starbucks leadership style case study

Starbuck Company Case: Howard Schultz Leadership Style Essay

The chief executive officer’s leadership style, schultz leadership style and organizational culture, schultz’s personal and organizational values, shultz’s values and ethical behavior, schultz’s greatest strengths, schultz’s greatest weaknesses, recommendations, impacts of communication and collaboration, impacts of power and politics.

Howard Schultz; the Starbuck’s chief executive officer (CEO) is a transformational leader. Schultz trusts in motivation and moral support. Moreover, he believes in organizational growth. Harrison (2005) alleges that Schultz persuades his employees to come up with novel ideas. He challenges status quo, and this underlines the reason Starbucks has achieved its current success in terms of product diversification and brand positioning. Schultz is a good communicator and uses personalized consideration. He deals with each staff individually and supports them based on their needs. As a way to motivate his staff, Schultz acknowledges the contribution of every employee.

At times, he makes personal calls and sends emails to employees to seek their advice. Harrison (2005) asserts that Schultz has empowered his staff. For instance, employees have the liberty to select their working hours. His leadership style has helped to motivate employees, thus guaranteeing a continued growth for the company. One of Schultz’s goals is to ensure that Starbucks dominates the coffee market. Hence, He has guaranteed that employees know about his vision. Besides, he has instilled the idea in his staff. Today, all Starbucks’ workers share in the desire to dominate the coffee market.

George (2007) claims that Starbucks’ workers are known as baristas. The company regards its workers as the image of the enterprise. One of the company’s cultures is the sustenance of an uplifting experience for its customers (George, 2007). Schultz has encouraged innovation in Starbucks leading to the enterprise offering the best beverages in the market. He encourages his staff to provide personalized services. Hence, the company has a catchphrase that encourages staff members to serve one client at a time. Starbucks is dedicated to creating a culture of legendary services. The company has recruited a cultural specialist to help it achieve this objective.

George (2007) holds that Starbucks entrusts its staff with the responsibility to preserve organizational culture. Schultz allows employees to buy company’s stock as a way to motivate them. In addition, Starbucks believes in diversity and inclusion. The company hires employees from diverse backgrounds as a means to ensure that it offers customized services. Schultz advocates service diversification. He maintains that it is only through product and service diversification that a company can remain competitive. Hence, he promotes the culture of inclusion by employing staff from different regions.

As aforementioned, Schultz is a good communicator. In addition, he encourages communication among the employees. Communication helps to ensure that each customer receives what s/he orders. Schultz believes, “people do not think about just how much you realize, but how much you care” (George, 2007, p. 54). Consequently, he encourages his staff to be social conscious. Presently, Starbucks embodies a number of features that aim to improve customer experience. The features include focusing on details, aggressiveness, teamwork, stability, and customer-centered. Starbucks ensures that customers enjoy a relaxed environment. Besides, Schultz takes time to relate to each employee as a way to encourage collaboration and promote innovation. Consequently, employees are dedicated to their duties since they develop a sense of ownership of the company.

Howard Schultz desires to unwind. According to Marques (2008), Schultz encourages employees to be open. He always listens to all workers regardless of their position. Besides, he encourages open communication where employees are free to share their opinions and air their complaints. His desire to unwind has made him establish a calm and relaxed environment at Starbucks. Customers like visiting the business because it provides a serene environment where clients can sit, think and unwind. Marques (2008) supposes that Schultz values employee growth and development. He believes that employee training helps not only an organization to enhance its productivity, but also employees to grow professionally.

It underlines the reason Starbucks has partnered with Arizona State University. Schultz assists his staff to acquire education by paying part of the school fees. Apart from employee growth, Schultz values innovation and creativity. He trusts that a company cannot be competitive and sustainable unless it is innovative. Schultz discourages complacency (Marques, 2008).

He always advocates reinvention and self-renewal. Reinvention and self-renewal can only be achieved if employees have the courage to take big risks. Consequently, Schultz has helped the company to sign deals with businesses and individuals like Oprah Winfrey in a bid to stay competitive.

One of Schultz’s organizational cultures is aggressiveness. He maintains that a company cannot overcome competition unless it is aggressive in terms of product differentiation and customer acquisition. Therefore, he pushes employees to remain curious and identify potential opportunities. According to Marques (2008), in Starbucks, one achievement paves way for another goal. Schultz does not stop after accomplishing his goal. Instead, he embarks on planning for the next objective. Apart from aggressiveness, Schultz is also team oriented. Schultz’s aim is to see Starbucks succeed and open more branches worldwide. Moreover, he is committed to ensuring that the company does not grow at the expense of employees. Hence, he spends a lot of time with staff and guarantees that the company helps employees to grow both financially and intellectually.

O’Neill (2009) alleges that Starbucks is regarded as one of the most ethical institutions worldwide. O’Neill (2009) asserts, “Throughout history, Starbucks has embedded acting ethically as a cornerstone to its culture and to how it works every day” (p. 28). Schultz encourages employees to execute their duties with thoroughness. He treats all employees equally and encourages communication among the staff. His love for open communication has led to employees treating each other with respect. Besides, it has made employees to offer customized and quality services. Schultz maintains that each Starbucks’ store is a constituent of a society. Hence, he requests employees to be good neighbors (O’Neill, 2009).

Besides, he encourages the different stores to assist in uniting the community and work towards improving its living conditions. Schultz believes that leadership does not entail giving donations to the community or communicating organizational values. Instead, leadership involves exercising organizational values (O’Neill, 2009). He recommends that corporate leaders should evaluate their contribution to the society.

Schultz values social responsibility. Hence, he has instilled the same value in his workers. Employees are passionate about offering quality products and services. Consequently, they ethically source for the best coffee beans. Moreover, they care about their customers and coffee beans suppliers (O’Neill, 2009). Starbucks’ workers considered treat each customer as special. Consequently, they ensure that every customer enjoys his/her stay in the company. Apart from offering quality beverages, Starbucks’ employees value human connection. They take time to relate to their customers and fortify their lives. Through interaction, employees are able to identify emerging customer needs. Moreover, they get customers’ opinions on what the company ought to do. Indeed, the current growth is as a result of employees’ interaction with customers. Apart from organizational growth, the company has helped the community to improve its living standards by enlightening it on how to preserve the environment.

One of Schultz’s greatest strengths is the ability to establish strong brand position. Schultz has positioned Starbucks as a high-end brand in coffee industry. Starbucks has managed to provide exotic and delicious coffee blends under Schultz’s leadership. Today, the company offers the best coffee in the United States. Schultz is gifted in employee development and management (O’Neill, 2009). After becoming the CEO, Schultz embarked on an employee development campaign aimed at assisting Starbucks to offer quality services. Today, he has established an organizational culture that values style, sophistication, and knowledge.

