Onward (6 page)

I often think that the best person to have led Starbucks would have been someone who had been inside the company for many years.

As we had done from our early years, Starbucks was doing its best to invest ahead of the growth curve by, for example, building new roasting plants and distribution facilities before they were absolutely necessary to supply our stores. But as we opened more stores, it became almost impossible to effectively keep up the pace of investment. That reality, combined with the deteriorating customer experience I was witnessing in stores and the complaints I was hearing from colleagues, pushed me to act. That was why, in February 2007, as chairman, I sat down at my kitchen table to write a memo to Jim and Starbucks’ leadership team:

Over the past 10 years, in order to achieve the growth, development and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks Experience, and what some might call the commoditization of our brand.

Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces.

It was never my intent to attack or to assign blame. We were all responsible for the problems I saw surfacing and was about to air. Our problems were, in large part, self-induced, and I desperately wanted all of our leaders to feel the level of distress that I felt knowing that Starbucks was under attack, mostly from within.

A well-built brand is the culmination of intangibles that do not directly flow to the revenue or profitability of a company, but contribute to its texture. Forsaking them can take a subtle, collective toll.

I always say that Starbucks is at its best when we are creating enduring relationships and personal connections. It's the essence of our brand, but not simple to achieve. Many layers go into eliciting such an emotional response. Starbucks is intensely personal. Aside from brushing their teeth, what else do so many people do habitually every day? They drink coffee. Same time. Same store. Same beverage. There's a
special relationship millions have developed with our brand, our people, our stores, and our coffee. Preserving that relationship is an honorable but enormous responsibility.

In 2006, as I visited hundreds of Starbucks stores in cities around the world, the entrepreneurial merchant in me sensed something intrinsic to Starbucks’ brand was missing. An aura. A spirit. At first I couldn't put my finger on it. No one thing was sapping the stores of a certain soul. Rather, the unintended consequences resulting from the absence of several things that had distinguished our brand were, I feared, silently deflating it.

In the memo, I spelled out my concerns.

New espresso machines that we had installed in stores, while effectively increasing efficiency, were too tall. This unforeseen barrier prevented customers on one side of the coffee bar from watching baristas on the other side create their beverages. The height also kept baristas from engaging with customers in the same manner that had enchanted me back in Milan. I expressed this concern in the memo:

When we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency. At the same time, we overlooked the fact that we would remove much of the romance and theater that was in play. . . .

Also in stores, the full-bodied, suggestive, rich aroma of freshly ground coffee had become weak to nonexistent, due in large part to how we shipped and stored coffee grounds. Without it, Starbucks lost a way to tell a story that transported customers out of their day to far-flung places like Costa Rica and Africa. Ever since I had been with the company, we had banned smoking and asked partners not to wear perfume or cologne to preserve the coffee aroma. It is perhaps the most sensory aspect of our brand, and it reinforces the core of who we are: purveyors of the world's highest-quality coffees. Again, I articulated this in the memo:

We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma—perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage.

Finally, the stores’ design, so critical to atmosphere, seemed to lack the warm, cozy feeling of a neighborhood gathering place. Some people called our interior spaces cookie-cutter or sterile:

Clearly we have had to streamline store design to gain efficiencies of scale . . . [but] one of the results has been stores that no longer have the soul of the past. . . .

Without these sensory triggers, something about visiting a Starbucks vanished. The unique sights, smells, and charms that Starbucks introduced into the marketplace define our brand. If coffee and people are our core, the overall experience is our soul.

“We desperately need to . . . get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience,” I wrote, adding that competitors of all kinds were breathing down our necks.

I could not allow us, or myself, to drift into a sea of mediocrity after so many years of hard work. I just could not do it. The time had come to speak up, from the heart:

I have said for 20 years that our success is not an entitlement and now it's proving to be a reality. . . . Let's get back to the core. Push for innovation and do the things necessary to once again differentiate Starbucks from all others. We have an enormous responsibility to both the people who have come before us. . . . our partners and their families who are relying on our stewardship.

I titled the e-mail “The Commoditization of the Starbucks Experience.”

