Speaker A
Hello, good morning, and thank you for inviting me to speak at the 4th Annual Innovations in Business Conference.
A presentation on Starbucks' success story, focusing on Howard Schultz's leadership, employee value, and social responsibility.
Key Takeaways
- Valuing employees as partners and sharing profits can drive business success.
- Strong company values and social responsibility attract and retain customers.
- Persistence and confidence in a vision are crucial for overcoming investor skepticism.
- Personalized customer experience enhances brand loyalty.
- Businesses should balance profit-making with doing good to sustain growth.
Summary
- Howard Schultz founded Starbucks with the vision of bringing European coffee culture to the U.S.
- Initial investor skepticism was due to uncertainty about paying premium prices and Schultz's social mission.
- Starbucks values its employees as partners, sharing profits and offering stock options.
- The company focuses on personalized customer service, including handwritten names and customizable drinks.
- Schultz's leadership emphasized social responsibility, ethical sourcing, community service, and sustainability.
- Starbucks faced challenges when Schultz left as CEO in 2000, moving away from its original values.
- Schultz returned in 2008 to restore the company's mission and improve performance.
- The company’s success is partly due to customers supporting businesses with strong values and responsible actions.
- Schultz’s persistence and confidence were key to overcoming early challenges.
- The presentation encourages businesses to adopt similar values for long-term success.
Full Transcript — Download SRT & Markdown
Speaker A
It's a pleasure to be here. My topic this morning is something that is, I can see, very relevant to many of you.
Speaker A
Many of you have paper cups in your hands right now. It's coffee, and a little company called Starbucks.
Speaker A
That all of you have heard of, and although the company isn't actually little anymore, it did start out that way.
Speaker A
I'd like to talk to you today about the man who started the company, Howard Schultz, and about some of the things he's done along the way that have led to the company's great success.
Speaker A
Perhaps these same ideas could lead to more success for your companies as well.
Speaker A
In the early days, Schultz was like every entrepreneur. He had a strong motivation to bring the coffee culture of European countries to the United States.
Speaker A
But, of course, he needed money to get started, so he needed to find investors, but it was quite difficult for Schultz to find those investors for two main reasons.
Speaker A
First, they didn't understand why anyone would pay extra for a fancy cup of coffee, and this created a lot of uncertainty about the whole idea.
Speaker A
Would they eventually get their money back? Now, of course, it seems like the world was just waiting for a good cafe latte to come along.
Speaker A
I've certainly bought my share of fancy coffee drinks.
Speaker A
Okay, the other reason for the uncertainty among possible investors was the fact that Schultz kept talking about using his company to do good things. That was unusual, since the main focus of most businesses is making money.
Speaker A
If you ask me, focusing only on making money is a great way to make a business fail, but I suppose a lot of people would disagree with me on that.
Speaker A
So, what is Starbucks' model for success? To begin with, valuing employees is an essential part of the Starbucks business model, and it's an idea that many businesses could learn from, I think.
Speaker A
In fact, I really shouldn't use the term employees to refer to the people who work at Starbucks, since they're actually called partners.
Speaker A
As you know, partners in a company are equals.
Speaker A
So, I guess Starbucks wants to show its employees how important they are to the company.
Speaker A
A well-known quotation from Schultz is that, "Success is best when it's shared." And Starbucks does share its profits with its employees.
Speaker A
Sorry, with its partners. Not only are Starbucks wages a little higher than in other service jobs, partners who work enough hours can receive stock in the company.
Speaker A
I mean, how great is that?
Speaker A
If Starbucks has a good year, their employee stockholders also have a good year.
Speaker A
Now let's think back to a younger Howard Schultz, trying to convince investors that instead of keeping employees' salaries as low as possible, you know, in order to make a bigger profit, he was planning to pay his employees more in order to make their lives better.
Speaker A
It must have been a difficult idea for the investors to accept.
Speaker A
Well, Schultz was persistent, and he had confidence in his ideas.
Speaker A
And in light of how quickly Starbucks grew, that persistence clearly paid off.
Speaker A
Another important aspect of the Starbucks business model has been to treat the customers as individuals and to value them as people.
Speaker A
It's no accident that your name is handwritten on your coffee cup, and that the coffee can be customized in any number of ways to suit your taste.
Speaker A
According to the company website, "Our mission is to inspire and nurture the human spirit, one person, one cup, and one neighborhood at a time."
Speaker A
Okay, as long as we're trying to learn lessons from Schultz and his company, it's important to point out that Starbucks has experienced some failures along the way.
Speaker A
Schultz has given up his position as CEO on more than one occasion over the years.
Speaker A
The first time was in 2000, and the company experienced some major problems as a result.
Speaker A
Those problems were caused by the company moving away from Schultz's original vision. Instead, after Schultz quit, they moved away from being a company that cared about its employees and focused on making as much money as possible.
Speaker A
And though every company evolves over time, this was not the kind of change that Schultz wanted.
Speaker A
Starbucks' sales were down, and some stores had been closed when Schultz returned to the company in 2008.
Speaker A
So, in the hope of turning the company around, he outlined a set of plans for social responsibility, buying coffee only from ethical growers, doing community service, and making Starbucks stores more environmentally sustainable.
Speaker A
And although he quit the job of CEO again more recently, he stayed on with the company in a new position.
Speaker A
His goal now being the same as it was in the beginning, to have a successful company that also does good things.
Speaker A
And this is where we can find a valuable lesson to take away from the Starbucks story. Customers have supported this company for many years now and made it a success.
Speaker A
And that's at least partly because customers are willing to spend a little more to buy products from a business that has strong values and that acts responsibly.
Speaker A
They want to feel good about the companies they buy from, and any company that wants to be successful needs to keep this in mind.
Speaker A
Thanks, and we do have a few minutes for questions.
Topics:StarbucksHoward Schultzbusiness successemployee valuesocial responsibilitycustomer experienceentrepreneurshipethical sourcingsustainabilitybusiness model
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