Onward (32 page)

I recognized, and so did the leadership team, that slimming down the company would be brutal. Absolutely brutal. And even as we did so as compassionately as possible, our actions still seemed unfair.

But the tragedy of doing nothing would have been far worse.

“Why don't you just sell the company?” someone outside Starbucks asked me rhetorically, suggesting that a larger organization could leverage things that we could not, given our size, and stop the bloodletting.

Unbeknownst to most of our partners, as ceo, pressure to dramatically slash costs came at me from all fronts as the chatter in the press and online insisted that Starbucks’ best days were behind us. Investors wanted Starbucks to undo our company-owned and -operated store model and franchise the system, letting other people own and operate our stores and pay Starbucks royalties. On its face, it made economic sense. Franchising would have given us a war chest of cash and significantly increased our return on capital. But if Starbucks ceded ownership of stores to hundreds of individuals, it would be harder for us to maintain the fundamental trust our store partners had in the company,
which, in turn, fueled the trust and connection they established with customers. Franchising worked well for other companies, but would, I believed, create a very different organization by diluting our unique culture.

“How much coffee do you roast?” someone else wanted to know.

“Four hundred million pounds a year.”

“Well, if you reduce the quality just 5 percent, no one would know, and that's a few million dollars right there!” This was seriously suggested as an option. But Starbucks would never sacrifice quality for the sake of saving costs.

Others insisted I cancel our upcoming leadership conference, when we would bring almost 10,000 of our store, district, and regional managers together in one place at great expense, but for, I believed, great purpose. We desperately needed to reconnect with our own people, in person.

At these recommendations and others, I did not blink. Every brand has inherent nuances that, if compromised, will eat away at its equity regardless of short-term returns. As Starbucks navigated, we had to stay true to our values, reinvesting in and recommitting to the things that had brought us success, not quick fixes. We had to believe in our hearts that, if we were authentic and if we were true and stayed the course, this transformation would work.

“If I had a shadow of a doubt—
a shadow of a doubt
,” I told the person who suggested we put Starbucks on the block, “that we would not return the glory of our company, the equity of the brand, the experience in our stores, and the pride of partners, then I would be the first one to say, ‘Let's sell the company.’”

I needed to communicate this same confidence to our people at the open forum following the layoffs, to ask them to stay strong and focused, which was no easy request given the circumstances.

I can see the light, I know what we have to do. We have to show up. We have to do the work. And doing the work means we have to find answers to tough problems. We have to be highly focused on the things that matter and stop wasting time and money on things that are irrelevant.

What matters is that we push for answers for the problems in front of us and are curious about the things we do not see, and look for ways to get better, smarter, more efficient, and push for reinvention and innovation.

This is a true test of the company and a true test of the individuals who are assembled here. The reason we are going to succeed is the same reason we have succeeded in the past. Not the stock price or the press. We succeeded because of what we believe in and what we stand for.

I believe in the future of our company because I believe in all of you.

Not everyone, of course, believed in me, and many people inside and outside the company were questioning my leadership, whether I could get us out of the deepening hole. In fact, during the past 24 hours I'd received a lot of e-mails from the people who were let go, thanking me for the opportunity to be part of Starbucks and thanking the company for dealing with them in a compassionate way. But I also got e-mails from partners who felt betrayed and questioned whether we were honoring our guiding principles. Read one curt note: “To provide an
uplifting
experience that enriches people's lives every day. Do you remember when that used to mean something? I do.”

Given the frustration, it was imperative that I stand in front of our people and give them a chance to vent. Publicly. They were complaining among themselves anyway, but talking to me reinforced, I hoped, the very values people felt I had tarnished. Being transparent is my natural response, but it is also a symbol of the honesty I want everyone inside the company to embrace.

When I opened the forum floor to comments and questions, several people stepped up to the microphones stationed around the room. A few read prepared written comments. Others spoke spontaneously. When Sean Shanahan, a manager in risk management, spoke, his voice was edgy after the day of letting members of his team go. From across the room, he looked me in the eye. “We took part of the hit for you yesterday in having those conversations,” he said. “And I don't want to do that again.” He gathered his thoughts. “I need to know that you hear that. We are not prepared to go through this again. So, we will be looking to you for things that we may have never asked you for before. . . . Are you and the people around you prepared to be held accountable by us?”