Customers praise Starbucks for its sophisticated and stylish atmosphere. Prabhakar et al. (2014) allege that Schultz is a good team player. He has helped not only to engender teamwork within Starbucks, but also communication and respect. Moreover, he has assisted the company to recruit competent and dedicated workers. All Starbucks’ employees are vetted by a panel of human resource, which guarantees that the company hires the best.

One of Schultz’s greatest weaknesses is that he talks a lot, thus subjecting the company to scrutiny. Starbucks is known to be a progressive and respectable company. Schultz’s participation in political affairs might subject Starbucks to public scrutiny. He has gone on the record as one who advocates rejecting contributions. Such a stance may affect the company’s image. Schultz has not been able to reduce operation costs in Starbucks (Argenti, 2004).

His desire to offer customized and quality services have forced the company to raise employees’ salaries. Besides, the company has been compelled to provide benefits to all workers. Hence, Starbucks has witnessed an increase in operation costs under Schultz’s watch. Another weakness is that Schultz has subjected Starbucks to distraction. Despite participating in corporate social responsibilities, Schultz has not managed to exploit the natural dynamics of the coffee industry. Therefore, in case the company encounters constraints, it would be hard for Schultz to convince the public that he is in a position to rescue the company.

Schultz has subjected Starbucks to the danger of losing its clients by participating in politics. Consequently, it is important for Schultz to remain impartial on partisan matters. Besides, he should avoid airing his opinions about controversial issues. Airing one’s opinions about controversial issues may lead to clients shifting to companies that do not share their opinion publicly. For instance, Starbucks lost many customers after Schultz expressed his opinion about gay marriage. Hence, for the sake of the company, Schultz should remain neutral even if he is not happy about some political issues. Schultz has built his legacy in Starbucks. He has helped Starbucks to become a domestic name in the United States. To safeguard the company’s image, Schultz should stay away from politics and cease commenting on contentious political matters. He should focus on helping the company to expand its market share if he wants to be remembered for his achievements.

Communication and collaboration are essential for any organization. They ensure that activities run smoothly without interruptions. One of the reasons why Starbucks offers efficient services is due to effective communication and teamwork. Collaboration between baristas, cashiers and chefs ensures that customers get quality services (Prabhakar et al., 2014).

Besides, communication and collaboration between Schultz and employees has helped the company to expand its operations to different countries. In addition, communication and teamwork have helped Starbucks to develop novel products to meet customer demands. Prabhakar et al. (2014) allege that Starbucks uses persuasive communication to alter consumer behavior and attitude towards the company. Employees work together to change customers’ perceptions of Starbucks’ products and services. For instance, they collaborate in preparing and serving coffee. Besides, they assist new recruits to adapt the company’s system by assisting them in areas that they encounter challenges. Teamwork and communication are what have made Starbucks to attract a big customer base.

Power and politics have had adverse effects on Starbucks. For instance, after the company alleged that firearm holders had the right to carry the guns it became enmeshed in an unwanted clash. Many people could freely bring their weapons to the business (Argenti, 2004). Schultz had to publish a report to clarify the company’s position. He realized that the issue was affecting the company’s growth since many customers feared visiting Starbucks. In other words, Starbucks’ involvement in politics affects its performance. The company is at times torn between embracing some political values and disregarding them. The major problem arises in striking a balance that satisfies all its target customers. Starbucks has been blamed for tax avoidance in the United Kingdom (Argenti, 2004). Some customers even urged people to stop using Starbucks’ products. Nevertheless, the company moved fast to assure the public that it was a tax compliant firm. Schultz assured the public that Starbucks was dedicated to improving the living standard of its customers and it could never evade tax.

Argenti, P. (2004). Collaborating with activists: How Starbucks works with NGOs. California Management Review, 47 (1), 91-118. Web.

George, B. (2007). True North: Discover your authentic leadership . San Francisco: Jossey-Bass. Web.

Harrison, J. (2005). Exporting a North American concept to Asia: Starbucks in China. Cornell Hospitality Quarterly, 46 (2), 275-283. Web.

Marques, J. (2008). Spiritual performance from an organizational perspective: The Starbucks way. Corporate Governance: The International Journal of Business in Society, 8 (3), 248-257. Web.

O’Neill, J. (2009). Hotel brand strategy. Cornell Hospitality Quarterly, 51 (1), 27-34. Web.

Prabhakar, A., Harvey, B., Wicky, S., Hirsch, J., Thrall, J., & Okul, R. (2014). What’s brewing: How interventional radiologists can learn from the reinvention of Starbucks. Journal of the American College of Radiology, 10 (8), 559-561. Web.

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12.7 Leadership Development: The Case of Starbucks

Figure 12.15

Mike Mozart – Starbucks – CC BY 2.0.

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for convenience and accessibility to great coffee. In 1971, three friends made that desire a reality and established the first Starbucks coffee house in historic Pike Place Market on Seattle’s waterfront. In 1990, Starbucks drafted its first mission statement, and the number one principle was to “provide a great work environment and treat each other with respect and dignity.” How has the company lived up to that declaration 20 years later?? Starbucks has consistently made Fortune magazine’s “100 Best Companies to Work For” list and in addition is included on a list of the best places to work for LGBT (lesbian, gay, bisexual, and transgender) equality. Working conditions in the service and retail industry are notoriously low paying with long hours, but Starbucks manages to offer benefits for part-time and full-time employees as well as higher-than-average salaries for store managers. Why, one might ask, does Starbucks try so hard to set itself apart?

Leadership development is a core element of the business process at Starbucks, which ensures that the organizational culture of the company is maintained with every CEO successor. Starbucks is forward looking in this respect and strives to attract future business leaders and managers. The idea of planning for one’s own succession can often make people uneasy, but this idea is openly embraced at Starbucks. The company plans far in advance to replace its top-level successors. The importance of leadership is not only ingrained in the upper management team, but Starbucks also ensures that this is an understood value throughout the organization. In 2004, the Coffee Master program was introduced to teach employees about regional coffee flavors. Graduates of the Coffee Master program earn a prestigious black apron and a special insignia on their business cards. In creating this ethos, Starbucks excels at its ability to attract an educated workforce with a high satisfaction level where individuals often move up to become effective leaders within the company.

With the recession of 2009, Starbucks has been forced to rethink its traditional strategy of accelerated growth by closing over 30,000 stores. CEO Howard Schultz has cut his salary to less than $10,000 a year, down from $1.2 million. Despite these slowdowns, Starbucks continues to call employees “partners” and offers a dynamic place to work. As a result, the company had more than 150,000 people apply for jobs last year, a sure indication that the company’s ability to cultivate talented leaders is as strong as ever.

