Onward (14 page)

Feeling somewhat skeptical, I entered the large event space of Seattle's Palace Ballroom for a three-day brainstorming retreat being conducted by a consulting firm from San Francisco. Historically, I was not a fan of business consultants. Rarely had I looked to outsiders to tell Starbucks what Starbucks needed.

It was only weeks after I'd returned as ceo, and as I walked into the hotel's ballroom someone handed me a black Sharpie, a white iPod, and a packet of index cards. Instead of the murmur of small talk I was expecting, the dozen or so people already in the room, most wearing jeans and sweaters, were hushed. Following instructions, I clipped the iPod to my belt and put the earphones on. The familiar rhythm of “Come Together” was a jolt of joy on the chilly January morning.
Interesting
, I thought, and made my way to a large table covered with what looked to be a collage of posters. Familiar faces hovered over the table, each listening to his or her own music and scribbling notes on the cards. I leaned over to see what was so engrossing them.

A Hard Day's Night.

Yellow Submarine.

Abbey Road.

Meet the Beatles!

Laying across the table were enlargements of more than a dozen bright album covers and photos from The Beatles’ remarkable career, which spanned a decade as well as musical genres. For the second time that morning I was pleasantly surprised. I looked down and read what was written on one of the cards I'd been given: “What does it mean to reinvent an icon?”

Wow. There could not have been a more apt question for Starbucks at this juncture in our existence. And I was not sure I knew the answer.

On my second day back as ceo, Starbucks’ stock jumped 8 percent from the previous day, to $19.86. The media coverage, in a reprise of its reaction to the leaked memo, was a circus of opinions and speculation about what lay ahead for the world's largest coffee company now that its founder had retaken the reins. A
BusinessWeek
story headlined “Howard Schultz's Grande Challenge” noted that, while a returning founder has more freedom to play with the formula, nostalgia can also be dangerous. True, I thought. When the
Financial Times
asked other business leaders what our management change meant for our strategy, one banker I had never heard of chimed in that I might reposition the company for sale to a larger entity. That was way off. Selling the company was absolutely, positively the last thing I ever wanted. Ever.

In Herb Greenberg's column on Dow Jones’
MarketWatch
, the oft-quoted
Yale School of Management professor Jeffrey Sonnenfeld opined on the three qualities of returning CEOs who are ultimately successful. First, he said, they come back reluctantly, with no intention of undermining the sitting leader. Second, even though their reputations may be at stake, they aren't trying to fulfill some unmet ego need. And third, according to Sonnenfeld, effective second-time CEOs recognize that what they built the first time was not a religion. They accept that change is inevitable. The column also recalled companies whose former CEOs had triumphed after returning to their posts, such as Steve Jobs of Apple and Charles Schwab, as well as chiefs whose comebacks did not go so well, like Gateway's Ted Waitt and Xerox's Paul Allaire.

Which kind would I be?

That was the overriding question—for all of us.

Aside from perusing a daily summary of news to take the temperature of the marketplace and Wall Street, I didn't spend much time reading the omnipresent coverage that followed Starbucks like lint. Not only do I hate reading about myself, but also there simply was too much for me to do.

In fact, almost immediately, my work habits shifted as my level of discipline heightened. I could no longer be as freewheeling with my daily schedule, especially as I learned just how deep Starbucks’ internal problems went. I began spending quiet time alone early in the morning, either at home or at the office, preparing for the day, something I had not done as chairman or in my previous years as chief executive. Now, after skimming the news before 6 a.m., I'd make calls to our overseas offices, read e-mails from partners—hundreds were streaming in with suggestions and observations about the business—and then sit back to consider what I needed to do that day to be as productive as possible and have the most impact on the business. I asked Nancy to be very discriminating with my schedule, and it helped that I'd shed outside distractions, such as my corporate board positions.

By 7 a.m. for the first two weeks in January, I welcomed one or more senior leaders into my office or the boardroom where, using the three transformational pillars as a guide, we decided the company's most immediate next steps.

One of the first organizational changes I'd made was appointing the equivalent of a chief of staff, someone who would work closely
with me to craft our vision and a more comprehensive, long-term Transformation Agenda. The person I turned to was Michelle Gass, a 12-year Starbucks partner who at the time also happened to be the youngest member of the leadership team. An engineer by training, Michelle is an energetic, hard-charging, creative leader who embraces risk and bold thinking as well as details. In the 1990s, she led the strategy that took Frappuccino from a two-flavor product to a $2 billion brand platform.

I had a lot of confidence in Michelle's analytical thinking and recognized in her a rare duality: an embodiment of the values of our culture and a fierce, quantitative understanding of the world. Plus, she did not shy away from respectfully disagreeing with me.