On Valentine's Day 2007, my longtime assistant, Nancy Kent, typed up my handwritten thoughts and, after I made a few changes, e-mailed it to Jim and his team. I hoped my impassioned plea would unleash an honest, provocative conversation, prompting us to look in the mirror and get back to our core.

Instead, the memo unleashed a public furor.

I was sitting at my desk on Friday, February 23, when a colleague stepped into my office and looked at me incredulously. “Someone leaked the memo.” My jaw dropped. My forehead crinkled in confusion.

“What?” I was not sure I had heard correctly.

“It's on the Internet.”

I swirled my chair around to face the three computer screens that streamed world news, market data, and e-mails to my desk throughout the day. A quick Google search and there it was: “The Commoditization of the Starbucks Experience” on a gossip website, for anyone to see. Investors. Competitors. Journalists. Starbucks’ partners. Staring at the screen, I was speechless. Not because my criticisms were now public. What upset me, what felt like a blow to my gut, was
the leak.
I could not imagine who would do such a thing.

It was nothing less than a betrayal.

In my life I place enormous value on loyalty and trust. It is intrinsic to my personal relationships and to the integrity of our company's culture, essential to how we conduct business with one another and with our customers. And while Starbucks is not perfect, nor am I, and people may disagree with some of our choices, we make it our business to uphold that trust, and we make amends if we fail.

Unlike other brands, Starbucks was not built through marketing and traditional advertising. We succeed by creating an experience that comes to life, in large part, because of how we treat our people, how we treat our farmers, our customers, and how we give back to communities. Inside the company, there had always been an unspoken level of trust that, for more than two decades, had allowed us to empower partners and to communicate openly, always assuming that the information would be used to benefit the company.

Disloyalty was not part of our moral fabric. So for me to sit in my own office and discover that someone close to me, someone inside Starbucks, had acted with such blatant, premeditated disregard for me, Jim, and the rest of the leadership team was a tremendous disappointment. It took me a while to digest it.

But I had no choice. The deed was done.

News of the memo had already spread, and phones on our media hotline were lighting up with calls from reporters. Was the memo real?
Yes.
Can we interview Howard?
No.
I could not do a single interview. It would have been too emotional. Instead, I helped Valerie O'Neil, then our director of corporate and issues management, craft a statement that accurately expressed my thoughts:

The memo is legitimate. It is a reflection of the passion and commitment Starbucks has to maintaining the authenticity of the Starbucks Experience while we continue to grow. We believe that success is not an entitlement and that it has to be earned every day. We do not embrace
the status quo and constantly push for reinvention. This is a consistent, long-standing business philosophy to ensure we provide our customers the uplifting experience they have come to expect.

We released the statement.

At one point amid the chaos, a welcome face unexpectedly appeared at my office door. Wanda Herndon is a straight-talking, fun-loving, wise woman who headed Starbucks’ global communications from 1995 until 2006, when she left us to launch her own consulting firm, W Communications. As many ex-partners do, Wanda often returned to visit. She and I had our own rich history of honest conversations, and when she popped in to say hello I was relieved to see her. I asked her to close the door. “Did you hear about the memo?” I said, still emanating disbelief. Wanda said yes, she knew about it, and as she sat down in front of my desk, I shook my head and spoke about how hurt I was about the breach of trust.

“Howard,” she said in the matter-of-fact tone I'd come to expect, and appreciate. “Nothing is confidential. This is the new reality.”

It was not the first time Wanda had spoken these words to me. In the past she had even suggested I refrain from putting certain thoughts in writing. Yet Wanda also understood two things about me. First, that it is my nature to speak from the heart, usually unedited. Second, that I conduct my life with an expectation that people will do the right thing. Yet even with all my experience, I am still surprised when they do not.

“This too shall pass,” Wanda told me. “Just hang in there.”

She was a calming influence that day and helped me put the situation in perspective. With time, my hunger to find the person who leaked the memo—and fire him or her—faded as the source of the breach paled in comparison to its consequences, inside and outside Starbucks. Moving forward became more important than laying blame.