Achievements
Howard Schultz turned a small local company into a rapidly growing global empire… with soul. He has built the company in which people are respected. Starbucks became the first privately-owned company to offer employees stock options. Under Schultz’s direction it experienced astronomical expansion during the '90s, going public in 1992 and growing at a rate of 25 to 30 percent a year. During the new corporation's first year, expansion amounted to 15 additional stores; by 1992 there were nearly 150 Starbucks locations. Howard Schultz was honoured with several awards among which is Botwinick Prize in Business Ethics, Columbia Business School, 2000.
Career Highlights
Howard Schultz grew up in the Carnisie housing projects of Brooklyn. Looking for a way to stand out and be successful, he turned to sports and gained a football scholarship to Northern Michigan University in 1971. He didn't discover his fore-most talent until he took a sales position with the Xerox Corporation. Schultz flourished in competitive environments and rose quickly when he joined the housewares company Hammarplast in 1979.
As a Hammarplast general manager he traveled to Seattle in 1981 to investigate a small coffee company Starbucks that was ordering an extraordinary number of specially shaped coffee filters. He fell in love with this business and was delighted with the care the Starbucks owners put into choosing and roasting the beans. He was making a successful career in big corporation, but he left everything and followed his dream. It took Schultz a year to convince the Starbucks owners to hire him. When they finally made him director of marketing and operations in 1982, Schultz went to Italy where he took note of the coffee bars that existed on practically every block. He learned that they not only served excellent espresso, they also served as meeting places or public squares; they were a big part of Italy's societal glue, and there were 200,000 of them in the country. But back in Seattle, the Starbucks owners resisted Schultz's plans to serve coffee in the stores, saying they did not want to get into the restaurant business. Frustrated, Schultz quit and started his own coffee-bar business called Il Giornale.
His first investors were Starbucks’s owners that gave him $150 000. But to realize his dream he needed $400 000 for start-up and $1.25 million for opening next 8 espresso-bars. During one year he talked to 242 potential investors and 217 of them said “no”. They didn’t believe that his project could have commercial success. It was the hardest time for him but he didn’t stop. And after all his passion and faith helped him to find private investors that believed in his idea and gave him enough money. Il Giornale was successful, and a year later Schultz bought Starbucks for $3.8 million.
Starbucks experienced astronomical expansion during the '90s, going public in 1992 and growing at a rate of 25 percent to 30 percent a year. During the new corporation's first year, expansion amounted to 15 additional stores; by 1992 there were nearly 150 Starbucks locations. A markedly growing mail-order business paved the way for the Starbucks brand in many other areas outside of the Pacific Northwest, such that the only advertising the company needed was word of mouth. Now the company has stores in 37 countries.
Leadership Experience
Howard Schultz wanted to build “a company with the soul”, a company that his father never got a chance to work for, in which people were respected. He applied a series of practices that were unprecedented in retail. He insisted that all employees working at least 20 hours a week get comprehensive health coverage - including coverage for unmarried spouses. And now Starbucks spends more on health care than it does on coffee. Then he introduced an employee stock-option plan. These moves boosted loyalty and led to extremely low worker turnover. And when you pay $4 for coffee, you're funding Schultz's social agenda — the health care, stock options for employees and more. He even pays farmers higher than market rate for beans.
Howard Schultz is visiting about 25 stores a week and he is looking for people doing things right. That's an important point. Not looking for people doing things wrong. He is sure that it is necessary to win back customers' loyalty every day and that success is based on their continued trust in company’s people and environment over long periods of time. “I think one of the underlying values of Starbucks for the last 20-25 years has been that everything we do relates to the fact that we're — the only reason we are in business is because of the quality of people that we're able to attract and retain, coupled with the quality of coffee that we can buy and roast. If we don't do those two things well, we are finished. We have no secret sauce, we have no patent, we have no technology, those are the only two pieces of the puzzle that can differentiate Starbucks” says Schultz.
“I think there were many moments when people said, not to me directly, but I remember hearing things that, 'Don't aim too high.' Not my parents, but people. 'You're from Brooklyn, you're from the projects. Don't aim too high.' “said Schultz. “I can’t give you any secret recipe for success, any foolproof plan for making it in the world of business. But my own experience suggests that it is possible to start from nothing and achieve even beyond your dreams.”
Background Links
Howard Schultz, Dori Jones Yang, Pour Your Heart into It : How Starbucks Built a Company One Cup at a Time, 1997
