Howard Schulz — Leadership Style & Commandments
When it comes to one of the most successful businesses in the world, Starbucks will definitely be on the list, with its Chairman and CEO Howard Schultz on its helm. The company’s stature in the industry is attributed to Howard Schultz’s leadership style.
There was a time when most Americans didn’t know the difference between a high-grade coffee bean and a teaspoon of Nescafe instant coffee.
So when Howard Schultz dreamed of creating a national chain serving the best coffee in the world and offering a third place (apart from home and office) for Americans to socialize, it may have seemed like a outlandish idea. Today, his company needs no introduction. Good, quality coffee and the name Starbucks have become synonymous.
Howard Schultz came into limelight for his great leadership in making Starbucks the largest coffeehouse in the world with more than 20,000 locations.
He is a transformational leader who kicked off the U.S.’s second coffee revolution. His employee-focused leadership style left a template for other business owners to follow as they grow their own enterprises, and Howard Schultz grew a global brand in the process.
According to a leadership theory formulated in 1978, there are two leaders, transactional and transformational. The man behind Starbucks applies the latter.
Transformational leaders inspire their team and encourage members to develop as individuals and be part of a collective team to work towards achieving objectives. This is the type of leader Howard Schultz is and he ensures there is trust, respect, honesty and commitment in the company he is running.
Coming from modest roots in Brooklyn, Howard Schultz has always brought a sense of social justice to the way he’s operated.
Over the last few years, the underlying search for justice has exploded with a new intensity, inspiring both support and boycotts of Starbucks. His aspirations and lessons for the business leaders and entrepreneurs had changed the concept of business in several minds.
Here are some of the commandments and leadership principles commanded by Howard Schultz at Starbucks.
Howard Schultz’s belief in his ideas coupled with determination and hard work have been instrumental behind his success. There are many commandments to be learned from this CEO of Starbucks. Here are seven of the most important leadership lessons we can learn from Starbucks and its fearless leader, Howard Schultz.
Principle #1: Lead From The Heart
Howard Schultz talks a lot about emotions. He anchors much of his leadership to passion and trust and believes that leaders must make investments in the reservoir of trust for all they serve. His writings, speeches, and emails frequently reference love, passion, and romance.
Howard Schultz has always backed his teams and often displays emotions, even vulnerabilities and advocates authenticity as an essential element for leadership.
He advocates doing things from your heart. He says when you romance what you serve it creates an elevated feeling and customers can experience it. When you do things with your heart into it, it creates vibes that take it to the next level.
In the same way, Howard Schultz is known to be the CEO who knows how to take care of his employees and this is not only for how he gives rewards and perks to members of his team.
Aside from given them comprehensive health insurance, he also offers them the option to earn stocks and give them tuition benefits. As for listening to the grievances of his people, he sees to it that these are acted upon like the case in which an employee forwarded a complaint about work schedule and shared it via an interview. Right after this was known, he immediately talked with the store manager to stabilize the shift schedules of employees.
Howard Schultz is a democratic leader as he is looking for employees who are team player and have passion to work for Starbucks.
He regards all his employees as partners to create a sense of equality, as well as giving them more power in decision making and empowering them to exercise certain amount of control such as having the flexibility to choose their own working hours. He also values every partner’s opinion and feedback and takes them into consideration.
Gratitude is a 2-way street. Life doesn’t have to be a zero-sum game.
If you make other lives better, people are willing to return that favor. Win-win. You can hardly forget when someone helps you turn things around. Starbucks becomes the first company to turn most of its employees to shareholders. The Ben Stock program generates more than $1.5 billion over the past 3 decades.
Howard Schultz credits the success of Starbucks to its people and thus makes sure the company takes care of them.
He believes in creating and maintaining an influential company culture for improving teamwork and getting a satisfying output. That’s why Starbucks provides its employees with medical insurances and offers stock options to motivate and appreciate them.
Principle #2: Roads Are Bumpy
After completing his degree in communication, Howard got a job as a salesperson at Hammarplast, a company that sold coffeemakers. Through hard work he climbed the ladder and was promoted to a full sales representative, and eventually Director of Sales. His career advances at Hammerplast led to his introduction to Starbucks.
Your first avenue to success in life might not work out, and that is all right.
But you can hardly change the world by not taking risks. As a leader you have to be bold and think big. You have to do sacrifice, work hard and create something that will create a huge impact. Despite all the hurdles and setbacks, you cannot lose sight of the big picture. Leaders need to keep believing and push themselves towards their goals everyday.
Great leaders take responsibility for what they do. They go out of their way, push themselves and never accept status quo.
The consistency of Starbucks’ products across locations and countries is a proof of this. As a leader it is important not to blame your team or situations, take responsibility for your actions and help your team find the solution. From leaving his job to taking Starbucks to the heights of success, Howard Schultz took risks and created opportunities, which brought him and the brand prosperity.
Nothing grows in the comfort zone. You might be stuck in your home neighborhood and never leave the place. Growth happens when you expose yourself to a new reality.