“I think you have that right,” I replied. “Thank you for saying that.” Sean was right. Starbucks’ leaders had to be accountable in ways we had not been in the past.

Decisiveness during this time of uncertainty was critical, especially when choosing who would lead Starbucks alongside me, and I continued to refine and realign Starbucks’ leadership team, shifting people's roles, saying a respectful good-bye to others, and welcoming new talent.

The board, specifically Craig Weatherup, was impressing upon me the need to add seasoned executives from outside Starbucks to the management mix, people with rich brand-building and operational track records at larger organizations. I'd always believed that, to move forward, we needed to embrace new perspectives and approaches, and Starbucks had always attracted leaders with skill bases beyond the size and scale of the company.

Our challenge was finding individuals whose accomplishments were matched by their values and an innate sense for Starbucks’ culture. This is a very fragile balance to strike, because the wrong match can pollute the integrity of the company. Political agendas. Managing upward, but not downward. An inability to earn respect or to be a trusted team player. These traits are poison. Yet when it comes to hiring, I have antennae about people's characters, a sixth sense that I often follow even if my choices raise others’ eyebrows. More than once I have promoted internal leaders to positions that would be a stretch from their previous roles because their core skills, determination, and passion for what Starbucks stands for would, I wholeheartedly believed, yield success.

With the company in such dire straits, each leadership decision I made was more critical than ever. If I put or kept the wrong people in the wrong roles, the company would drift further off course.

By the end of July, along with the layoffs, I had made several significant leadership changes, including a few surprises.

I'd found our new chief information officer in Stephen Gillett, a 32-year-old from outside the retail industry. It appeared that Stephen would be the youngest CIO of a Fortune 500 company, which made some question whether he could handle the immense job of overhauling our ancient technological infrastructure. But Stephen brought a rich combination of technical acumen, valuable digital media knowledge, and insatiable curiosity to the table, all of which he'd honed at the digital media company Corbis, as well as at Yahoo! and CNET. I was also impressed by Stephen's dynamic thought process, and I sensed a good heart behind his wide grin.

To oversee our supply chain organization, I appointed Peter Gibbons, our soft-spoken yet tough-minded head of manufacturing who had come to Starbucks in 2007 from a huge chemical company, bringing discipline and pride to his work. Peter recognized, perhaps more than anyone else at Starbucks, just how broken our distribution and logistics systems were, and when I tapped him to be executive vice president of our global supply chain, the area of the business I knew the least about, I had confidence that Peter would act with informed decisiveness and professionalism.

And in September 2008, Vivek Varma joined Starbucks to lead public affairs after 12 years at Microsoft. I'd known Vivek and had asked his counsel on several complex issues that Starbucks had faced on several fronts. I found his perspective informed, confident, straightforward. And while we did not always agree, Vivek approached issues through a strategic and socially conscious lens that I believed would add sophisticated, sensitive guidance when it came to telling our story.

Cliff continued the good but hard work as president of our teetering US business. And after having worked side by side with Michelle Gass to articulate the company's direction with the Transformation Agenda, I needed her back in an operational role. She assumed the position of head of marketing and category, overseeing the teams that lead marketing, creative, beverages, coffee innovation, and food. Paula Boggs, who had come to Starbucks from Dell, remained our knowledgeable and multifaceted executive vice president of law and corporate affairs, and Chet Kuchinad was in charge of partner resources. Arthur Rubinfeld was back at the leadership table as president of global development. Arthur had stepped into the job with conviction and creativity, and in addition to tackling our real estate challenges, his design team was already looking forward, envisioning the future look and feel of Starbucks stores. Beyond these positions on the leadership team, I knew a few more changes remained.

I could not save Starbucks on my own. Being able to do so was never my intention or my belief when I returned as chief. I was no silver bullet and, like any leader, I needed to surround myself with strong talent who would bring new ideas and, with courage, challenge the old as well as challenge me. This meant watching some people leave the organization, which was never easy whether or not it was my decision.