Leadership Analysis on Howard Shultz

It’s not coffee, It’s a way of life Being a leader seems rather simple by definition. One that is followed by other is a leader. However, the trivial aspects are uncovered when you ask what makes followers follow a leader, how far are they willing to follow them, and does where the leader want to go a reason for the following? The leader I chose is Howard Shultz, Chairmen and CEO of Starbucks. His book is titled Onward: How Starbucks Fought for Its Life without Losing Its Soul.

Shultz describes his vision for what a company should be and how he implemented this vision into Starbucks overtime. His vision is value, and unlike many others in his shoes, is not distracted by profit. As many leaders have something of a crucible at some point early on, Shultz has made very little mention of his early life shaping who he is today as a leader but rather his experience with Starbucks and its transformation overtime. At each barrier throughout his and his organization’s career, he learned how to get around it and, in turn, learned how to lead others around it as well.

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I do not believe that Howard Shultz was a leader who found a means to lead, I believe that he found a passion and desire so strong that he knew the only way he would ever see his vision is if he led the charge. Although many of the ideas that were used to make Starbucks what it is today came from one man and his vision, without Shultz’s unique style of leadership, it is safe to say Starbucks would no longer exist. What is significant about Shultz and what separates him from many others is the way he conceptualizes the way he thinks things should be.

His values and beliefs are concrete and when he related them to the coffee industry, he refused to let even one be sacrificed in the process. The base of what he thought a merchant should be can be seen as one of the many ideas Shultz had that was crucial in the development and monumental growth of Starbucks. He says “That’s what merchants do. We take something ordinary and infuse it with emotion and meaning, and then we tell its story over and over again, often without saying a word”.

After a trip to Italy and seeing the presence of espresso in culture, Shultz saw that the product can mean much more to the customer than just something to drink and get a mid-day kick from. As Dunkin Donuts fulfills the role of getting you though the day with quick caffeine, he saw that Starbucks could provide much more meaning to the customer than just the effect you get when you drink coffee. After sharing this love for the culture of coffee with original Starbucks founders they declined his steps moving forward and Shultz went on to start his own coffee house and his first memo included this mission statement:

Il Giornale will strive to be the best coffee bar company on earth. We will offer superior coffee and related products that will help our customers start and continue their work day. We are genuinely interested in educating our customers and will not compromise our ethics or integrity in the name of profit…Our coffee bars will change the way people perceive the beverage, and we will build into each Il Giornale coffee bar a level of quality, performance and value that will earn the respect and loyalty of our customers.

From the love and care it takes to make a special espresso drink to the knowledge and experience that can be gained about how coffee and espresso really came to be, a customer can become much more appreciative of their mid-day routine caffeine stop, even if it costs a couple extra dollars. Another simple idea that was a foundation for what Starbucks is today is where he sees the coffee house should take place in the community and in society as a whole. He called home your “1st place”, work your “2nd” place, and the coffee shop your third.

Everyone has their home where certain activities take place and work (the same) but without a third place there is something missing from someone’s everyday life. Where do you read, socialize, or just relax if you are not yet ready to go home where often might entail other types of work? He thought that Starbucks could serve more than just a place to get coffee but a public place that could provide a much needed environment to socialize, read/study, or even just to think. It was ideas like this that Shultz was not willing to let go of and, in turn, made Starbucks such a giant in American society.

Shultz has really illustrated what it means to be persistent. Whether it was arguing with Starbucks back in the early 80’s for over a year to eventually convince them to make him the director of marketing, or completely breaking off from the organization to start his own coffee house because Starbucks did not see the vision he had for what a coffee house should be. He had, what some would see as, stubbornness in him because he knew that his vision was not fueled by capitalism but by passion and he was not willing to sacrifice that for anything.

After breaking off from Starbucks and starting Il Giornale to continue his apparition for an ideal coffee house he was successful enough to buy out Starbucks within 16 months of his departure. Howard Shultz possesses a very unusual amount of courage in his leadership style. When you think of what a leader really is at its most basic definition it is one who is followed by others. When Starbucks stepped into uncharted territory Shultz was able to connect with employees furthest away on the chain of command, the baristas.

In order to gain followers in his vision for Starbucks he went to very risky lengths to be sure that he was being followed by all employees of Starbucks and not just those reporting to him. After his 8-year hiatus as CEO, Starbucks was hitting a real standstill, just as the majority of all other businesses were during the height of the recession. In 2008 Shultz said “As chairmen I hold myself personally responsible for the problems we have created”. Against many others advice, Shultz had all Starbucks close down early leaving a note on the door that read “We’re taking time to perfect our espresso. Great espresso requires practice.