In 1996, Starbucks entered into an agreement with United Airlines to serve coffee on flights. There was an opportunity to serve 20 million people a year, but with airlines’ reputation for serving bad coffee, investors were concerned about the move. Howard Schultz signed the deal, but he ensured there was a comprehensive quality-assurance program in place, along with thorough training for flight attendants on both coffee in general and Starbucks in particular.
We all make mistakes. What makes the difference, however, is owning up to those mistakes and addressing them in a professional and timely manner.
One of the prominent qualities of a leader is to accept that he knows less, to admit failures and work on them. Also, business leaders need to be humble and share their mistakes as it helps them to be collaborative, open-minded, thereby encouraging employees to voice their opinions.
Principle #3: Sight Is Light
The success of Howard Schultz can be attributed to his remarkable vision. When he joined Starbucks, he could see things that others didn’t. He knew there was more to Starbucks than coffee. He wanted to build the complete experience, a place where people enjoyed spending time and eventually ended up creating a haven for coffee lovers called Starbucks.
Howard Schultz dreamt of making Starbucks as the third place for everyone after home and office.
Starbucks has always been driven by his 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.
His passion is about building a company that is focused on treating people with respect and dignity. This is the vision of Starbucks.
As for the company’s mission, it aims to have not just a simple place where people can enjoy their coffee and enjoy some food. It exists to give its customers a place where they can meet up with their friends, hold meetings, do their work and have some relaxation time.
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.
You need the vision to make it big. Vision is like goals, but bigger. Vision is your ability to imagine and foresee your future.
Starbucks has one simple mission: To inspire and nurture the human spirit–one person, one cup, and one neighborhood at a time. That mission statement has served the company for many decades, because Starbucks is more than just a coffeehouse. It’s become an escape for anyone needing a break from the daily grind. It’s become a centralized meeting location for friends to catch up and business people to have meetings.
Moreover, Howard Schultz realized that Starbucks couldn’t flourish and win customers’ hearts without the passionate devotion of its employees.
Things would probably look very different if Howard Schultz did not pay close attention to his customers when he worked as a salesperson for Hammerplast. Later in his life he took this same dedicated focus on people to the Starbucks brand. From baristas greeting customers by name, or writing their names on cups, to the company’s employee policies. That passion comes from ownership, trust, and loyalty.
Principle #4: Purpose Beyond Profit
Another principle that distinguishes Howard Schultz from his contemporaries is his integrity. When frost in Brazil caused a coffee crisis in 1994, most of its competitors raised prices immediately. As Starbucks had locked in lower prices for the next few months, it decided not to raise the price of its drinks immediately as it would be unfair to the customers.
No business can survive long-term without making money. However, companies that focus exclusively on this can end up squeezing customers for every penny without making any effort to add value.
According to Peter Drucker, there is only one valid purpose for a business, and that is to create a customer. The customer is the foundation of a business and keeps it in existence. Starbucks built its brand identity without employing advertising techniques. It earned the brand value by its customers’ experiences and their word of mouth publicity. Howard Schultz believed that authenticity in brand value is what helps a business to be successful.
For many successful companies, profits follow a motivated workforce and are not the driving force of the business.
Starbucks has always opted to balance social responsibility with high profits and volume. By providing employee health care and other great benefits, Howard Schultz created a team of evangelical baristas for the company. This leads to less turnover, happier customers, and better relationships. All of which increase Starbucks’ bottom line.
If a company focuses purely on the profit, they won’t be very profitable. Money isn’t a cause; it doesn’t speak to customers, it doesn’t inspire.
For consumers, they want to support a company that does more than just sell goods or services. They want to know that their money is supporting a cause. Sure, it seems strange that the most successful companies aren’t actually putting their bottom dollar line first. But when you really think about it, it makes complete sense.
Businesses that value long-term positive impacts over short-terms profits have been able to generate profits and withstand shifts in the economy as they are based on a purpose, rather than profits.
Such organizations are able to do so due to the positive implications of purpose-driven organizations on their employees and the consumers. As this philosophy of purpose over profit permeates the business environment, if it is adopted by organizations, the potential to improve the world is limitless.
Principle #5: Make Your Own Opportunities
You’ve probably noticed there’s a Starbucks on just about every corner. Starbucks has done this intentionally, through clustering. Instead of focusing on traffic patterns, or the location of competition, Starbucks blankets entire areas. While there were fears that this would lead to self-cannibalization, this unorthodox move has helped the company dominate the market by blocking out the competition.
Sometimes you just have to go against the grain and do something that other companies aren’t doing. It may be risky, but it can be beneficial for your company.
Most people think that Howard Schultz founded Starbucks, but that’s not true. What he did do was turn Starbucks from a small Seattle company that sold roasted coffee beans to a global coffee chain. But even before that, his 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.
Howard 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?
Howard Schultz certainly challenged the status quo with his plan to create Americans’ third place, the most-visited site after home and work.