Based on information from Helm, B. (2007, April 9). Saving Starbucks’ soul. BusinessWeek . pp. 56–61. Retrieved April 30, 2010, from http://www.businessweek.com/magazine/content/07_15/b4029070.htm ; Cohn, J., Khurana, R., & Reeves, L. (2005). Growing talent as if your business depended on it. Harvard Business Review , 83 (10), 62–70; Stanley, A. (2002). Starbucks Coffee Company. Tuck School of Business at Dartmouth (no. 1–0023). Retrieved April 23, 2010, from http://mba.tuck.dartmouth.edu/pdf/2002-1-0023.pdf ; 100 best companies to work for. (2010, February 8). Fortune . Retrieved February 14, 2010, from http://money.cnn.com/magazines/fortune/bestcompanies/2010/snapshots/93.html ; Miller, C. C. (2009, January 29). Starbucks to close 300 stores and open fewer new ones. New York Times . Retrieved February 15, 2010, from http://www.nytimes.com/2009/01/29/business/29sbux.html .

Discussion Questions

• Why does Starbucks Coffee consider internal leadership development such an important part of its core business process?
• What possible negative repercussions can the aggressive growth strategy that Starbucks exhibits have on its leadership agenda?
• With the slowdown of business, how can Starbucks ensure that the importance of leadership development does not get overlooked?
• How does your experience with leadership and management compare with the case of Starbucks?

Organizational Behavior Copyright © 2017 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Module 12: Leading People within Organizations

12.7 optional case study: leadership development at starbucks.

Figure 12.15  Source: http://upload.wikimedia.org/wikipedia/commons/9/94/starbucks_in_WashingtonDC.jpg by Elvert Barnes.

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for convenience and accessibility to great coffee. In 1971, three friends made that desire a reality and established the first Starbucks coffee house in historic Pike Place Market on Seattle’s waterfront. In 1990, Starbucks drafted its first mission statement, and the number one principle was to “provide a great work environment and treat each other with respect and dignity.” How has the company lived up to that declaration 20 years later?? Starbucks has consistently made Fortune magazine’s “100 Best Companies to Work For” list and in addition is included on a list of the best places to work for LGBT (lesbian, gay, bisexual, and transgender) equality. Working conditions in the service and retail industry are notoriously low paying with long hours, but Starbucks manages to offer benefits for part-time and full-time employees as well as higher-than-average salaries for store managers. Why, one might ask, does Starbucks try so hard to set itself apart?

Leadership development is a core element of the business process at Starbucks, which ensures that the organizational culture of the company is maintained with every CEO successor. Starbucks is forward looking in this respect and strives to attract future business leaders and managers. The idea of planning for one’s own succession can often make people uneasy, but this idea is openly embraced at Starbucks. The company plans far in advance to replace its top-level successors. The importance of leadership is not only ingrained in the upper management team, but Starbucks also ensures that this is an understood value throughout the organization. In 2004, the Coffee Master program was introduced to teach employees about regional coffee flavors. Graduates of the Coffee Master program earn a prestigious black apron and a special insignia on their business cards. In creating this ethos, Starbucks excels at its ability to attract an educated workforce with a high satisfaction level where individuals often move up to become effective leaders within the company.

With the recession of 2009, Starbucks has been forced to rethink its traditional strategy of accelerated growth by closing over 30,000 stores. CEO Howard Schultz has cut his salary to less than $10,000 a year, down from $1.2 million. Despite these slowdowns, Starbucks continues to call employees “partners” and offers a dynamic place to work. As a result, the company had more than 150,000 people apply for jobs last year, a sure indication that the company’s ability to cultivate talented leaders is as strong as ever.

Discussion Questions

• Why does Starbucks Coffee consider internal leadership development such an important part of its core business process?
• What possible negative repercussions can the aggressive growth strategy that Starbucks exhibits have on its leadership agenda?
• With the slowdown of business, how can Starbucks ensure that the importance of leadership development does not get overlooked?
• How does your experience with leadership and management compare with the case of Starbucks?
• An Introduction to Organizational Behavior. Authored by : Anonymous. Provided by : Anonymous. Located at : http://2012books.lardbucket.org/books/an-introduction-to-organizational-behavior-v1.1/ . License : CC BY-NC-SA: Attribution-NonCommercial-ShareAlike

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Starbucks Reinvented

Harvard Business School Professor and historian Nancy Koehn has studied Starbucks and its leader, Howard Schultz, for close to 20 years. For her, the company represents much more than a phenomenal success story.

In a recently published case, "Starbucks Coffee Company: Transformation and Renewal," (available soon) Koehn and coauthors Kelly McNamara, Nora Khan, and Elizabeth Legris trace the dramatic arc of the company's past seven-plus years—a period that saw Starbucks teeter on the brink of insolvency, dig deep to renew its sense of purpose and direction, and launch itself in new, untested arenas that define the company as it exists today.

"This case distills 20 years of my thinking about the most important lessons of strategy, leadership, and managing in turbulence in the frame of a very relevant company," says Koehn, the James E. Robison Professor of Business Administration. "As a brand, leadership, and entrepreneurship scholar, I've been dogging Starbucks for a long time."

On a 1995 trip to Seattle, Koehn visited a Starbucks store for the first time and was struck by what she saw and felt. The notion of a "third place" between home and work to relax and enjoy the small, affordable luxury of a special coffee beverage seemed to resonate with the social and economic moment, she recalls. Six months later she met Howard Schultz, an entrepreneur who acquired the company in 1987, and was struck by his seriousness of purpose and the breadth of what he wanted to accomplish.

The case, Koehn's fourth to focus on Starbucks, opens in February 2007. Schultz, no longer Starbucks' CEO but still its chairman, is worried the company is losing its ability to be true to its values while providing a store experience that conveys a sense of comfort, connection, and respect for its product and the communities Starbucks serves.

So Schultz composed a heartfelt, searching memo to senior leadership. In it, he bemoaned decisions (for which he accepted responsibility) that improved efficiency and increased economies of scale but robbed stores of some of their essential magic, such as the smell of roasting coffee and the sights and sounds of traditional Italian espresso machines and baristas at work.

He also cited the company's rapid expansion and the potential "commoditization" of the Starbucks brand. "[W]e desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience," Schultz wrote.

The scope and richness of Koehn's case gives it the feel of a page-turning novel; in that sense, Schultz's memo is the inciting action for all that follows.

Remaining True To Core Values

The challenge that had confronted Starbucks in the early- and mid-2000s was one common to many organizations: Could the company continue to grow while preserving its culture and values? In some areas, the drive to expand, egged on by Wall Street, was compromising the company's ability to invest in its partners (Starbucks' term for its employees), deliver personalized customer service, and maintain a close connection to the local community.

In addition, McDonald's and Dunkin' Donuts had emerged as serious competitors, offering their own lines of specialty coffee beverages. Even so, Starbucks' financials for 2007, the year Schultz composed his memo, didn't look so bad. But the entrepreneur became concerned as he dug more deeply into the numbers. Sure, revenues were up almost 21 percent over the previous year, but had slowed by over a third; transactions per store were up 1 percent, versus 5 percent the year before. Same-store sales rose only 5 percent, the smallest increase in five years.

