Starbucks CEO Howard Schultz: How to Be Strategic Thinkers | Inc.
Summary
TLDRThe speaker reflects on unconventional strategies that revitalized a company, such as temporarily closing all stores for retraining, which was costly but essential for quality enhancement. Despite facing skepticism and criticism, these bold moves, including the launch of a successful instant coffee product, demonstrated the company's commitment to innovation and the entrepreneurial spirit. The narrative underscores the importance of vision, courage, and the collective strength of a trusted team in driving transformation.
Takeaways
- 💼 The speaker made bold, unorthodox decisions when returning to the company, including halting monthly reporting and closing every store for retraining.
- 📉 Closing the stores was a costly move, costing millions of dollars, and attracted heavy criticism from competitors and the market.
- 🔄 The closure of stores symbolized an admission of the company's mistakes and commitment to restoring quality, which became a turning point.
- 📝 The book is filled with bold moves, and the speaker emphasizes that every bold decision is often met with internal resistance and skepticism.
- 🔍 Great entrepreneurs need the curiosity to anticipate future challenges and the courage to make tough decisions.
- 🤝 Decisions in the company are now more consensus-driven due to the trust in a skilled team, but the speaker still reserves the final decision-making authority.
- ☕ Launching VIA, Starbucks' instant coffee, was seen as risky due to the brand’s high-quality image, but the company saw an untapped opportunity in the $24 billion instant coffee market.
- 📰 The media and Wall Street were initially skeptical and critical of Starbucks’ decision to enter the instant coffee market.
- 🚀 VIA became a major success, generating an estimated $250 million and proving the company's innovative ability.
- 🎯 Beyond financial success, the VIA launch reignited the entrepreneurial spirit within the company and reinforced its courage to take risks and innovate.
Q & A
What unorthodox action did the speaker take upon returning to the company?
-Upon returning, the speaker closed every store for retraining, which was an unprecedented move.
What was the initial reaction to the retraining closure of all stores?
-The retraining closure was met with tremendous criticism, and the competition saw it as an opportunity to attack the company.
What was the underlying purpose of closing all the stores for retraining?
-The purpose was to acknowledge the dilution of quality over the years and to demonstrate a commitment to improving it.
How did the speaker describe the impact of the retraining on the company?
-The retraining was a galvanizing moment that signaled a major turning point for the company, demonstrating a commitment to quality.
What is the speaker's view on the role of curiosity in entrepreneurship?
-The speaker believes that great entrepreneurs must have the curiosity to anticipate what others do not see and the courage to execute their strategies.
How does the speaker approach decision-making in the company?
-The speaker believes in making decisions based on consensus, especially with a world-class team, but retains the right to make the final decision and takes responsibility for it.
What was the context of the product launch mentioned in the script?
-The product launch was for an instant coffee product, which was a significant departure for Starbucks, given their high-quality specialty coffee image.
What was the media and Wall Street's reaction to Starbucks entering the instant coffee category?
-The media and Wall Street were highly critical, with headlines that were negative and seemed to want to destroy the company's reputation.
How did the speaker justify entering the instant coffee market despite the risks?
-The speaker felt they saw an opportunity that others did not and believed in the potential success once they replicated the taste of Starbucks coffee in an instant form.
What was the outcome of the instant coffee product launch?
-The instant coffee product, called V, was a runaway hit, generating approximately $250 million in revenue and had not yet been introduced globally.
How did the launch of the instant coffee product impact the company's culture?
-The launch rekindled the entrepreneurial spirit within the company and reminded the organization about the courage to take the road less traveled, making the employees proud.
Outlines
🔄 Unorthodox Decisions and Transformative Actions
The speaker discusses some unconventional steps taken upon returning to the company, such as halting monthly reports and closing every store for retraining. This move, initially criticized and seen as risky, turned out to be a pivotal moment in regaining customer and employee trust. Despite the costs and backlash, it demonstrated a commitment to quality and marked a significant turning point for the organization. The narrative emphasizes that bold moves often face resistance, yet they play a crucial role in transformation and success.
💡 The Challenge of Convictions and Strategy Execution
The speaker highlights the importance of being a visionary and having the courage to make bold decisions despite opposition. They reflect on past decisions, acknowledging that not all choices were successful. However, by surrounding themselves with a skilled team, they’ve shifted towards more consensus-driven decision-making. The speaker asserts that while leadership requires owning the final decision, it also means taking responsibility when things go wrong. This section underscores the balance between individual vision and collaborative execution.
☕️ Revolutionizing the Instant Coffee Market
The speaker introduces the case of launching an instant coffee product, describing it as a high-risk, high-reward strategy. Entering a $24 billion global market dominated by a single player and lacking innovation for over 50 years, the new product faced skepticism and negative media reactions. However, the company believed in their ability to replicate the taste of Starbucks coffee in instant form. With successful technology and product development, the launch exceeded expectations, generating $250 million in revenue so far. The success served as a reminder of the company’s entrepreneurial spirit and reinforced its position as an industry leader.