That’s why we are dedicating ourselves to honoring our craft”. Baristas then watched a DVD organized by Shultz attempting to connect with the baristas on a personal level to encourage them to see the vision of what their product should be. Although this was a 6 million dollar stunt, and considered highly unconventional by many business leaders, it worked. Howard Shultz preformed unconventionally more often than not which truly does make him a leader as opposed to the contrary. The biggest crisis of Starbucks and, Shultz would argue, of himself as well, is during the 90’s when the economy took a plummet.

As countless other corporations had to do as well, Starbucks had to make cuts and revaluate whether it was feasible to continue or not. As Starbucks was forced to shut down around 600 unsuccessful locations, Shultz made a bold move by including remarkable severance packages as he took personal responsibility for the failure of many. He made an even bolder decision to gain loyalty from even the lowest of his employees and stated that not only will workers (part-time included) have access to full-coverage healthcare but stock options as well.

These benefits were unheard of for part-time workers and even fulltime workers of jobs such as an espresso barista. Although the barista job title does not carry a desirable salary, Starbucks gained a level of loyalty that cannot be measured by a figure. 5 years later Starbucks held a stock growth of 25% as the Dow Jones was down 10% and the NASDAQ 60%. In Lecture 4 we discussed how effective leaders illustrate the opposite of what is called the “self-serving bias”. This bias occurs when one tends to attribute positive outcomes to stable and dispositional aspects of themselves and less desirable outcomes to situational causes.

Here, Howard Shultz took the undesirable outcome of unsuccessful Starbucks locations (their employees) and considered it as a personal failure. He expressed this by the unnecessarily generous severance packages he provided those he had to lay off. Instead of using a situational cop-out (recession) he took it upon himself to close down all United States Starbucks location for the evening to better educate baristas on the culture of espresso and what he felt a coffee shop could and should be.

After monumental success following these major decisions by Shultz he did not attribute the later success to his decisions as a leader, but rather the personal efforts of the baristas at Starbucks. This is a perfect example of how the self-serving bias can be used as a tremendous tool for a leader if, “simply”, reversed. In Bennis and Thomas’s article titled the crucibles of Leadership, they address the four essential skills of an effective leader. The first being the ability to engage other in shared meaning. Shultz does this through what he saw as the culture of coffee and how it can play a role in everyday American life.

The second is a distinctive and compelling voice and Howard must have had something of the sort as he quickly gained the capitol to buy out Starbucks after leaving, as well as creating the video for baristas around the nation to better understand where true quality comes from. Third, an effective leader needs to have a sense of integrity; I feel as though every move Shultz has made speaks integrity and does not need further analysis. And fourth and most important of all, an effective leader must have adaptive capacity or applied creativity.

Where as many leaders in Shultz’s position would have looked for every means possible to cut costs and put together pennies, Shultz announced a benefit and stock program option that made jaws drop around the globe. Yes, it was risky, but it was creative in that he knew what he knew the amount of loyalty he would gain would be paying itself back for years and even decades to come. Shultz puts it very simply when he says “You have to strike a balance between profit and social conscience”. Howard Shultz has proven to be an outstanding leader in so many ways during his career as a coffee entrepreneur.

However, there is one decision he made that I don’t believe to be the best route for a leader. For 8 years Shultz stepped down as CEO and remained as the chairmen of the board. I like this decision in that he was taking too much personal responsibility for some of the failures that were occurring within Starbucks, but I don’t like in the image it portrays for all that were following him. Removing yourself from a leadership role such as this, regardless of the reasoning, really takes a blow at the image you want to portray as a leader.

I best relate it to being on a little league baseball team and having to meet your new coach one Saturday morning right before a mid-season game because the original coach no longer wanted to be coach. Whether or not he had a legitimate reason for making the decision he did, I would bet a fortune that Saturday’s game was not the team’s best and regardless of the players’ health. Regardless of Howard Shultz’s temporary step down as coach, he is a marvelous example of what a leader could and should be.

His passion was backed by conviction and refused to let anyone or anything get in the way of what he saw as “right”. His perception during crisis was self-sacrificing and was used as fuel for betterment. He was and still is someone that people want to follow for one reason or another. Through his following, Howard Shultz and Starbucks have successfully transformed the coffee experience in America and around the World. Works Cited Shultz, H. (2011). Onward: How Starbucks Fought for Its Life without Losing Its Soul. Rodale . Thomas, B. a. (2002). Crucibles of leadership. Harvard Business Review , 39-45.