Putting People First Starbucks CEO Howard Schultz steps down, but this isn’t goodbye
The man behind one of the largest brands in the world will be taking a step out of the spotlight this April. However, longtime CEO and Chairman Howard Schultz’s illustrious career with the coffee giant isn’t coming to an end entirely.
The mantel of power is poised to shift to veteran board member, COO and acting president, Kevin Johnson, while Schultz is expected to remain on the board. On March 1, the big transition will take effect.
If you recall, this isn’t the first time Schultz has left the green siren. The man, that’s often credited for establishing the framework for success that’s followed the brand since initially joining as director of operations and marketing in 1982, has thrived throughout a tumultuous journey. Bringing the brand from hometown favorite to a globally traded company is no small feat.
So what makes Schultz’s exit such a big deal? Back in the year 2000, when Schultz stepped away from a 13 year tenure as CEO, the company entered a downward spiral. While he maintained the role of chairman to focus on global expansion efforts, the ball was effectively out of his court. As the company continued to grow over the next half-decade, it did so too quickly, with little foresight. Stocks dropped 42 percent by 2007 and America embarked on the Great Recession. With an additional 4,000 locations having been added in this brief absence, turmoil set in.
Noting the failure of his successors, Schultz saw the time fit for his return in 2009. With a company left devastated, picking back up the pieces was no easy feat – yet Schultz persevered by undertaking one of the business world’s largest and inspiring turnarounds as the dust of the economy’s crash began to settle.
When the numbers seemed to be all that mattered, Schultz doubled down and invested in something else – the people. With the rapid expansion that occurred, the brand experienced a significant decline in quality. Employees were hastily trained and this was echoed by the dissatisfaction of its customers. In a seemingly ludicrous plan to glue the pieces back together, Schultz ceased operations at nearly 600 locations to retrain its employees. With a newfound grasp on quality and an emphasis on customer service, things began to change. Coupled with the introduction of the now infamous Starbucks Rewards program, the company was back on its feet, reaching a then all-time-high in stock value in 2011, all because of the triumphant return of the beloved CEO.
So this naturally leads us to ask, why does he keep coming back? Essentially, Starbucks is his baby.
“Over the past two decades, I have grown to know Starbucks first as a customer, then as a director on the board and, for the past two years, as a member of the management team,” remarked Schultz in the company’s official announcement of the transition. “Through that journey, I fell in love with Starbucks…”
Schultz views business practices through the lens of humanity, not just profits. He not only placed a stake in the company, but its people – something that the brand maintains to this day. This strategy played a pivotal role in revitalizing the brand, and has since led to the fruition of other great brands that emulate a dedication to people. Starbucks recognizes the work of its employees on every level, offering stock options to all, acknowledging them as “partners.” It’s these intricacies toward acknowledging the importance of a team and a community above profits, that’s cemented Schultz’s legacy as a visionary in 20th century commerce.
So what now? Should we fear the worse? Poignantly so, things will change. There are big shoes to be filled. Yet, Schultz is adamant that this time, history won’t repeat itself.
“As I shift my focus to this next wave of retail innovation, I am sincerely pleased that Johnson, our current president, COO, a seven-year board member and my partner in running every facet of Starbucks business day-to-day over the last two years, will be assuming the duties of Starbucks chief executive officer in April 2017,” explained Schultz in an interview from Starbuck’s online Newsroom. “This move ideally positions Starbucks to continue to profitably grow our core business around the world.”
While his tenure as CEO ends, Schultz promises to be more attentive as a board member. By having a more active focus this time around, Schultz plans to learn from his mistakes of negligence and retain a better handle on his responsibility to halt operations and business practices that may be detrimental to the future of the brand.
Schultz is adamant that his next successor will be the right one. Having extended the offer to Johnson personally, he’s never been more excited about where the brand is headed next.
“Kevin brings to the CEO role an unparalleled understanding of the market dynamics and strategic choices that have driven Starbucks to become one of the world’s most recognized and respected companies and brand,” said Schultz. “We share a passion for customer-focused innovation and a commitment to preserving Starbucks’ heritage. Our complementary backgrounds – my entrepreneurial journey building Starbucks and Kevin’s decades spent scaling global businesses — will continue to help Starbucks navigate this new period of worldwide growth and innovation.”
The future remains bright, and Starbucks looks to continue its tradition of innovation with a promise for additional premium locations. As change comes, one thing remains true, Schultz’s legacy and traditions toward putting people first will remain at the heart of this organization.
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