In January 2008, Schultz returned as Starbucks CEO, replacing Jim Donald, the man he and other senior colleagues had chosen to lead the company.

Starbucks Sails Again

The case chronicles the blizzard of decisions and initiatives that follow what could have been the company's death knell as the financial crisis hit home and consumers cinched their belts.

"Schultz understood that you can't lift your foot off the gas pedal when you're attempting to transform a company," Koehn says. "Severe as its financial needs may be, you also have to figure out what you will invest in. Schultz knew that if he waited until the company was out of the woods to invest in new products, communication channels, and ways of doing business it would be too late—Starbucks would no longer be relevant."

From the start, Schultz sent the clear, unwavering message that Starbucks' transformation would represent a return to its roots and an uncompromising commitment to core values, such as health care benefits for any partners working at least 20 hours a week.

At a March 2008 gathering of 200 senior-level company leaders, Schultz unveiled a Transformation Agenda that included seven "Big Moves":

• Be the undisputed coffee authority;
• Engage and inspire our partners;
• Ignite the emotional attachment with our customers;
• Expand our global presence—while making each store the heart of a local neighborhood;
• Be a leader in ethical sourcing and environmental impact;
• Creative innovation growth platforms worthy of our coffee;
• Deliver a sustainable economic model.

The case provides a behind-the-scenes look at how the coffee company moved forward on these goals, including the introduction of the milder Pike Place Roast; the story of its VIA Ready Brew line; the launch of a loyalty program; investment in and engagement with social media; focus on a global expansion strategy; and the extension of social programs. The company closed stores, restructured its manufacturing and supply operations, and, perhaps most significantly, took steps to reengage its partners and store managers. In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, however, that wasn't enough—he wanted to reach the company's store managers, recognizing them as essential to the transformation process.

"I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake," he wrote in Onward: How Starbucks Fought for Its Life without Losing Its Soul . The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be tanking. Starbucks' fourth quarter profits were down 97 percent from the same time a year earlier; for the fiscal year, net earnings were down 53 percent to $316 million. The Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million, but Schultz stuck to his guns.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks; in the "novel" of Koehn's case, it's the climax.

"Investing in a conference of that size is such an unusual thing to do when faced with a cash crunch," Koehn says. "Schultz understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people."

Schultz's experience qualifies him for closer study in Koehn's HBS course Power and Glory in Turbulent Times: The History of Leadership from Henry V to Steve Jobs. Not all managers are confronted in their careers with the sort of transformation challenge faced by Starbucks, but Schultz's reflections and actions are instructive for anyone charged with finding sources of strength, innovation, and renewal in today's turbulent business environment, Koehn says.

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How Starbucks’s Culture Brings Its Strategy to Life

• Paul Leinwand
• Varya Davidson

They focus on a few positive attributes and amplify them.

In most organizations, culture and strategy tend to be discussed in separate conversations. Executives know that culture is important and that a negative culture can hurt company performance, but they often don’t know what to do about it. Or they attempt to improve the situation by launching a culture initiative to “make the workplace more positive.” What most executive teams typically fail to do is to connect the company’s culture with how the company makes its strategy work.

• Paul Leinwand is a principal at PwC U.S., a global managing director at Strategy&, and an adjunct professor at Northwestern’s Kellogg School. He is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (HBR Press, 2022).
• Varya Davidson leads the people and organization business for Strategy& in Australia, Southeast Asia, and New Zealand and sits on the Katzenbach Center’s global leadership team. She is a partner with PwC Australia, and has worked with leading public and private sector organizations across Europe, the Middle East, North and South America and Asia-Pacific.

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Case study explores Kevin Johnson's response to an incident where two African Americans were asked to leave a Philadelphia Starbucks.

Starbucks CEO Kevin Johnson (AP Photo/Richard Drew)

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks.  The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything.  Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong. The general public and those who witnessed the arrest labeled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store.  The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “ The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values.  Creating an environment that is both safe and welcoming for everyone is paramount for every store.  Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”  

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub--a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better.  Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did on May 29, 2018.  A month after the arrests, Starbucks released a new “ Use of Third Place Policy, ” which states that anyone can use Starbucks and its facilities without making a purchase; it also explains what managers should do if a customer becomes disruptive.  Additionally, the policy says that Starbucks seeks to create “a culture of warmth and belonging where everyone is welcome. This policy is intended to help maintain the third place environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.’”

Practice of Ethical Leadership

Ann Skeet, senior director of Leadership Ethics at the Markkula Center for Applied Ethics, has created a Practice of Ethical Leadership .  Using this model, we can ask the overall question:   How is Johnson practicing ethical leadership? Additionally, we can consider what we learn about his character through his actions and his impact.

Along with character as a cornerstone for anyone’s practice of ethical leadership, we can look at the five additional ethical leadership practices Skeet identifies as a way to explore whether Johnson’s actions are enhancing his impact as an ethical leader in his role as Starbucks CEO.

• Creating Community :  Did Johnson use Starbucks’ shared values as the cornerstone of his decision making after the arrests?  Did his decision to close all Starbucks stores for unconscious bias training and to create a new “Third Space Policy” align with Starbucks’ mission and goals?  Did his handling of the incident promote positive relationships between employees and customers? Did it encourage a sense of connectedness and shared values?
• Encouraging Ethical Conduct :  Did Johnson openly acknowledge that his decision was based in ethics and morality?  Did his apology and actions promote awareness of an ethical issue? Did it create a positive or negative difference in the communities Starbucks serves? Did it make a positive or negative difference for Starbucks employees and customers?
• Showing Discipline in One’s Role :  Does Johnson explicitly accept responsibility for the incident and provide direction for a course correction? Does he identify ways to collaborate with others when necessary?  Does he show he understands what his role is in fixing this problem?  
• Clarifying Culture :  Did Johnson clarify his values and the company’s values in his apology and with his subsequent actions?  Did Johnson’s apology and follow-up actions uphold Starbucks’ mission and core values? Did he identify gaps between stated and actual values?  Did Johnson’s apology help Starbucks employees figure out if their personal values align with the company’s?
• Designing Ethical Systems :  Did Johnson’s actions have impact beyond Starbucks?  Did they sent a precedent for other companies to follow? Did his apology create a conversation about unconscious bias in the workplace? How do his apology and the subsequent follow-up actions compare to other companies and CEOs that have faced similar problems?

Howard Schultz Leadership Style

Howard Schultz is an American entrepreneur, known as driving force behind Starbucks Coffee Company. Through his own brand of transformational leadership , he grew Starbucks from a small Seattle company to a global coffee chain with over 23,000 outlets in 72 countries. He stepped down as CEO of Starbucks in April 2017, but remains executive chairman of the company.

