Need a Turnaround? Make a Comeback the Starbucks Way

It's no surprise to me that the new memoir by Howard Schultz, the founder of Starbucks, is on the top of the best seller lists. Onward: How Starbucks Fought for Its Life Without Losing Its Soul is a comprehensive, step-by-step personal account of how an entrepreneurial, growth-driven CEO learned from others, changed his leadership style in a difficult time for his company, and reignited passion and confidence in his brand. Onward is a must-read for any manager and ranks as one of the best corporate memoirs written in recent years.

Yes, it has been criticized. Samantha Ettus, a branding blogger at Forbes, called the book misguided and ill-timed, "a marketing exercise which is using the hallowed Starbucks brand as a sacrificial lamb." But I have no clue what book she and other critics are reading. Schultz's book is far too transparent, detailed, and honest to be considered a marketing document. Schultz recounts in thorough detail the meetings, memos, consultants, studies, and personal experiences that drove the Starbucks reboot through the end of 2010.

In 2008, Schultz returned as CEO of the company and his agenda was simple: to bring the company back on track after it had badly stumbled, pursuing a high growth strategy. Rather than sacrificing the Starbucks brand, Schultz reveals himself to be consumed by the appeal of Starbucks' connection to consumers and on a quest to restore every inch of its aura. As Schultz writes:

"outsiders failed to appreciate the nuances of invigorating a service-based business, especially a brand as emotionally charged as ours. Starbucks is not a coffee company that serves people. It is a people company that serves coffee, and human behavior is much more challenging to change than any muffin recipe or marketing strategy."

Never forget the basics. Schultz knew the appeal of Starbucks' coffee was essential--and that the race for growth had undercut quality. Schultz and his team closed every Starbucks store for one day to train baristas in making the best espresso. They upgraded espresso machines to the Mastrena worldwide and improved training. Schultz and other executives visited restaurants and coffee houses, investigating high end food selling techniques. In fact, Schultz was drinking coffee in Seattle's Ballard neighborhood, when he discovered the Clover, the french press single serving coffee marker, sought out its maker and put it in stores worldwide.

Be willing to listen and work with consultants, but know your North Star. Schultz brought a few management consultants into his trust and credits them heavily in the book. He also listened to friends such as Jim Sinegal, cofounder and CEO of Costco, who reminded Schultz to "protect and perserve your core customers" during a downturn. When the product lunch for Starbucks instant coffee hit a design snag, he turned to his most trusted design consultant. In each case, however, Schultz had to be convinced outsiders understood and shared the values and iconic power of the brand.

If you need to reduce operations to become leaner, make sure you cut enough. For Schultz, Starbucks' commitment to workers, to health care benefits, and to the role of stores in local communities are hugely important. Burdened by too many stores as the recession dragged on, Schultz and his team knew they needed to close hundreds of doors and reduce the workforce. This was painful--but, after the initial analysis, Starbucks closed more stores and laid off more people than they'd originally planned. They needed to ensure that they would not have to go back and cut again.

Give customers a voice in your redirection. Schultz embraced social media and the idea sharing website, mystarbucksidea.com, which has over 250,000 registered members who have submitted 100,000 ideas since launch in 2008. A retail company that invites customers to cocreate their own drinks and use stores as a second living room must actively engage their ideas.

Communicate heavily--and communicate some more. Schultz' capacity for hands-on communication is impressive. He blitzed each core constituency--senior managers, store managers, customers, media, analysts, shareholders, and employees--with various communications concisely presenting the case for change or a particular decision. He wrote a stream of internal memos, staged interactive presentations and multimedia displays at Starbucks conventions, made careful pitches to analysts, and invested time and energy in his corporate communications strategy.

Reinvigorate corporate responsibility and production practices. Starbucks' hard times were not an excuse for the company to be less responsible, but an opportunity to do more. Schultz expanded partnerships with Fairtrade and Conservation International, reduced store environmental impact, and expanded local community service.

The next time you're asked to turnaround a project, a team, a product or a division, get a cup of good coffee, a copy of Onward and make some notes. In the meantime, commenters: have you tried a turn around? What worked, or didn't work, for you?

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