{"id":124987,"date":"2024-08-06T09:02:38","date_gmt":"2024-08-06T13:02:38","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=124987"},"modified":"2024-08-14T09:16:03","modified_gmt":"2024-08-14T13:16:03","slug":"howard-schultz-leadership","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/howard-schultz-leadership\/","title":{"rendered":"How Howard Schultz&#8217;s Leadership Style Saved Starbucks"},"content":{"rendered":"\n<p>What is Howard Schultz like as a leader? How did Schultz help Starbucks out of a rut?<\/p>\n\n\n\n<p>In 2008, Howard Schultz made his official return to Starbucks. In his first few months as CEO, he used two strategies to project a reassuring image to both internal and external stakeholders: strong communication and timely action.<\/p>\n\n\n\n<p>Let&#8217;s look at these two elements of Howard Schultz&#8217;s leadership style.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-strong-communication\">Strong Communication<\/h2>\n\n\n\n<p>Howard Schultz&#8217;s leadership style is best represented by his triumph return to Starbucks. Schultz says that when he considered how to announce his return as CEO, he knew it would be important to communicate a reassuring message. He wanted stakeholders to understand that he was devoted to improving the company\u2019s health and that they could trust him to accomplish that. If they didn\u2019t trust him, employees might perform poorly at work, customers might lose interest in the company\u2019s products, and investors might pull out and decrease the company\u2019s value.<\/p>\n\n\n\n<p>(Shortform note: In <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The Speed of Trust<\/em><\/a><em>, <\/em>leadership consultant Stephen M.R. Covey explains why trust is so instrumental to a company\u2019s health. Covey says that in business contexts, <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#trust-and-effort\" target=\"_blank\" rel=\"noreferrer noopener\">trust magnifies the results of your efforts<\/a>\u2014which means you don\u2019t have to work as hard to accomplish your goals. To illustrate, if Schultz had failed to gain customers\u2019 trust when he became CEO, he would have had to put more time, effort, and money into getting them to buy Starbucks coffee. To prove the value of instilling trust in your leadership, Covey points to data showing that companies in which employees trust one another <a href=\"https:\/\/www.iise.org\/details.aspx?id=36235\" target=\"_blank\" rel=\"noreferrer noopener\">outperform companies with low levels of trust<\/a> by significant margins.)<\/p>\n\n\n\n<p><strong>To project a reassuring image, Schultz strove to communicate transparently<\/strong> about his resumption of the CEO role. In both internal and external messages, he accepted responsibility for the company\u2019s current failures and stated his intention to correct Starbucks\u2019 course. He shared three turnaround strategies in every message: overhauling the company\u2019s management, improving its financial standing, and enhancing its coffeehouse experience. (We\u2019ll discuss each of these in more detail later in the guide.)<\/p>\n\n\n\n<p>(Shortform note: Covey\u2019s description of trust-building practices in <em>The Speed of Trust <\/em>explains how transparent communication helped Schultz reassure stakeholders. Covey says you can earn trust by demonstrating <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#rule-1-be-authentic\" target=\"_blank\" rel=\"noreferrer noopener\">authenticity<\/a> and <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#rule-2-treat-people-well\" target=\"_blank\" rel=\"noreferrer noopener\">humility<\/a> and by <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#rule-4-be-explicit\" target=\"_blank\" rel=\"noreferrer noopener\">clarifying what others can expect from you<\/a>. Schultz demonstrated authenticity by speaking frankly about an uncomfortable situation (Starbucks\u2019 poor performance), and he demonstrated humility by <a href=\"https:\/\/www.shortform.com\/blog\/accepting-responsibility\/\">taking responsibility<\/a> for Starbucks\u2019 mistakes. In communicating his three turnaround strategies, Schultz also clarified what others could expect from him, setting himself up to be accountable for Starbucks\u2019 future.)