Howard Schultz Leadership Style: His Top 3 Leadership Traits and Qualities

1. Make your own opportunities

“I believe life is a series of near misses. A lot of what we ascribe to luck is not luck at all. It’s seizing the day and accepting responsibility for your future. It’s seeing what other people don’t see. And pursuing that vision.”

Most people think that Schultz founded Starbucks, but that’s not true. What Schultz did do was turn Starbucks from a small Seattle company that sold roasted coffee beans to a global coffee chain. But even before that, Schultz’s journey to joining Starbucks shows his tenacity in creating his own opportunities. It took a year for him to convince the original Starbucks owners to hire him, yet he kept at it even after they initially rejected him.

Once he was on the Starbucks team, Schultz faced another huge hurdle when he suggested that the company should expand into the cafe business. He saw untapped potential and a gap in the market that Starbucks could fill — yet again, he faced rejection. Schultz was so convicted in his vision that he left Starbucks. After raising enough capital, he opened his own chain of coffee bars. This chain, Il Giornale, would eventually merge with the Starbucks brand after Schultz acquired it.

Schultz’s success can be attributed to his dogged pursuit of his vision; he was undeterred by closed doors and was tenacious enough to create his own opportunities. As a leader, do you let rejection stop you from achieving your goals? How committed are you to your goals, and how resourceful are you when things don’t go your way?

2. Be driven by passion

“Entrepreneurs must love what they do to such a degree that doing it is worth sacrifice and, at times, pain. But doing anything else, we think, would be unimaginable.”

The idea for Starbucks as a cafe was borne from a trip Schultz took to Milan, Italy. He had seen Italy’s coffee culture and how cafes there are a focal point for friends to get together and he wanted to replicate that feeling of community which was missing in the US cafe market at that time. Despite setbacks, he remained committed to his vision.

Starbucks is driven by Schultz’s passion for coffee and community. His second tenure as CEO in 2008 was motivated by his desire to realign operations to his initial vision of the company. He wanted to restore the integrity of the Starbucks brand, which he felt had eroded during its rapid growth.

What makes you excited to wake up every day and go to work? It’s important to know what drives you as a leader. What are your hopes and dreams? What impact do you hope to leave in the world? Find out what you will tirelessly work for, what goal you will sacrifice for because that’s what you should be doing in your life.

3. Stand by your values

“Coffee is what we sell as a product, but it’s not the business we’re in. We’re in the people business. I’m passionate about human connection.”

When Schultz was a young boy, his father got injured during his job as a truck driver. Without health insurance or any compensation, the injury meant that the Schultz family had no income. Schultz remembers how the incident caused his father to “[lose] his sense of dignity and self-respect. I am sure that this was caused mostly by the fact that he has been treated as an ordinary working man.”

This experience affected Schultz’s management style; one of his tenets of leadership is to treat people with respect. His own personal values are reflected in Starbuck’s company values .

For any leader, your core values became the guiding principle for your actions and behavior towards others. How can you better align your core values with your work? Doing work that is in line with your core values means greater dedication, higher conviction and more belief in your goals.

A Short Biography of Howard Schultz

Howard Schultz was born on on July 19th 1963 in Brooklyn, New York. He came from a poor family, and he was the first in his family to go to college when he won an athletic scholarship to Northern Michigan University. In 1975, Schultz graduated with a bachelor’s degree in Communications.

He started his career as a sales representative for Xerox Corporation before moving on to Hammarplast, a Swedish company that manufactured drip coffee makers. It was during his time there that Schultz found out about Starbucks Coffee Company, which was a client of Hammarplast. Schultz was won over by their passion and knowledge of coffee, and joined Starbucks a year later as its retail operations and marketing director.

A Star(bucks) is born

Inspiration struck on a buying trip to Milan where Schultz took note of Italian coffee culture — he wanted to introduce a similar cafe concept with the Starbucks brand. Although he did convince the Starbucks owners to try a pilot of the cafe concept (which was successful!), they were unwilling to branch out into the F&B business. This led to Schultz’s departure from Starbucks in 1985. He wanted to pursue the cafe idea, and a year later he launched his own chain of cafes, Il Giornale.

Il Giornale proved to be a success and two years later, Schultz bought Starbucks. Merging the two entities, he became the CEO and Chairman of the Starbucks Coffee Company and embarked on expanding the Starbucks chain across the United States. When Starbucks had its initial IPO in 1992, it had 140 outlets and earned an annual revenue of US$73.5 million.

Starbucks Expansion

Schultz stepped down as CEO in 2000 but returned to the helm in 2008. In his second term as CEO, Schultz was determined to restore the “distinctive Starbucks experience”, which was lost when the company aggressively expanded worldwide.

Schultz’s vision accelerated the second wave coffee culture, and paved the way for more coffee establishments to emerge. As of June 2016, Starbucks has over 23,000 outlets in 72 countries worldwide. Schultz has built Starbucks into a US$85 billion business, with the company expanding into offering food, tea and becoming one of the first to introduce mobile ordering. What’s more, he put in place programs to care for his employees, such as expanding healthcare coverage and an employee stock purchase program.

Schultz may have stepped down as CEO of Starbucks in April 2017, but his vision of Starbucks as a business that is connected to the community continues to guide the company.

Howard Schultz Leadership Video

Watch this interview with Howard Schultz to learn more about his business philosophy:

Related: Top 13 Leadership Quotes from Howard Schultz . Top 60 Quotes about Sacrifice

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12.7: Leadership Development: The Case of Starbucks

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Figure 12.15

Mike Mozart – Starbucks – CC BY 2.0.

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for convenience and accessibility to great coffee. In 1971, three friends made that desire a reality and established the first Starbucks coffee house in historic Pike Place Market on Seattle’s waterfront. In 1990, Starbucks drafted its first mission statement, and the number one principle was to “provide a great work environment and treat each other with respect and dignity.” How has the company lived up to that declaration 20 years later?? Starbucks has consistently made Fortune magazine’s “100 Best Companies to Work For” list and in addition is included on a list of the best places to work for LGBT (lesbian, gay, bisexual, and transgender) equality. Working conditions in the service and retail industry are notoriously low paying with long hours, but Starbucks manages to offer benefits for part-time and full-time employees as well as higher-than-average salaries for store managers. Why, one might ask, does Starbucks try so hard to set itself apart?

Leadership development is a core element of the business process at Starbucks, which ensures that the organizational culture of the company is maintained with every CEO successor. Starbucks is forward looking in this respect and strives to attract future business leaders and managers. The idea of planning for one’s own succession can often make people uneasy, but this idea is openly embraced at Starbucks. The company plans far in advance to replace its top-level successors. The importance of leadership is not only ingrained in the upper management team, but Starbucks also ensures that this is an understood value throughout the organization. In 2004, the Coffee Master program was introduced to teach employees about regional coffee flavors. Graduates of the Coffee Master program earn a prestigious black apron and a special insignia on their business cards. In creating this ethos, Starbucks excels at its ability to attract an educated workforce with a high satisfaction level where individuals often move up to become effective leaders within the company.