🔥 Embracing the Entrepreneurial Spirit and Defying Odds
The speaker emphasizes how the instant coffee launch was not just a product introduction but a symbol of the company’s willingness to take on challenges. By going against the grain, the project invigorated employees and boosted morale, proving that innovation and risk-taking are part of the company’s DNA. The speaker argues that no other coffee company could have accomplished this due to the unique combination of passion, strategic positioning, and commitment demonstrated during the launch. This success story reaffirms the company’s ability to achieve greatness by staying true to its entrepreneurial roots.
Mindmap
Keywords
💡Unorthodox
💡Retraining
💡PR Bonanza
💡Galvanizing
💡Entrepreneurial Spirit
💡Consensus
💡Credibility
💡Innovation
💡Execution
💡Catastrophic
💡Instant Coffee
Highlights
The company closed every store for retraining, costing millions of dollars.
The retraining was an admission of guilt regarding a dilution of quality over the years.
The decision to close stores was met with criticism and competitive attacks.
The retraining was a galvanizing moment to demonstrate a commitment to quality.
The company made bold moves to increase qualitative measures.
Entrepreneurs need curiosity to anticipate what others do not see.
Courage of convictions is essential for executing strategies in the face of opposition.
The speaker admits to making wrong decisions that had catastrophic outcomes.
Decision-making now leans towards consensus due to trust in a world-class team.
The final decision and responsibility rest with the speaker.
The launch of Starbucks' instant coffee was initially met with skepticism.
The instant coffee category, a $24 billion market, had seen no innovation for over 50 years.
Starbucks' entry into instant coffee was seen as a potential risk to its high-quality image.
The company successfully replicated the taste of Starbucks coffee in an instant form.
The instant coffee product is expected to generate $250 million in revenue.
The product launch was an opportunity to rekindle the entrepreneurial spirit within the company.
Starbucks' success in instant coffee was due to its unique positioning and passion for the market.
The company's people took pride in doing something against the grain that succeeded.
Transcripts
[Music]
when I came back you know I did a couple
of things that not that they were
unprecedented but they were unorthodox
one was we'd stopped reporting monthly
comps but in the first three months of
me returning I did something that
probably had never been done before and
that is we closed every store for
retraining right and and that turned out
to be a a PR Bonanza but it wasn't
designed for that what it was was an
admission of guilt we had to stand up to
our people and our customers and say you
know what over the years there's been a
dilution of quality and to continue like
this is a mistake so we literally closed
every store the cost was millions of
dollars I came under tremendous
criticism and the competition really
smelt blood and they went after us but
it was again one of those galvanizing
moments of demonstrating to our people
and the marketplace that this was not
going to stand anymore that in fact we
were going to significantly increase the
qualitative measures and that turned out
to be another major turning point for
the company but even even those types of
bold moves and the book is filled with
bold move after bold move after bold
move and almost every single time
there's a group assembled who doesn't
think you should do it and who um
questions you and challenges you so for
those of us who who run Enterprises of
any size should we ever expect that our
the group of people who work with us
should sort of give us that credibility
or are we only ever as good to Wall
Street to the people who work with us as
our last right call well I think um let
me try and answer it this way um I think
great
entrepreneurs must have the Curiosity to
to kind of metaphorically see around the
corner what's coming what can I
anticipate that other people don't see
um and then you must have the courage of
your convictions to execute the strategy
every decision is different and certain
people have different insight and
different skills and in the book I write
about some things that I decided on my
own that were wrong and that were you
know catastrophic in some ways I don't
always have the right decision now when
we brought in a new team this is a
worldclass group of people who have
skills and insight well beyond me the
decisions we're making today are more
skewed towards consensus than they were
in the past because of the trust of the
team however I will make the final
decision and you reserve that right and
I and also I will take the
responsibility if that decision is wrong
well that's just happened with uh at
least the way you describe it with via
the so you have a a team working for
well very very long time but as the
product launch comes near yes via the
instant coffee product um and you've got
these a lot of great people working on
it maybe these very same people you're
describing but at some point at some
point it ends up again back in your
living room with a couple of old
Consultants that you had worked with in
the past where you say let's get this
right well I think this is a great case
study uh the instant coffee category is
a $24 billion doll category globally has
not had any Innovation for over 50 years
and is dominated by one
company uh but for for a company like
Starbucks who's imag is based on high
quality specialy coffee to go into the
instant coffee category one could assume
would be a death sentence and uh when we
announced we were doing this the media
and Wall Street just basically wanted to
destroy me and the headlines were
terrible but again I felt we saw
something that other people didn't see
but the litmus test for this is we had
to replicate the taste of Starbucks
coffee in an instant form once we
cracked the code techn with with
technology I knew right away that this
would be a success V has been a runaway
hit for the company probably do $250
million as we sit today and we haven't
really begun to introduce it globally
where 81% of the market is so this is
this is a major hit for the company and
it also did something and I think this
is important you know not everything
should be measured on its own Merit this
again was a opportunity to rekindle and
remind the organization about the
entrepreneurial Spirit and the courage
of the company to take The Road Less
Traveled and our people were so proud of
the fact that we were about to do
something that was against the grain
that was going to succeed and I don't
believe there's any coffee company that
could have done this other than us not
because we're better than anyone else
but because of the way in which it was
positioned and obviously the the passion
we had to bring this to Market in a very
unique way
[Music]
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