This was unheard of in corporate coffee culture at the time. The “third place” concept involved retail locations with calming music and famously speedy Wi-Fi so patrons would feel at home. Whereas other grab-and-go food stops are less inviting, Howard Shultz was bold enough to imagine a place that felt more like home. This helped him become a category king of coffee chains.
Opportunities rarely happen in your comfort zone.
If an opportunity were prone to present itself where you are, then you’d already have one. Use your confidence to step outside your comfort zone and engage people and situations that will help get you to where you want to be. By putting yourself out there and meeting people who will support your dream, you’re more likely to create opportunities for yourself.
Principle #6: Stick To Your Core Values
In 2008, Howard Schultz re-joined Starbucks as the CEO and realized that its financial crisis wasn’t because of the economic recession but the company’s shift from its core value of enhancing the consumer experience. He believed that it is the core values of your business that makes you unique. Hence, Starbucks started “My Starbucks Idea” to enhance the consumers’ experience.
It’s relatively easy to reboot an organization, but it’s much harder to maintain the core and innovate around it.
Starbucks was still proud of its activities in ethical coffee procurement, fair trade, collaborations, community support, diversity and environmental management. The business never has used a single pound of robust coffee and always has the finest Arabica beans. Besides, the company does not allow smoking at its stores to maintain the coffee scent and requests its partners not to wear perfumes and cologne.
A company’s values need to be more than just words — if taken seriously, they can be the key to success.
It’s impossible to come up with a rule for everything. Values become the compass that guides employees in making decisions. It empowers them to use their judgment. This is especially important today, with our global economy, where employees are scattered across satellite offices. Values are a company’s megaphone.
Having a set of public company values gives your business a distinct stature and can significantly strengthen your company’s image and reputation.
Oftentimes, having a brand or image that is consistent with your company’s public values can garner consumer loyalty and make people feel good about the purchases they are making with your company. You may absolutely nail the core values that are alive in your organization, and still find that people struggle to remember what they are. If they aren’t memorable, they aren’t going to be of much use to anyone.
Principle #7: Don't Pioneer. Disrupt.
Starbucks does its best to remain true to its roots, but the company is also extremely innovative. For example, realizing that customers wanted to spend more time at its locations, Starbucks began offering free Wi-Fi in 2010. The company even allows customers to pay for products with an iPhone app and was one of the first companies to go mobile.
Innovation in any business is significant.
It encourages teamwork, identifying problems, embracing new ideas and then risking hard work to bring in a change in the world. At the same time, it brings profits and goodwill along with success.
Nonetheless, don’t go into the pioneering business. Don’t try to change human behavior.
Unless you have the patience to wait a long time, a lot of money to waste, and an extremely compelling idea and platform. This reminds me of the words of John Maynard Keynes: ‘The market can remain irrational longer than you can remain solvent.”
Understanding disruption isn’t just about creating better ideas; it’s also about looking out for new competition that might disrupt your industry in the future.
If a startup is labeled disruptive, you might want to give it notice — but the biggest threats to your business are the ones you won’t see coming. Dig deep and take all threats seriously, even if they’re starting out with lower profit margins and a smaller target market than you’d expect from a legitimate competitor.
The true value of open innovation rests in the ability to encourage customers to share different perspectives on a product or service.
After all, you can have the world’s most amazing thinkers on your payroll, but having access to a broad pool of opinions will still get the best ideas. Starbucks really got this right with “My Starbucks Idea”. By actively encouraging and rewarding a range of perspectives and values, the company was able to unlock the innovative potential of a huge number of people, with great results.
In tough times, his leadership was under enormous pressure to compromise on a variety of aspects. Still, Howard Schultz stood on the ground and remained faithful to the company’s roots. The business was innovating. But all of this, achieved by maintaining the essence intact.
Leadership needs consistency, direction and clarity of vision.
Tough times are inevitable, how leaders handle these times molds their future. A leader with strong self awareness is well equipped to lead his team to great heights. Howard Schultz believes in Starbucks and Italian espresso. Starbucks believes in Schultz too. The two-way street has made the world a better place for coffee lovers and coffee makers.
Strong leadership qualities propelled Howard Schultz forward, allowing his company to differentiate itself and usher in the second wave of the coffee revolution.
Howard Schultz is a shining and illustrious example of the infinite possibilities the universe holds for those who dream big. Anything is possible, when you are driven by a strong commitment for achieving your goals.
Howard Schultz may have stepped down as CEO of Starbucks in April 2017, but his vision of Starbucks that is connected to the community continues to guide the company.
A highly self-conscious leader is well prepared to direct his team to great heights. Howard Schultz is a magnificent illustration of the limitless possibilities for those who dream great. When you are motivated by a deep commitment to achieving your objectives, everything is possible.
If you can be the most excited, you will excite those around you. And by creating something bigger than yourself, you can share a mission with your employees, or as Howard Schultz called them, your partners.
So by now, there is no hiding it. I am an avowed Howard Schultz fan who is honored to have written about his leadership excellence. I would love to hear about leaders who have inspired you and have a conversation about areas where you are seeking to lead your organization, your people, and your customer experience. Share your thoughts in the comments below!