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Ahhhhh, That First Cup of Coffee
September | 2012


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Courageous Leadership

Ahhhhh, That First Cup of Coffee

It's become a national obsession. That first cup of Starbucks. Whether you like it as a macchiato, latte, or misto, decaf or regular, that bold taste of coffee and the community of fellow drinkers is what keeps the lines at Starbucks out the door.

It was 1981 when Howard Schultz, then a general manager for a Swedish drip coffee maker manufacturer named Hammarplast made a trip from New York to Seattle to see why a start up coffee shop company called Starbucks was buying so many of his coffee makers. When he got to Seattle and visited the store he was taken by the great smell of their coffee but even more so by the care they showed in the management of coffee bean roasting and customer service. This was a way to experience coffee and not just drink it. The name, he found out, was taken from the novel Moby Dick and is the name of the chief mate on Captain Ahab's ship, the Pequod who loved to drink coffee.

After convincing the Starbucks owners to hire him as Director of Marketing, he made a trip to Italy where he noted that the coffee bars seemingly located on every corner served as gathering places where people sat and savored their drinks and friendships. And he had a business epiphany when he realized that there were 200,000 of them across Italy. Schultz came home and decided to start his own coffee shop when the Starbucks owners failed to embrace his ideas about adding espresso beverages. His idea was a major success and after a few years the Starbucks owners decided to sell their stores and concepts to Schultz and his investors for $3.8 million.

Howard Schultz grew Starbucks globally and while his goal was always to serve a great cup of coffee, he wanted to make sure that his corporate culture had a soul. His people strategy included health insurance for any employee working more than 20 hours, employee stock option plans and a friendly welcoming environment, all of which led to low employee turnover. The company grew at a torrid pace in the 1990s adding a new store every business day and expanding to 28 countries around the globe. Starbucks had its mojo going with Wall Street and Main Street. Everyone, it seemed loved Starbucks. At the end of 2000 after growing Starbucks into a global phenomenon in just 15 years, Howard decided to cede his role as CEO and become the company's chief strategist.

Despite continued growth during the early 2000s, things began to change for the worse at Starbucks. Competition increased, people began questioning $4 lattes when gasoline was selling for less and the sense of barista-customer intimacy was lost when they added new automatic espresso machines that blocked the customers view and interaction with barista. Schultz decided to return to his CEO role in 2008 and immediately made one key decision — To return to the company's guiding principles of creating a great work culture giving customers great value and rooting out mediocrity. He galvanized the company's store managers by having 10,000 flown to New Orleans for a conference about character and values highlighted by a day of community service in that post-Katrina city. In addition, one day he closed all stores for 3 hours so that all the baristas could be retrained on making that perfect cup of coffee. It turned out to be much more than that as employees came together and reconnected with the Starbucks values.

Back under Schultz, Starbucks has grown 17% annually over the past 5 years and with over 200,000 employees they have achieved business success while maintaining their core beliefs of giving back. Their latest step is to help address unemployment in the US and while adding over 10,000 jobs in the last year, their Create Jobs for USA campaign is highlighted at every Starbucks across the country.

Howard Schultz built his company around a core set of values that he's been able to maintain for over 20 years. Each of us struggles at times to find the right balance between what we think will bring success and what we know is the right thing to do. Sometimes they are one in the same and sometimes they are not. Perhaps it gets back to what we really believe will make a difference in the world. Find yours and everything may be a bit easier.


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TED Talks

At a social dinner last week, we were discussing the pros and cons of social media and its impact on our privacy. In this TED Talk, Gary Kovacs who is CEO of Mozilla, which develops and manages the popular Firefox web browser, reveals the truth about privacy on the web (none) and how you can start to uncover the great mystery about who is tracking you. By the way, it is only a mystery to us, not to the people following us.


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The Resilience Advantage Teleconference Series

I'll be kicking off a webinar series on The Resilience Advantage on a monthly basis through the end of the year. The series will be scheduled for the first Friday of every month from 1-2 PM and we will drill down on how you and your organization can be more resilient in the face of everyday as well as strategic challenges. Future sessions will include:

October: The Resilience Advantage: Why Stress Management Doesn't Manage Stress

November: The Three Keys for Building Personal Resilience

December: How to Build Organizational Resilience.

Look for further announcements. There is no charge!


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