human connections; Third place

  donations to local communities, 19

  election-themed ad, 216

  locale reflected in stores,* 147–48, 306–8

  local relevancy, in Seven Big Moves, 107

  in Milan coffee bars, 10

  in mission statement, 113

  as touchstone of Starbucks, 4–5, 13

  volunteer service by partners, 323–24

  volunteers in New Orleans, 2008,* 196, 198–200

  Competitors, 4, 6, 62–63, 146, 212

  Comps. See same-store sales data

  definition of, 35, 42, 49

  Computers. See also Technology

  Concord Music Group, 21, 146

  Conservation International

  C.A.F.E Practices program, 20, 120, 291, 323

  enhanced support for, 119–20

  presentation at annual shareholders’ meeting, 2008, 132–33

  Starbucks’ partnership with, 19

  Consistent Brew, 85–86. See also Pike Place Roast

  Consumer packaged goods (CPG)

  opportunities from, 233, 316–17

  performance of, 146

  Consumer Reports coffee taste test, 2007, 85

  Corporate responsibility. See Social responsibility

  Costa Rica, farmer support center, 289

  Cost management. See also Plan B

  analyst conference report on, 2008, 230

  continuing efforts in, 263, 325

  layoffs required for, 170–72, 174

  leadership team meeting about, 173–74

  plans for 2009 (Plan B), 218–19, 223, 286

  Countrywide Financial, 89

  Cows for Rwanda, 292–93, 323

  CPG. See consumer packaged goods

  Crescent City Art Project, 199

  Cromett, Sherry (partner), 194

  Culver, John (senior leadership team),* 322, 325

  Customers. See also Rewards program

  better understanding of, 110, 166, 197

  “Bob” and “not Bob,” 198

  election-themed ad, 215–16

  feedback from, 135, 166, 231, 265, 320

  gallery at leadership conference, October 2008, 197–98

  initiatives to reignite emotional attachment with, 66–67, 124–25

  Lean techniques improving service to, 282–86, 321

  in mission statement, 113

  D

  Dammeier, Kurt Beecher, 79

  Davenport, Terry (partner), 119, 133–34, 143, 208–10, 212–13, 226, 228, 231–33

  David, Nicole, 222

  Dell, Michael, 48–49, 123–24

  Digital Ventures business unit, 268–70, 320–21

  Disney Village store, Paris, France, 276

  Donald, Jim , 20–23, 25, 27, 29, 35–37, 40, 44, 46, 50, 58–60, 62, 173

  Donations. See Social responsibility Donlan, Tim (partner), 62

  Douglas, Tom, 279–80

  DreamWorks, 50

  Driscoll, Kristen (partner), 284–85

  Dunkin’ Donuts, 62, 212

  E

  Earnings. See Financial reports; Same-store sales data (comps)

  Edelman (public relations agency), 143

  Edgewater brainstorming session, 2007, 35–36

  Edinburgh store, Scotland* Egan, Mary (senior leadership team),* 326

  Eight-Minute Cadence, 284–85

  Election-themed ad

  author's first view of, 210

  BBDO conceived of, 211–13

  goodwill generated by, 215–16

  NBC SNL spot for, 213

  social media setup for, 214–15

  store preparations for, 213

  Emotional connections. See Human connections

  Engskov, Kris (partner)*

  Entertainment

  overhaul of strategy for, 145–46

  Starbucks's expansion into, 21

  Entrepreneurs, 8–9, 38, 305

  Environmental concerns. See also Sourcing

  climate change, 119–20

  LEED certification for stores,* 276, 324

  overview of initiatives, 324

  po
stconsumer recycled fiber use, 118–19

  in Seven Big Moves, 107, 324

  in store designs, 275–78

  Equity. See Stock options

  Espresso Excellence Training

  benefits for customers, 7

  coffee quality scores improved by, 6–7

  decision-making for, 4–5, 78

  media reaction to, 4, 6

  press statement for, 78

  US stores closed for,* 3–6, 78, 104

  Espresso machines

  automated, 24, 121, 122

  change to Mastrena machines, 121–22, 131–32, 309, 319

  manual versus automatic, 120–21

 

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