Howard Schultz is the CEO at Starbucks, the coffee
company. Global coffee company everybody
knows it. Actually I have
Starbucks right here that I have been
drinking. He is running this global
conglomerate and he wrote this book
called Onward. He had stepped away from
being Starbucks CEO for a number of
years and he decided that he had to come
back to reboot the company. Because while
he was away some issues happened with the
company and he realized it wasn't really
towards the company's mission. And this
book Onword is all about his mindset
and what happened when he came back to
Starbucks after not being the CEO for
for all that time. So these are three
rules from Howard Schultz's Onward. Let's
jump into it!
Rule number one is product quality is the
most important thing. As Starbucks
scaled the customer experience started
to break down. They invested in some new
coffee machines that had blocked the
ability for baristas to make eye contact.
They had started stocking their stores
with a bunch of random stuff.
Instead of just music they started
selling stuffed animals and all this
stuff that had nothing to do with coffee.
The taste of the coffee had gotten
burned because the baristas really didn't
know how to make a proper espresso or
they've been steaming the milk the wrong
way. All these random breakdowns had
been happening while Howard Schultz
wasn't the CEO and he realized that
product quality is the most important
thing. So he implemented a few things. Three
things. To start he invested in new coffee
machine that were lower in terms of the
eye level so that people could really
experience it.
He closed all of his stores for a day to
retrain all the baristas how to make
espresso. And then the other thing that
was wrong was he had been selling
sandwiches in the store, but the cheese
on the sandwiches would melt and it would
make the whole store smell like cheese
instead of coffee. So he removed the
sandwiches because of the cheese smell. So
his first act as CEO is to reboot.
To get the company back and if you're
looking at your own company do this thought
exercise. Try to look at your company as
an outside observer. If you were a
customer and you were treated the same
way that your customers are being
treated would you continue to buy from
yourself? And if not what needs to be
changed there? Is your product quality as
high as it could be? Are your services as
good as you say they are? Or as your sales team is saying.
If not, it's time to improve. Rule number
two is make cuts no matter if they hurt.
No company is immune from the impact of
the recession not even the one time
darling of Wall Street Starbucks.
Same-store sales in this country had
dropped nine percent since the end of
September and Starbucks is finding that
getting back to its venti sized profits
could be a tall order.
So after he improve the product quality he
knew that he needed to make cuts. So one
of the things that the CEO that was in
charge before him did was try to expand
Starbucks as big as it possibly could
get. The end of the universe happens to
be in the United States, I've seen it. And
oddly enough it's in Houston Texas. I
know, I know I was shocked too.
I left the comedy club there and walked
down the street. On one corner there was
a Starbucks and across the street from
that Starbucks in the exact same
building as that Starbucks was a
Starbucks. And that was the kind of thing
that Howard Schultz knew wasn't
sustainable. So he had to close all these
stores. Especially around 2008 when the
recession hit people started losing
their jobs. People couldn't afford a
five-dollar coffee anymore and Starbucks
became more of a luxury. So he closed
stores all around the world during the
2008 recession and one of the things he
writes about in this book is as he was
closing these stores people in the
stores, customers and the baristas would
send him messages and beg him, literally
beg him, not to close the stores because
it's part of their habits or whatever and
he still had to do it. Because he said
that every individual in the company is
not important as the business as a whole.
He would rather a few people have
to switch up their routines and go to a
Starbucks that's .2 miles away
instead of .1 miles away
from their house then have the entire
business at risk of failing and that's
how he weathered 2008. That's how they
got through the economic recession.
Rule number three is give your employees
power to change. Similar to rule number
one and after that great recession
happened he realized that his employees
had a lot more knowledge about what was
going on with the customers then he did
as CEO in the office, really than any of
the higher-ups in the office. So what he
started doing is implementing a lean
process. Lean if you don't know is
basically this process that started with
manufacturers where employees are
empowered to make small improvements
that will make their job more efficient
without having to get approval from the
higher ups. So he let his employees
identify problems for broken process.
Whether that included moving around
instructions for their coffee drinks,
maybe rewriting the instructions to make
them more
efficient, moving trash cans to different
parts of the store so that they could
more efficiently throw things away,
redoing the way that clean stores and
he let each manager in each Starbucks have
free reign within the
limits of the franchise, of the
brand. He let them have free reign to
solve these problems and he would take
those solutions and implement them on a
corporate scale. The best solutions
became corporate policy and that led
directly to the Starbucks you see
today with all of the new redesignes and the
fact that it doesn't smell like cheese
sandwiches and the fact that it runs very
efficiently. So implementing a lean
process really worked for him. I did a
video a while ago where I interviewed this
guy Étienne Garbugli
who wrote this book Lean B2B
which is worth checking out if you want
to implement a similar system for your
own company.
So those are the three rules from Howard
Schultz. How did you like
them? Which one of those do you see
being most relevant for your business? If
you want to let me know in the
comments I'd really appreciate, always
enjoy the feedback. Give this video a
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I'm Alex Berman. Thanks!