With the recession of 2009, Starbucks has been forced to rethink its traditional strategy of accelerated growth by closing over 30,000 stores. CEO Howard Schultz has cut his salary to less than $10,000 a year, down from $1.2 million. Despite these slowdowns, Starbucks continues to call employees “partners” and offers a dynamic place to work. As a result, the company had more than 150,000 people apply for jobs last year, a sure indication that the company’s ability to cultivate talented leaders is as strong as ever.

Based on information from Helm, B. (2007, April 9). Saving Starbucks’ soul. BusinessWeek . pp. 56–61. Retrieved April 30, 2010, from http://www.businessweek.com/magazine/content/07_15/b4029070.htm ; Cohn, J., Khurana, R., & Reeves, L. (2005). Growing talent as if your business depended on it. Harvard Business Review , 83 (10), 62–70; Stanley, A. (2002). Starbucks Coffee Company. Tuck School of Business at Dartmouth (no. 1–0023). Retrieved April 23, 2010, from mba.tuck.dartmouth.edu/pdf/2002-1-0023.pdf; 100 best companies to work for. (2010, February 8). Fortune . Retrieved February 14, 2010, from http://money.cnn.com/magazines/fortune/bestcompanies/2010/snapshots/93.html ; Miller, C. C. (2009, January 29). Starbucks to close 300 stores and open fewer new ones. New York Times . Retrieved February 15, 2010, from http://www.nytimes.com/2009/01/29/business/29sbux.html .

Discussion Questions

• Why does Starbucks Coffee consider internal leadership development such an important part of its core business process?
• What possible negative repercussions can the aggressive growth strategy that Starbucks exhibits have on its leadership agenda?
• With the slowdown of business, how can Starbucks ensure that the importance of leadership development does not get overlooked?
• How does your experience with leadership and management compare with the case of Starbucks?

BUS209: Organizational Behavior

Leading People within Organizations

This unit will discuss how influence differs from manipulation and explain how individuals use influence within the workforce. This unit will conclude with a look at the politics within organizations and how ethics apply to power. As you are likely aware, there are too many examples in which power is used improperly in business. Responsible business schools today place extra emphasis upon ethics, especially when talking about subjects such as power.

Leadership Development: The Case of Starbucks

Figure 12.15

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for convenience and accessibility to great coffee. In 1971, three friends made that desire a reality and established the first Starbucks coffee house in historic Pike Place Market on Seattle's waterfront. In 1990, Starbucks drafted its first mission statement, and the number one principle was to "provide a great work environment and treat each other with respect and dignity". How has the company lived up to that declaration 20 years later?? Starbucks has consistently made Fortune magazine's "100 Best Companies to Work For" list and in addition is included on a list of the best places to work for LGBT (lesbian, gay, bisexual, and transgender) equality. Working conditions in the service and retail industry are notoriously low paying with long hours, but Starbucks manages to offer benefits for part-time and full-time employees as well as higher-than-average salaries for store managers. Why, one might ask, does Starbucks try so hard to set itself apart? Leadership development is a core element of the business process at Starbucks, which ensures that the organizational culture of the company is maintained with every CEO successor. Starbucks is forward looking in this respect and strives to attract future business leaders and managers. The idea of planning for one's own succession can often make people uneasy, but this idea is openly embraced at Starbucks. The company plans far in advance to replace its top-level successors. The importance of leadership is not only ingrained in the upper management team, but Starbucks also ensures that this is an understood value throughout the organization. In 2004, the Coffee Master program was introduced to teach employees about regional coffee flavors. Graduates of the Coffee Master program earn a prestigious black apron and a special insignia on their business cards. In creating this ethos, Starbucks excels at its ability to attract an educated workforce with a high satisfaction level where individuals often move up to become effective leaders within the company. With the recession of 2009, Starbucks has been forced to rethink its traditional strategy of accelerated growth by closing over 30,000 stores. CEO Howard Schultz has cut his salary to less than $10,000 a year, down from $1.2 million. Despite these slowdowns, Starbucks continues to call employees "partners" and offers a dynamic place to work. As a result, the company had more than 150,000 people apply for jobs last year, a sure indication that the company's ability to cultivate talented leaders is as strong as ever.

Discussion Questions

• Why does Starbucks Coffee consider internal leadership development such an important part of its core business process?
• What possible negative repercussions can the aggressive growth strategy that Starbucks exhibits have on its leadership agenda?
• With the slowdown of business, how can Starbucks ensure that the importance of leadership development does not get overlooked?
• How does your experience with leadership and management compare with the case of Starbucks?

• Harvard Business School →
• Faculty & Research →
• June 2006 (Revised April 2007)
• HBS Case Collection

Howard Schultz: Building Starbucks Community

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Howard Schultz: Building Starbucks Community (B)

• Howard Schultz: Building Starbucks Community (B)  By: William W. George and Lance P. Pierce

A Guide To Starbucks Leadership Style: From Bean To Cup

The most profitable business in terms of revenue is Starbucks. Under the direction of CEO and Chairperson Howard Schultz, the business flourished and expanded.

Along with the organization’s standing within the market, he has a unique leadership style. This was enough to attract the attention of those within the genre.

When it comes to the difference between high-quality coffee beans and a teaspoon of Nescafe instant coffee, Americans once didn’t understand it. They were unable to comprehend the difference in the coffee taste and flavor.

Table of Contents

What Is Starbucks’ Leadership Style?

Starbucks’ leadership style is characterized by a commitment to ethical and servant leadership, prioritizing employee well-being, sustainability, and social responsibility. Former CEO Howard Schultz was instrumental in shaping this approach.

Howard Schultz’s Concept of Leadership

When he was younger, Howard Schultz dreamed of starting a chain of stores known for serving the best coffee in the world.

Everything took place under Howard’s direction and control. He is the unseen figure whose leadership skills contributed to the business’s increased success. He could take the company to great heights.

The coffee line has been doing well under the direction of Howard Schultz because Americans prefer to socialize. Socializing is absurd; in this situation, the person does not require an introduction.

The leadership is strong, and the focus is on premium coffee and the Starbucks brand. The brand is superior when it comes to traditional breweries.

Howard Schultz’s transformational leadership

Because of his strong leadership in elevating Starbucks above all other coffee shops, Howard Schultz’s name rose to prominence. More than 20000 sites carry the brewery; Starbucks has attained its highest success under Howard’s direction.

The individual is renowned for being a transformative leader and is credited with starting the second coffee revolution in the USA.

He adopted an employee-focused leadership style, which served as a model for other business entrepreneurs.

Over the years, Howard became a well-known and successful worldwide and international brand. He stood the test with the introduction of premium coffee beans. Under his leadership, the brand was the best, and demand for the coffee increased with time.

