Truth Is Just Perception

The Management Lesson Of Starbucks’ CEO

Not content with having defined a very original strategic vision, Howard Schultz is also implementing a maverick managerial style.

Starbucks’ CEO recounted in a recent book his comeback at the helm of “his” company after it had lost both his soul and effectiveness.

I will focus on three aspects that impressed me enough in this book that I remember them a few months after reading it:

  • Schultz says that the best corporate leaders combine two qualities: An unshakable confidence in the vision that guides their business and the ability to convince employees to engage in the implementation of this vision. In this regard, he stresses that, once the vision has been defined, it is important not to confuse strategy and tactics: Growth, for example, is a tactic.
  • From the beginning, even when Starbucks was losing money, Schultz decided to provide all employees – even part-time – with two benefits, which at the time was and is still unique in the U.S.: Comprehensive health insurance and stock-options. This helped the company to attract talent and build a relationship of trust with employees. Schultz explains that a professional occupation should be something personal for everybody, not just the entrepreneur or the artist. Their work should also make sense to the accountant, the worker and the secretary. But for them to love what they do, their company must love them. This principle has always guided Schultz’s management. So when Starbucks went through the worst crisis in its history and Schultz was subjected to all kinds of pressure (from Wall Street, his Board of Directors, members of his management team …) to put an end to the health care benefits and stock-options enjoyed by his employees, he did not yield – he didn’t want to sacrifice Starbucks’ values ​for the sake of its financial performance. He finally managed to reconcile the two.

(CC) University of Denver

  • In 2008, shortly after Howard Schultz’s comeback, Starbucks closed its 7,000 US stores. A note on the door of each shop explained that the teams were taking the time to perfect their technique for preparing coffee. 135,000 employees were trained in a day, resulting in a cost of six million dollars in lost sales for Starbucks, as well as the risks of passing customers to competition and negatively affecting Starbucks’ share price. Above all, Schultz admitted publicly that Starbucks coffee was not good enough. So it was an extremely risky decision but, again, in line with another aspect of Schultz’ management philosophy. He considers that Starbucks must always exceed expectations and that, to do so, the Company must recognize when it is not as effective as it should be. He believes that his role includes facilitating an ongoing internal discussion questioning the achievements of Starbucks – and his own – in order to help the Company improve its performance. His employees trust him to do so and he would betray them if he were not expressing what he thinks and did not act accordingly.

It is unusual for a CEO to have so strong management principles and to implement them with as much conviction as Schultz against all odds.

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