April 14, 2011
Jack Covert Selects: Jack Covert Selects – Onward
Howard Schultz has been with Starbucks for almost thirty years. He left the day-to-day operations in 2000 to become chairman (and yes, it’s a lower case “c”—Starbucks doesn’t capitalize titles), and watched from that perch as the company began to fail. The fall was not caused by a monstrous event, but was a slow unraveling, like a sweater being pulled from a single thread. But, as Schultz tells it, he was helpless to stop the unraveling without daily control of the company, “So in January of 2008, [he] surprised many people by returning as ceo. Onward is the story of what happened next.”
Predictably, this book contains loads of Schultz’s business philosophy and ideas that are refreshingly progressive and humanistic. For example:
As a business leader, my quest has never been just about winning or making money; it has also been about building a great, enduring company, which has always meant trying to strike a balance between profit and social conscience. […] For us, that means doing our best to treat everyone with respect and dignity, from coffee farmers and baristas to customers and neighbors. I understand that striving to achieve profitability without sacrificing humanity sounds lofty. But I refused to abandon that purpose—even when Starbucks and I lost our way.”So, what was that “one thread” that unraveled the core of this highly idealistic and successful business? Stating that “to achieve long-term value for shareholders, a company must … first create value for its employees as well as its customers,” Schultz writes:
Unfortunately, Wall Street does not always see it the same way and too often treats long-term investments as short-term dilution, bringing down the company’s value. Adopting this mentality was, in large part, how Starbucks had become complicit with the Street: for the past two years in particular, we—and I say “we” because no one person led the charge—chased the pace of growth by building stores as fast as we could rather than investing in sustainable growth opportunities. The top line grew fast, but in a way that, for a variety of reasons, was impossible to sustain, especially when combined with the macrofactor of a tightening economy.From these snippets you can get an idea of the high mindedness that almost oozes from this book. I have been accused of being cynical, but I would say I am just a realist. And this is the real story, warts and all, of the fall of an iconic brand that had lost its way and the organization’s attempt to transform itself back into the company that was growing quarter after quarter—and it is told by the man who led the charge. The Howard Schultz and Starbucks journey is remarkable and it is told brilliantly here.