Howard Schultz’s Ethical Leadership

Howard Schultz, the former CEO of Starbucks, is widely recognized as an ethical leader who prioritized social responsibility and sustainability in his business practices.

Schultz believed that businesses have a responsibility to not only generate profit but also to make a positive impact on society and the environment.

One example of Schultz’s ethical leadership was his commitment to fair trade and ethical sourcing. Under his leadership, Starbucks began sourcing its coffee beans directly from farmers and cooperatives, paying fair prices, and investing in sustainable farming practices.

Schultz also prioritized the well-being of Starbucks employees, offering benefits such as healthcare and stock options.

Schultz was also known for his commitment to social and environmental causes. He was an outspoken advocate for LGBTQ rights, supporting same-sex marriage and publicly criticizing discriminatory laws.

He also prioritized sustainability at Starbucks, implementing initiatives such as using recyclable cups and reducing the company’s carbon footprint.

Schultz’s ethical leadership was demonstrated during a difficult time for Starbucks in 2018, when two black men were arrested at a Philadelphia location.

Schultz publicly apologized for the incident and took swift action, closing all US stores for a day of racial bias training and implementing new policies to prevent similar incidents from happening in the future.

Howard Schultz’s ethical leadership style prioritized social responsibility, sustainability, and employee well-being.

He built a successful and socially responsible company by leading with a strong sense of purpose and values.

Creation of the Leadership

The leadership theory was created in 1978. Transformative and transactional leadership are the two styles that have developed over time.

Howard’s leadership greatly inspired the team members. The team has also been told to cooperate to achieve a single objective. They worked in coordination with each other to make it a grand success.

Howard, a successful team leader, thinks that team members should respect and trust one another. Commitment is essential to the group’s success and ability to continue operating. By studying his management style, one can determine the extent to which the leader is dedicated to social justice.

When it comes to organization, this is both helpful and notable. Over the years, several incidents have occurred under Howard Schultz due to employee support and boycotts.

He is the one in charge and possesses the knowledge and goals that can aid in suggesting a successful outcome. The idea of business has evolved in the minds of aspiring entrepreneurs thanks to their clear and vivid views.

Commandments and Principles of Starbucks

Howard Schultz upholds the leadership tenets necessary to lead Starbucks to success while standing by his convictions and commandments.

The leader uses his ideas with extreme tenacity, and hard labor has fueled his success. There are many things you may pick up from the CEO of Starbucks.

The seven guiding principles that the leader has suggested are listed here.

• It would be best if you had a good eye for all things.
• It would be best to have a purpose beyond the profit level.
• You must make ways for your opportunities.
• The employee or the leader should stick to the fundamental values.
• There is no need to believe that you are the end; one must refrain from interfering needlessly.

Leadership Process and Concept at Starbucks

Leadership development is the prime component at Starbucks and is a vital part of the complete business process. Leadership development of the organizational culture in the case of the company will be maintained on a prolonged basis by the successor of the CEO.

Starbucks is looking forward, and in this respect, the company strives to attract the attention of the upcoming business leaders.

The Starbucks leadership adheres to the concept and strategy of personal succession. The business will make replacement plans in advance, specifically for the top-level successors. The executive management team at Starbucks is deeply rooted in the value of leadership.

The team members followed the company principles to go ahead in the competition. At the same time, Starbucks will ensure that all areas of the corporation understand its value.

The Coffee Master event was first held in 2004 under the direction of the CEO. People were engaged in the workshop by experiencing various regional coffee flavors and tastes.

Leadership Ethos at Starbucks

The CEO, Howard Schultz, has made things interesting at Starbucks. The graduates are part of the Coffee Master Program, and the members get the black apron.

The prestigious apparel will make the team members follow the CEO’s principles and get into mainstream business operations.

Howard Schultz leads the corporation and has highly educated personnel. The staff members are highly satisfied with their work and receive precise instruction to help them develop into the organization’s potential future leaders.

This is how people can advance their careers and push the boundaries of what is possible while gaining experience and job satisfaction.

Starbucks And Servant Leadership

Starbucks is a company that has embraced the concept of servant leadership , which prioritizes the needs of employees and customers above all else.

Servant leadership is a philosophy in which the leader’s primary role is to serve and support their employees, to help them reach their full potential and achieve the company’s goals.

At Starbucks, this leadership philosophy is reflected in the company’s commitment to employee well-being and development.

The company offers competitive salaries, healthcare benefits, and career growth and advancement opportunities. Starbucks also provides training and support for its employees, emphasizing the importance of customer service and creating a positive customer experience.

Another way in which Starbucks embodies servant leadership is through its commitment to sustainability and social responsibility.

The company has implemented a number of initiatives aimed at reducing its environmental footprint and making a positive impact on the communities it serves.

For example, Starbucks sources its coffee beans ethically and sustainably and has committed to reducing waste and using recyclable materials in its stores.

Starbucks’ focus on servant leadership has also been demonstrated in its response to crises and challenges. For example, in the wake of the 2018 incident in Philadelphia, Starbucks closed all of its US stores for a day of racial bias training, emphasizing the importance of creating an inclusive and welcoming environment for all customers and employees.

Starbucks’ embrace of servant leadership has been instrumental in the company’s success.

By prioritizing the needs of employees and customers, as well as sustainability and social responsibility, Starbucks has created a culture of excellence and service that sets it apart from other companies in the industry.

Transformational leadership is a central theme at Starbucks and has long been associated with the company’s success as a lucrative enterprise.

Here, Howard Schultz assumes the position of a transformational leader, and it is admirable how he has created and communicated his mission statement.

He thinks Starbucks may become a respectable establishment where Americans would like to enjoy a cup of coffee. The CEO has used his extraordinary personality to influence and draw others to him and boost the growth of Starbucks.

He transformed Starbucks into a new workplace where employees fully appreciate the environment and unique workplace culture. Also, Starbucks became the largest coffee-selling company with a huge fan base.

How does Starbucks prioritize employee well-being?

Starbucks prioritizes employee well-being by offering competitive salaries, healthcare benefits, and career growth and advancement opportunities.

The company also provides training and support for its employees, emphasizing the importance of customer service and creating a positive customer experience.

How does Starbucks demonstrate its commitment to sustainability?

Starbucks demonstrates its commitment to sustainability by sourcing its coffee beans ethically and sustainably and by implementing initiatives aimed at reducing its environmental footprint and positively impacting the communities it serves.

The company has also committed to reducing waste and using recyclable materials in its stores.

What was the 2018 incident in Philadelphia, and how did Starbucks respond?

In 2018, two black men were arrested at a Philadelphia Starbucks location. Starbucks responded by publicly apologizing for the incident, closing all US stores for a day of racial bias training, and implementing new policies to prevent similar incidents from happening in the future.

Unravel the Mysteries of Knowledge?: Embark on a Mind-Bending Adventure ? with These Incredible Articles?️!