Prior to announcing Michelle's new role, I'd asked for her input on my first draft of the Transformation Agenda—again, the three pillars—and 24 hours later, she had come to my office with solid suggestions. A few days later, we brought others into the planning process, and for the first time in a long while, Starbucks’ leaders debated, disagreed, and occasionally laughed as we envisioned a future that involved much more than opening new stores.

We had a delicate balance to strike.

A balance between heritage and innovation.

Between meaningful tradition and modern-day relevance.

What elements about Starbucks, we asked ourselves, are ritual and what elements are merely habits? Not everything required overhauling or needed to be discarded. But what, specifically, had to go, such as the movie promotions, and what was core to our soul, like health-care coverage, Bean Stock—our term for the equity in the company that we gave our partners—and ethically supporting our coffee farmers? Before we could challenge the status quo, my colleagues and I had to see it in new ways, reframe our existing ideas, and move beyond self-imposed constraints to imagine new possibilities.

Before we began the tough work of defining Starbucks’ future, we had to spend time just
seeing
.

To help us, I asked Michelle to organize an off-site retreat to flush us out of our familiar spaces and help us freely consider how we had lost our way, and then embark upon fresh thinking. To lead the retreat, Michelle suggested we look for someone outside Starbucks, and she asked me to interview SYPartners, a consultancy that Howard Behar had recommended and that Michelle had already vetted.
“They're different,” Michelle promised as I raised an eyebrow. But, in the spirit of being open to new ideas, I agreed, and a few days later the firm's founders, Susan Schuman and Keith Yamashita, flew to Seattle with their colleague David Glickman.

“Put down your pens. Don't take notes. Just listen,” I instructed after we shook hands. Then I summarized for them the past year at Starbucks, from the leaked memo to my gut instinct that the company had to get back to its core in a way that also embraced change and renewal. “I want to convene a summit not just for our top executives, but also 20 or so people with different histories that can enrich our perspective.” I told them the meeting was about much more than making money or putting bandages on old wounds. We needed to rediscover who we were and imagine who we could be.

The discussion that followed was intriguing, not the PowerPoint presentation or jargon-laced dialogue I'd anticipated. Susan, Keith, and David asked probing, thought-provoking questions, and as they told me stories of various clients—Nike, Gap, Procter & Gamble—they spoke Starbucks’ language, from the word “partner” in their company's name to their philosophy: “See. Believe. Think. Act.”

I was impressed, enough to override my long-held bias. If Starbucks was going to bring in strategic consultants, SYPartners seemed to be the firm for us. My ultimate decision to hire them was greatly influenced by my confidence in Michelle.

“Let's give it a shot,” I conceded, having no idea what to expect given that they had only a few days to organize the retreat.

The iPods were put away, and we sat in chairs around a sea of Beatles’ posters that had been spread out on the floor. The group included members of the leadership team as well as a select group of diverse voices from throughout the company. There were also a few people from outside the company whose ideas I respected.

Another question was posed: “What did John, Paul, George, and Ringo teach us about the art of reinvention?”

Everyone was deep in thought, but playfully so. The meeting had begun on such a sensory note with the music, the effervescent posters, even the writing with pens instead of keyboards, that it immediately transported our minds to a different place, in some cases back in time. Cliff Burrows, a Brit and seven-year partner and our regional president
for Europe, the Middle East, and Asia, had flown in from Amsterdam to be here at my personal request. Tall and lean in a crisp white-collared shirt, Cliff enthusiastically held up a poster of a brick building splashed with a psychedelic painting, his eyes dancing behind rimless glasses. “This building is on Baker Street, only two blocks from my old home in London and near the Starbucks where I would stop on my way to work every morning.”

While it would have been audacious for any of us to compare Starbucks’ cultural impact to that of The Beatles, one thing was clear from comments like Cliff's: Both are icons that play memorable roles in people's lives.

Others piped up with observations about The Beatles’ career.

“The band took risks,” someone said.

“They took us on a journey at a time when the world needed cultural leaders.”

“They didn't compromise.”

“They led with their hearts.”

“The Beatles believed. And if you believe, you can change anything.”

“They kept reinventing themselves, but at the same time they stayed true to their music,” I offered, recalling their 1967 album
Sgt. Pepper's Lonely Hearts Club Band
.

Using The Beatles as a metaphor for an iconic brand was, I thought, brilliant. It swept us into a creative process, providing fresh context for us to examine and speak about ourselves and the company. Most of us were enthused (although I noticed a few who were lost or rolling their eyes at the exercise), and, like Cliff, we got up out of our seats and walked across the posters to pick up our favorites.