Can a company have a soul?Published on: October 5, 2016
In a recent interview, Starbucks CEO Howard Schultz talked candidly about a period beginning around the end of 2007 when the future of the coffee-chain was on the line. Schultz himself had joined the company in 1982, and subsequently bought out its owners, who had a few popular stores in Seattle and Vancouver, but who had no vision of turning it into national – let alone global – brand. After almost twenty years, during which there seemed to quite literally be a Starbucks everywhere (there still is), Schultz resigned as CEO and bought a basketball team.
In the years that followed, the story gets more interesting. Schultz stayed on nominally as chairman, but by his own admission he wasn’t paying very close attention to what was happening, so to speak, on the shop floor: the undercutting from lower end chains like McDonald’s and Dunkin Donuts, the springing up of artisanal ‘local’ coffee shops, and a string of poor location choices for new branches. Add the financial crisis into the mix, and its knock-on effect on consumer behaviour, and you have a pretty toxic situation for the world’s most ubiquitous coffee brand. It was a company in danger of failing.
As anyone who follows this stuff knows, Shultz sold his basketball team and came back to run Starbucks, deposing journeyman CEO Jim Donald in the process and, eventually, rescuing the business he had pretty much built with his own hands. This process involved the typical rationalizations and cuts, but it was also marked by a return to the fundamentals Schultz fervently believed in: a passion for coffee, customer experience and fair and ethical treatment of its employees. In other words, it might have been a chain but it was never meant to be soulless – the whole point of Starbucks, as he conceived it, was to emulate the local Italian coffee bar – with added full medical coverage for its baristas. It was supposed to be the kind of place that Schultz’s blue-collar father never got to work for.
What is so interesting is that Schultz clearly felt that he alone was the one to make the changes the company needed. Without knowing intuitively what was working and not working, and why everything was the way it was in the first place, it would have been impossible – as he saw it – to fix the situation from the outside. But then this raises a bigger question: are figurehead CEOs like Schultz ever truly able to let go, and to what extent is being a CEO fundamentally about understanding at a very deep level the values of a company? Not just knowing what they are, but feeling them in your bones.
You can of course learn all about managing a return to profitability from books, an MBA degree, or experience with other companies. But is this always enough? How do you learn about the heart and soul of a place? If you accept that most successful companies were founded on a certain set of ideas and principles extraneous to their goods and services, at what level is this stuff of real, material importance for future senior managers? It’s probably easy to dismiss these ideals as quaint or even obsolete. But hugely successful companies like Starbucks tend to ascribe some of that success to their core values and we think that in general it really matters.
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