Changing Starbucks: Schultz Second Act for Success
Starbucks has had its chance at being one of the most popular and recognized coffee brands in the world thanks in part to Howard Schultz. In the past few years, Schultz has been a Chairman at Starbucks and let another person take the CEO reigns. With no suprise, Schultz has returned as the CEO and his goal is simple: “[transform] coffee from a commodity into a social experience.” Now is the perfect time, as its stock, NASDAQ:SBUX, once brewed at $40 and now is a sour $17 and yearly earnings are meager.
Is it time to buy SBUX stock? Not yet. The US is in a recession and people, more specifically the younger wealthier generation of customers that they target, are spending less on luxury goods. Eventually, I know SBUX will regenerate its growth and appeal due to Howard Schultz’s style and taste for success.
Looking at Mr. Schultz’s day in a Fortune Magazine interview, he “gets up between 5 and 5:30, and naturally the first thing [he does] is make some coffee … At work the first thing I do is read the flash report, which is our roadmap of what we do that day. We manage day-to-day in our business. I’m proud that we are so nimble — we have great information flow to make that happen.” Starbuck’s flash report is very similar to the JP Morgan Secret to Success story, I posted about earlier. It doesn’t surprise me that knowing what you need to get done and executing it leads to success. I would bet that Schultz has a list of things he wants SBUX to accomplish in the near future and eventually long term. This allows himself and his colleagues to prioritize, organize, and execute.
Another positive trait trait for success that Mr. Schultz displays is the ability to change and adaptability to new trends. Starbuck’s wants each cafè to have a local feel and community design, hence the social experience. According to the Wall Street Journal, an employee from Long Beach, CA complained that he could produce better artwork than what was being displayed at the local Starbucks. Schultz response was to “put his own pictures up … Don’t ask for permission; ask for forgiveness.” This mentality of execution without the hand holding of upper management will allow Starbuck’s to create a local community of art, coffee, and social gathering. The particular quote of “Don’t ask for permission; ask for forgivenes” is powerful in the sense that to be successful, sometimes you need to delegate work and trust your employees. This is true for any startup; if you insist on doing everything and double checking your friends/employees/partners work then you will be too slow to take on new trends in your industry.
Schultz has the right idea to turn Starbucks around and has the proper lifestyle for success. He was quoted for saying that “he was just depressed … and [in turn] launched a personal turnaround routine, consisting of what are now six gym workouts a week and a daily health shake of fruit and cottage cheese.” Healthy lifestyle, wakes up early, makes his list of things to do; sounds like the makings of a successful person and a changing company.
References:
http://online.wsj.com/article/SB121115607637802259.html?mod=hps_us_pageone
http://money.cnn.com/popups/2006/fortune/how_i_work/frameset.exclude.html
