Starbucks

The Schultz Legacy on Corporate Leadership

Howard Schultz is stepping down as executive chairman of Starbucks, the coffee company that he made ubiquitous and iconic for what it served customers and how it treated employees. Schultz, who may run for President in 2020, left an enduring legacy of corporate leadership.

Howard Schultz is stepping down as executive chairman of Starbucks, the coffee company that he made ubiquitous and iconic for what it served customers and how it treated employees. Schultz, who may run for President in 2020, left an enduring legacy of corporate leadership.

The decision by Starbucks Executive Chairman Howard Schultz to step down is fueling speculation of a 2020 presidential run. There is no need to speculate on Schultz’ enduring impact on the rules of corporate behavior.

After announcing his decision, Schultz didn’t spare his criticism of President Donald Trump, the “political class” and Democrats. “My concern is for the country,” Schultz said in an interview with CNN Money. “I think we can do much better. I think the political class as a whole has been reckless.”

No one could accuse Schultz of being a timid businessman. He traveled to Italy in 1983, became enamored with Italian espresso bars and launched a US version in Seattle in 1984.

“Starbucks started hosting Facebook promotions in 2009, before most restaurants had even figured out this was a space they needed to be in,” Forbes reported. “While most brands were still experimenting with mobile payments in 2014, Starbucks was generating double-digit transactions from the channel.”

Commercial success put Starbucks on the map, but arguably Schultz earned his iconic status by what he did for his employees and what he viewed as his communities. Schultz often said Starbucks was in the “experience” business, not the “coffee” business.

Under his aegis, Starbucks offered health benefits for employees – and extended those benefits to employee domestic partners 11 years before domestic partnerships were recognized in the United States. Employees can receive reimbursement for earning a college degree online through Arizona State University.

Struck by the challenges facing returning US military veterans, Schultz committed Starbucks to hire them and their spouses. Since making the pledge in 2013, Starbucks says it has hired more than 15,000 veterans and military spouses, exceeding the original commitment of 10,000 hires. Starbucks has renewed the pledge to hire 25,000 veterans and military spouses by 2025. The coffee giant also plans to dedicate more than 100 military/family stores where veterans and military spouses can connect with peers facing similar transitional challenges.

“We strive to bridge the divide between the 1 percent of Americans who have served in the US military and the 99 percent who have not,” says Starbucks on its website.

After a recent incident in Philadelphia when a Starbucks manager called police to remove two black men, Schultz undertook a company-wide effort to provide employees with anti-bias training. The four-hour training affected employees at 8,000 company stores, which were closed for an afternoon. Schultz took a beating on social media and was greeted with skepticism that a single training session could alter deep-seated, often unconscious bias.

Schultz lets criticism roll off his back. When a Starbucks shareholder expressed disappointment at the company’s support for gay marriage, Schultz shot back, "Not every decision is an economic decision."

“As a business leader, my quest has never been just about winning or making money,” Schultz says. “It has also been about building a great, enduring company, which has always meant striking a balance between profit and social conscience." It’s worth noting the value of Starbucks’ shares since the company’s initial public offering in 1992 has risen 21,000 percent.

Schultz seems unlikely to slip out of sight. Americans may see him on the political stump advocating his brand of leadership in a global environment.

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Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling

 

 

The Not-So-Secret to Starbucks Addiction

Starbucks has cultivated a lot of loyal customers who find its coffee shops inviting, the service friendly and the branding subtle. They also appreciate the friction-free ways they can buy their morning cup of joe.

Starbucks has cultivated a lot of loyal customers who find its coffee shops inviting, the service friendly and the branding subtle. They also appreciate the friction-free ways they can buy their morning cup of joe.

I am addicted to Starbucks – and I don’t drink coffee. I’m not alone.

Starbucks does a lot of things right. Clean, inviting coffee shop atmospheres – usually equipped with electric plugs to charge laptops or smartphones. Constantly evolving menus of drinks and snacks (and here and there wine). Friendly baristas who wish you a good day even when you don’t tip.

Some of the smart stuff Starbucks does is subtle. Like coffee cup sleeves that deliver brand messages. The current sleeve touts Starbucks’ commitment to hire veterans and military spouses (“10,000 and counting”) and was designed by the daughter of a Navy SEAL. The previous sleeve contained short testimonials of Starbucks employees enrolled in company-paid online college classes offered by Arizona State University (my daughter is enrolled). The sleeves reflect major corporate commitments that align well with its consumer base.

However, Robbie Kellman Baxter, who wrote The Membership Economy, says the smartest thing Starbucks does is reduce the friction in buying a cup of coffee. The Starbucks loyalty program, she explains, is tied with ease of purchase.

“Unlike punch cards of old, Starbucks cards usually start as gift cards, which the member connects digitally to a personal account from the Starbucks website,” Baxter says. “The member can add money to the card, either electronically or at the register. Why is this important? Because it removes a layer of friction, in that members only need their Starbucks card and not two cards or a card plus cash.”

