The Great Recession caught Starbucks in a bad place. They had just aquired several ambitious aquisitions and were over-extended in a major expansion of stores in existing and new markets. To cut costs in a hurry, the coffee seller made a plan to cut 600 US stores in 2008 and 200 in 2009, plus another 100 overseas. All the cuts had a major impact on profit and costs, but also on the giant's reputation with consumers and employee morale.
Since the recession, Starbucks has thrived. Insiders and outsiders alike give the credit to efforts in planning a comeback almost as soon as the crisis began.
Video: CNNMoney's Corner Office series talks with Starbucks CEO Howard Schultz
Starbucks CEO Howard Schultz says the core to the comeback was refocusing the company on people: both customers and employees. More than some morale-raising warm fuzzies, Shultz sees this as having a direct relationship to returning the company back into profitability.
I've been a fan of Starbucks for a long time, and it's about more than just the coffee (which I rate about a 'B'). What's really kept me coming back is the company's treatment of employees and customer service. It's consistent from store to store. While living in the NYC area, I frequented about 7 stores. Each one was friendly -- and in NYC, especially if you're not a regular face from that neighborhood -- that's a rarity.
Here's two take-aways I get from Schultz' insights into how the company got massive buy in for its come-back vision and creates experiences that share the company vision with consumers with every cup of coffee.
- Personal Responsibility: Schultz talks about a conference for 10,000 managers he called right after returning to the company in 2008. In that conference, he called this team to take personal responsibility for turning the company around. According to Schultz, that was the turning point, and it energized the entire company to re-invent itself.
This has been coming up quite a bit lately. There's a surprising connection between responsibility and ownership and performance. No duh, but why do leading CEO's talk about it like it's a corporate secret? I think the answer lies in how often such messages are undermined by the unspoken story of our companies.
- Affirmation: When Schultz walks into a store, he always looks for something good an employee is doing that he can affirm. He understands Starbucks is selling some type of humanity (in fact, they are marketing "third space"), and that requires brining out the best humanity in workers.
Schultz is describing what I call Rule One of The Four Rules of vision: People over systems: creativity, fun, and access. Unless we invest in people's humanity, they won't be interested in our vision. But when we do acknowledge people's humanity and show we believe in their capacity, it's amazing how soon they are ready to buy into a shared vision and how deeply they will commit to following it through.