More To Explore:

• Decoding Howard Schultz’s Personality Traits And Qualities
• Ethical Leadership: A Guide for Aspiring Leaders
• Choosing the Right Leadership Styles in Management
• What Is Transformational Leadership: Unleashing The Power Of Influence
• 15 Proven Characteristics of a Servant Leadership Style

“Vision, strategy, and inspiration – these three words describe me the best. I am the founder of “TheLeaderboy” dedicated to leadership and personal development. As a self-taught practitioner, I have been studying the principles of effective leadership for the past decade and my passion lies in sharing my insights with others. My mission is to empower individuals to become better leader

Leadership Lessons from Howard Schultz the manager who built Starbucks

Ever walk into a Starbucks and get the sense that the baristas genuinely care about making your experience an enjoyable one? That vibe of engaged employees creating a “third place” between home and work doesn’t happen by accident. It’s very much by design, thanks to the leadership principles of Howard Schultz.

During his tenure as CEO and chairman of Starbucks, Schultz helped grow the company from a small Seattle coffee chain to a global brand with over 30,000 locations. But more importantly, he built an enduring company culture centred around respect, inclusiveness, and customer obsession. As managers, we could all take a page out of the Schultz playbook on inspiring and aligning a workforce.  

Here are five key leadership lessons from the Starbucks chairman:

Foster a Pioneering Growth Mindset

When Schultz originally walked into the Starbucks founders’ original Pike Place storefront in 1981, he was immediately struck by the culture surrounding the conscious coffee experience. It inspired his vision to bring that language and romance around coffee to the masses.

But bringing a premium coffee concept to the fast food world of the 80s required an insatiable appetite for growth and innovation. As he started expanding Starbucks, Schultz had to constantly try new things and fail forward. The company’s first attempt at selling coffee in supermarkets failed miserably. So did their first few forays into new products like sandwiches.  

The key lesson? As a leader, don’t just embrace change and fresh thinking, embody it. Schultz role modelled a growth mindset by continuously experimenting, even when it meant falling flat at times. That gave employees the psychological safety to take risks and bring new ideas to the table.

Make Values the Beating Heart of Your Company

Early in his tenure, Schultz realised that to scale up successfully, he needed to clearly define and institutionalise Starbucks’ core values. He developed seven principles like embracing resistance, applying old truths to new realms, and most importantly, delivering an unparalleled customer experience.

Those values became the foundation to Starbucks’ industry-defining decisions like providing comprehensive healthcare benefits for even part-time workers starting in 1988. It informed how they trained baristas to meet sky-high customer experience standards. And it guided tough choices like temporarily closing all U.S. stores in 2008 for an expensive retraining after growing too fast caused slippage in quality.

While profits are essential for any business, employee engagement and customer loyalty spring from honouring and living by your authentic organisational values day in and day out. Great leaders give teams clear ethical guideposts to orient around.

Empower and Trust Your People

Schultz refers to Starbucks’ workforce not as employees, but as “partners” who shared in the company’s success. He ardently believed that when you combine good people with ownership over their work experience, special things can happen.

This philosophy of decentralised decision making and autonomy within a values-based culture was baked into Starbucks from the very beginning. Store managers controlled everything from hiring and labor scheduling to selecting the music playlist. Baristas decided beverage recipes after intense training.  

As a leader, Schultz intentionally under-prescribed processes and protocols in favour of empowering people to do the right thing based on circumstances. He held a deep conviction that with the proper nurturing and tools, people will make great choices aligned with the company’s purpose.

Promoting this discretionary culture bred remarkable ownership. Front-line baristas found creative ways to personalise interactions. Regional support teams customised approaches for each community they served. For managers, consider where you can loosen the reins and enable your people to unleash their natural problem-solving ingenuity.

Cultivate Emotional Connections

At its core, the Starbucks brand was built around not just serving coffee, but creating a welcoming “third place” community experience for customers. Schultz obsessed over details like lighting, aromas, and music playlists to spark an emotional resonance.

The man exuded genuine passion, routinely walking store floors to connect directly with customers and partners. He personally conducted plant visits and green coffee tastings to strengthen his emotive ties to Starbucks’ essence.

Managers often get bogged down in numbers, metrics, and process details at the expense of cultivating human relationships. But truly inspiring leadership is as much an art as a science, driven by emotional intelligence and vulnerability. Schultz excelled at openly expressing his caring for Starbucks’ societal impact, sharing his life story, and creating human connection points.

Blend Profit with Purpose

Ask Schultz and he’ll assert that perhaps his most important leadership principle was striking a balance between profitability and being a positive force for societal good. He painstakingly worked to maintain the soul of Starbucks’ pro-community values even as it skyrocketed into a global juggernaut.

For example, he famously turned down lucrative partnerships that conflicted with Starbucks’ ethical standards. The company invested unprecedented resources into comprehensive healthcare coverage and stock ownership for employees. Schultz was an early driving force for sustainability and ethical sourcing programs.

He also catalysed national conversations around polarising issues like political dysfunction, racism, mental health, and veteran support. Schultz used Starbucks’ brand platform to give back through avant-garde triple bottom line thinking long before it was en vogue.

As leaders, balancing profitability with social impact is challenging. But we must continually ask ourselves – how can we use our organisational platform and core competency to benefit society? Are we just chasing money, or are we making the world incrementally better? Schultz showed us the power of seamlessly fusing commercial success with a pro-community and pro-environment ethos.

Of course, achieving Schultz’s pioneering, values-based, empowering, emotionally resonant yet community-minded leadership is no easy feat. But hopefully the through lines from his inspiring Starbucks journey provide a compass for navigating our own challenges.

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Starbucks as a Leadership Case Study: Efficiency, Effectiveness or Both?

What do any of these questions have to do with leadership, you ask?  (After all, that’s what this blog is supposed to be about.)  Here’s where I’m coming from.

There was an interesting article in the Wall Street Journal yesterday about how Starbucks is starting a company-wide program to implement the concepts of lean manufacturing to raise the efficiency and productivity of its stores. In a tight economy, it’s understandable why Starbucks or any organization would focus on controlling its costs.

What I’ve noticed lately is that people don’t seem to be using Starbucks as that third place location as much anymore. (You’d actually thing that in a recessionary economy they might be using Starbucks more as a meeting place for networking and such but it doesn’t seem that way.)  Have you noticed the same thing?  Maybe the leadership emphasis on efficiency is out of balance with an emphasis on effectiveness.

Let’s say that you were appointed as the new “guru of effectiveness with people” for Starbucks, where would you start in returning the company’s stores to that magnetic status of being the “third place”?

From a broader leadership perceptive, what do you notice in your own organization about striking the right balance between efficiency and effectiveness? Especially in a tough economy, what are your best ideas for keeping your customers and employees engaged with your organization? Let’s get a conversation going on this and see what good ideas we have to share with each other. Who knows, we may even come up with some that our friends at Starbucks want to pick up and run with.

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