Starbucks has taken its loyalty program even deeper with an app that allows coffee consumers to pay with their smartphones instead of pulling out a physical card of fumbling with cash. The app also allows consumers in a hurry to place mobile orders, so they can bypass any line or the cash register to retrieve their drink.

An inviting atmosphere, non-intrusive branding and frictionless purchases account for why Starbucks remains so popular. What is hard to fathom is why more consumer-facing companies haven’t emulated some of the Starbucks savvy.

The Shane Company has gotten the message. Instead of repetitious ads that tout buying diamonds in Antwerp, the jewelry company has bedecked its exterior with signs that say, “What are you waiting for?” and “Ask her now.” The jeweler offers a comfortable, non-threatening sales floor. Customers are quickly greeted and hooked up with a sales person. You can get your ring cleaned and checked without a second thought. It invites customer to show off their rings on Shane’s Instagram and Twitter feeds.

Back to Starbucks, loyal customers invariably return, even though serious coffee drinkers think places like Stumptown serve better coffee, because it just feels right. The Starbucks secret to loyalty is not really a secret.

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Gary Conkling is president and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.

Leonard Nimoy, Mr. Spock and Brands

Leonard Nimoy at first resisted being type-cast as Mr. Spock, but he came to realize that he and his iconic role were beloved – and his brand for life.  Photo by Beth Madison, via Wikimedia Commons.

Leonard Nimoy at first resisted being type-cast as Mr. Spock, but he came to realize that he and his iconic role were beloved – and his brand for life. Photo by Beth Madison, via Wikimedia Commons.

The late Leonard Nimoy wrote two memoirs with interlocking titles – "I Am Not Spock" and "I Am Spock." His literary works could be a case study in a marketing communications branding class.

Being type-cast in Hollywood is not always a good thing. Recognizing you are type-cast can be liberating. Nimoy became famous as Mr. Spock, the split-fingered Vulcan sage who could see logic in chaos. The role that catapulted him to fame became his cage, which he first rejected, but ultimately accepted.

The lesson behind Nimoy's transformation is that customers decide your brand, not you.

Rebelling against your "brand" is why many brand extensions often fail – e.g. Colgate TV dinners and Evian's water-filled bra. You are who your customers think you are, not who you think you are. The better known the brand, the more you are, well, type-cast.

When Nimoy came to grips with his situation and accepted his branding, he directed two of the six Star Trek movie take-offs. He lent his voice to a cartoon version of the popular TV series. And he branched out to photography, poetry and music.

Brands can expand if you stay grounded in what the brand is expected to be. Starbucks came up with a home coffee-making machine. Orville Reddenbacher sells ready-to-eat popcorn. Duracell offers a power mat for mobile devices. Nestlé Crunch teamed with the Girl Scouts to produce a cookie candy bar.

Much energy and expense is devoted to "branding." A good place to begin is asking your customers or clients to describe your brand. You may be surprised at what they tell you. If customers are unsure of what you do, you have one kind of branding problem. If they tell you what they like about what you do, you have a golden opportunity to keep doing it.

Values Over Volume

Advertising can be faulted for failing to state a product's value proposition. But ads also can fail to speak to the hearts of consumers about values.

Digital media has created headaches for advertising executives. Content marketing has confounded them. But in some ways, the revolution in technology has released advertising from its own boundaries.

People don't "believe" advertising, so it makes little sense to pound away at your value proposition. Even Wal-Mart has shifted its advertising from a bouncing yellow ball knocking over price tags on its shelves to ads featuring customers "discovering" they can buy what they need at a lower cost than a competitor store. Same message, but very different context.

In a blog post published by ragan.com, Chad Cipoletti argues that sometimes it is better for advertising to sell values than products. He cites the 1988 Nike ad showing 80-year-old Walt Stack on his daily run. As he crosses the Golden Gate Bridge, Stack says, "I run 17 miles every morning. People ask me how I keep my teeth from chattering in the wintertime. I leave them in my locker." 

Catching Up to a Smarter Digital World

Just when you had your keyboard commands down pat, you may no longer need them. The Internet is moving from interfaces to invisible buttons and voices. You may be able to make a computer command literally with the blink of an eye.

Before you toss away your wrist brace to avoid carpal tunnel syndrome, think for a moment what an Internet would be like if it surrounded you rather than just stared back on a computer screen. Your car could detect a potential accident and stop automatically — or even do the driving for you. You could walk into your house and have the heat adjusted and lights turn on. Your could wear Google glasses and have the computer see what you see.

Referred to as the Internet of Things, this new wave of interacting with the digital world is quickly taking hold. Even though Pope Francis was named Time's Man of the Year for 2013, many in the technology sphere are calling 2013 the Year of the Internet of Things.

If you didn't get the memo, you aren't alone. Like many technology trends, this one is well under way before most people notice.