<\/p>\n\n\n\n<p>Schultz also quickly opened up communication with in-store employees to gain clearer insight into the problems and successes they were experiencing. He invited them to email him directly and made it a priority to respond to their emails, often with a phone call. He also began holding quarterly Partner Open Forums where leadership and employees could openly discuss any relevant issues they wanted. Finally, he started sending regular emails to all Starbucks employees, giving them insight into his ideas for the direction Starbucks would take going forward.<\/p>\n\n\n\n<p>(Shortform note: Opening up communication with employees helped Schultz gain their trust <em>and <\/em>improved their engagement. As Jack Canfield explains in <a href=\"https:\/\/shortform.com\/app\/book\/the-success-principles\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The Success Principles<\/em><\/a>, <a href=\"https:\/\/www.shortform.com\/blog\/how-to-encourage-employees\/\">encouraging employees<\/a> to give feedback <a href=\"https:\/\/shortform.com\/app\/book\/the-success-principles\/principle-43#skill-2-learn-from-listening\" target=\"_blank\" rel=\"noreferrer noopener\">proves that you value them<\/a> and allows them to actively participate in improving their workplaces. Similarly, in <a href=\"https:\/\/shortform.com\/app\/book\/no-rules-rules\" target=\"_blank\" rel=\"noreferrer noopener\"><em>No Rules Rules<\/em><\/a>, Netflix CEO Reed Hastings says that <a href=\"https:\/\/shortform.com\/app\/book\/no-rules-rules\/part-3\" target=\"_blank\" rel=\"noreferrer noopener\">organizational transparency<\/a>\u2014achieved by clear, open internal communication\u2014increases employees\u2019 <a href=\"https:\/\/www.shortform.com\/blog\/the-endowment-effect\/\">sense of ownership<\/a> and responsibility for the company, which inspires them to put more effort into their work and help the company succeed.)<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-timely-action\">Timely Action<\/h2>\n\n\n\n<p>Schultz\u2019s other strategy for reassuring stakeholders of his leadership acumen was to <strong>begin implementing changes right away<\/strong>. With the help of his support staff and a consulting company, he immediately started thinking of specific strategies that would help Starbucks turn its performance around and making changes that aligned with the turnaround strategies we highlighted earlier. Schultz and his team also organized a conference to inspire Starbucks executives to think critically about what made Starbucks uniquely valuable and culturally important.<\/p>\n\n\n\n<p>(Shortform note: How did taking timely action help reassure stakeholders? One explanation could be that it demonstrated Schultz\u2019s competency. In <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#rule-3-be-competent\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The Speed of Trust<\/em><\/a><em>, <\/em>Covey explains that people are more likely to trust you if they <a href=\"https:\/\/www.shortform.com\/blog\/believe-in-your-abilities\/\">believe in your abilities<\/a>; the best way to earn that trust is by <a href=\"https:\/\/shortform.com\/app\/book\/the-speed-of-trust\/1-page-summary#rule-3-be-competent\" target=\"_blank\" rel=\"noreferrer noopener\">delivering the results you\u2019ve promised<\/a>. By delivering results expeditiously, Schultz gave stakeholders proof that they could put their faith in him. This may also explain why one of Schultz\u2019s first moves as CEO was to organize a conference for executives: It was important for <em>all <\/em>of Starbucks\u2019 leaders to demonstrate their competence\u2014or become more competent, if necessary, by <a href=\"https:\/\/shortform.com\/app\/book\/the-four-obsessions-of-an-extraordinary-executive\/1-page-summary#the-second-step-defining-organizational-values\" target=\"_blank\" rel=\"noreferrer noopener\">reinforcing their understanding of core company values<\/a>.)<\/p>\n\n\n\n<p>To prove to stakeholders that monumental changes were underway, Schultz made a bold decision: He tackled one of Starbucks\u2019 most pressing issues\u2014employee underperformance\u2014by <strong>closing every US store for an afternoon to retrain employees<\/strong> on how to make a proper espresso drink. (Shortform note: Starbucks <a href=\"https:\/\/www.shrm.org\/executive-network\/insights\/people-strategy\/case-study-crisis-affirmation-character\" target=\"_blank\" rel=\"noreferrer noopener\">reused this strategy following a 2018 racial bias incident<\/a> that occurred when a store manager had two Black men arrested for asking to use the bathroom. Video of the arrest went viral and resulted in widespread scrutiny, which prompted the company to close all US stores so employees could undergo <a href=\"https:\/\/www.usatoday.com\/story\/money\/2018\/05\/23\/starbucks-racial-bias-training-hip-hop-common-ipads\/638335002\/\" target=\"_blank\" rel=\"noreferrer noopener\">racial bias training<\/a>.)