The same nice aroma, the same nice taste, the same freshness every time you have it: That is what Starbucks coffee has for you. A coffee – that has been made cup by cup by pouring the heart into it.
This is not about thinking. This is about belief. I wanted to write about the success story of one of the best CEOs who revived his company in the times when it needed him the most.
Starbucks dates back to ~ 1971 and started in Seattle. Today, the founders of the company are not important, for a simple fact that there was someone who had a stronger belief in Starbucks compared to them. In about 1981, the founders hired a guy called Howard Schultz. Howard had a belief and he was the one with a plan. It happens many times that Founders could be CEOs and they can be amazing like Mark Zuckerberg, or Jeff Bezos, Steve Jobs or Bill Gates, but it is very true, that if you are the one with a belief, you can surpass the founders. That is why we believe in the spirit of America.
Howard was the only person in his entire family to have attended a college. He was very innovative, and he toured to Europe where he found that the coffee was sold perfectly brewed, fresh in cups. Finding this idea, he came back to US with a plan to do the same in US. But the founders didn’t believe in him. He split himself from Starbucks and founded his own company. About 4 years down the road, the founders of original Starbucks wanted to focus on Peet’s coffee, so they sold Starbucks to Howard Schultz. He merged both companies and called it Starbucks.
Because he believed in the idea so much, he started creating stores after stores in United States, and then in other parts of the world. In roughly 20 years, Starbucks was the biggest coffee company in the world with over 15,000 stores, an unsurpassed market capitalization in the coffee world, and one of the greatest brands of all times.
Cherishing its success, he stepped down as the CEO in about 2000. Then came the financial crash, and then came another in 2008. By 2008, Starbucks had lost 50 % of market capitalization.
The media was against it and used to publish regularly that Starbucks was no more relevant.
The real Howard Schultz returned to Starbucks as CEO again. This journey is somewhat similar to Steve Jobs, that of a returning CEO. What a long break like this does to a person like Steve Jobs or Howard Schultz is that it gives them enormous amount of quality time to think. When they returned, they came back with even bigger plans. The plans that were centered on their beliefs. The plans that changed the world.
8 years of time for Starbucks without the CEO: Here is what was wrong: Cash flow was not at its best, the company had lost its cultural value, and the stock owners asked Howard Schultz to take four major steps.
- Turn Starbucks into a Franchise system.
- Cut away work force.
- Cut away training plans.
- Reduce the quality of coffee by 5 %.
Contrary to the demands of stock owners, Howard Schultz did four things that were 180 degrees opposite; and to the stock owners, he replied:
- If tomorrow McDonald’s, Dunkin donuts, and 7-11 start serving coffee for free, leave aside 5%, I would not reduce the quality of Starbucks coffee by even a grain.
- If tomorrow every single restaurant in the world is ran with a franchise system, I will not run Starbucks with that system.
- If tomorrow I have to take 90 % salary cut to defend my workers, I will take it but not let the fire of Wall Street touch my employees.
- And if tomorrow onward I have to spend every bit of my time only training my fleet of the 10,000 store managers, and shut down Starbucks shops for three hours I would not hesitate doing it.
If you do not believe in me, you can sell your Starbucks stocks.
What was going on?
What had happened in 8 years is that Starbucks had lost its cultural value. That cultural value is called “belief”.
Howard invited 10,000 managers to New Orleans for a conference where they all did community services. They all were taught the cultural values again. They were all inspired to believe.
Howard said to them:
We don’t believe in traditional marketing. We make every cup of coffee pouring our heart in it. We take pride in our work. And we believe in great quality. We go to our shops with green aprons, and serve our customers the best coffee they deserve.
And we don’t meet expectations. We beat expectations. Every. Single. Day. That is precisely why our customers keep coming back to us.
No matter what, the biggest lessons for all organizations are always the same.
- Serve your customers with great pride.
- Embrace great quality.
- Repeat. Every. Single. Day.
If your customers do believe in you, perhaps you can throw out all your marketing books out of window.