<\/p>\n\n\n\n<p>Schultz explains that customers were complaining Starbucks baristas were uninspired and poorly trained. Espresso drinks are finicky (even pouring speed affects their flavor), so it was integral for every employee to know the right technique and understand the importance of <a href=\"https:\/\/www.shortform.com\/blog\/what-is-great-customer-service\/\">good customer service<\/a> for Starbucks\u2019 survival. The company lost money on this training, but Schultz felt it was worthwhile because it would restore customers\u2019 trust and reassure investors that things were looking up.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Schultz Balanced Extreme Actions With <a href=\"https:\/\/www.shortform.com\/blog\/clear-thinking\/\">Clear Thinking<\/a><\/strong><br><br>Schultz explains that it was risky to close all Starbucks stores for retraining, but he believed the move would pay off by improving stakeholders\u2019 faith in Starbucks. Let\u2019s explore how Schultz balanced two seemingly contradictory leadership maxims\u2014extreme action and clear thinking\u2014as he made this decision.<br><br>In <a href=\"https:\/\/shortform.com\/app\/book\/the-10x-rule\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The 10X Rule<\/em><\/a>, entrepreneur Grant Cardone explains that taking \u201c<a href=\"https:\/\/shortform.com\/app\/book\/the-10x-rule\/chapter-7#4-taking-extreme-action\" target=\"_blank\" rel=\"noreferrer noopener\">extreme action<\/a>\u201d means taking unreasonable steps toward your goal\u2014steps few others would consider taking. Cardone believes that taking extreme action guarantees success because if you only take average action, or if you refuse to act or wait too long, you lose out on valuable opportunities to improve your situation.\u00a0<br><br>However, in <a href=\"https:\/\/shortform.com\/app\/book\/the-art-of-thinking-clearly\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The Art of Thinking Clearly<\/em><\/a><em>, <\/em>entrepreneur Rolf Dobelli argues that it\u2019s easy for decision-makers to fall victim to the logical fallacy known as <a href=\"https:\/\/shortform.com\/app\/book\/the-art-of-thinking-clearly\/chapter-5#action-bias\" target=\"_blank\" rel=\"noreferrer noopener\"><em>action bias<\/em><\/a>\u2014the human tendency to act too quickly for fear of a missed opportunity. According to this perspective, it\u2019s better to pause before you act and consider your options carefully, lest you make a rash decision with poor outcomes.<br><br>Although Schultz\u2019s choice to close all stores for retraining was extreme and carried out quickly, it wasn\u2019t rushed or poorly informed. He balanced his tendency to act quickly with clear forethought and rationality, basing his decision on data (like customer complaints) and strategy (his understanding of the relationship between customer satisfaction and corporate success). Achieving this balance helped Schultz determine the proper course of action.<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>What is Howard Schultz like as a leader? How did Schultz help Starbucks out of a rut? In 2008, Howard Schultz made his official return to Starbucks. In his first few months as CEO, he used two strategies to project a reassuring image to both internal and external stakeholders: strong communication and timely action. Let&#8217;s look at these two elements of Howard Schultz&#8217;s leadership style.<\/p>\n","protected":false},"author":14,"featured_media":128493,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,14,33],"tags":[1510],"class_list":["post-124987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-management","category-people","tag-onward","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Howard Schultz&#039;s Leadership Style Saved Starbucks - Shortform Books<\/title>\n<meta name=\"description\" content=\"Starbucks was in a crisis before former CEO Howard Schultz stepped back in. Take a look at two of Howard Schultz&#039;s leadership strategies.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/howard-schultz-leadership\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Howard Schultz&#039;s Leadership Style Saved Starbucks\" \/>\n<meta property=\"og:description\" content=\"Starbucks was in a crisis before former CEO Howard Schultz stepped back in. 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