Howard Schultz & Joanne Gordon’s “Onward”

Starbucks first opened its doors in Seattle on March 30, 1971. The name Starbucks is derived from the name of a sailor in the 19th-century American novel “Moby Dick,” named “Starbuck.”

The person credited with growing Starbucks is Howard Schultz, but the initial beginnings started when three partners, Jerry Baldwin, Zev Siegl, and Gordon Bowker, opened a retail store selling premium coffee beans and equipment in 1971.

Howard Schultz joined Starbucks as a marketing executive in 1982. As an entrepreneur, Schultz foresaw the growing demand for premium coffee in the United States in the 1980s and proposed the idea of selling espresso drinks in addition to beans at Starbucks. However, the Starbucks management did not perceive the need for this, so Schultz left Starbucks in 1985 and founded the espresso bar “Il Giornale,” opening its first store in Chicago. Il Giornale grew rapidly and, after three years, Schultz acquired Starbucks himself, where he had previously worked as a marketing executive, shaping Starbucks into its current form.

“Starbucks Expands to South Korea”

Nowadays, Starbucks stores can be found everywhere in South Korea. The first Starbucks store to open in South Korea was the one in Idasa, which opened its doors on July 27, 1999, marking Starbucks’ debut. Initially, Starbucks had a negative image as a place where coffee was more expensive than a meal, but over time, this perception disappeared, and Starbucks grew into the most successful “cafe brand” in South Korea.

Especially in the Gwanghwamun Square area, which can be considered the center of Seoul, Starbucks holds the highest number of stores within a 1km radius, boasting a higher density of stores than even New York.

“Starbucks Concept as the Third Place”

Starbucks operates under the concept of the third place. Howard Schultz envisioned Starbucks not just as a place to drink coffee but also as a space where various gatherings and study sessions could take place, providing a comfortable environment for people to relax and spend time. He wanted to create a place where the aroma of freshly ground coffee filled the air and where relationships between baristas and customers were formed.

Although it is relatively difficult to see the special relationship between baristas and customers in South Korea, it seems that in the United States, there were many stores that fostered such relationships. Even when visiting a Starbucks store in Japan, if you ordered early in the morning, the store would write “Good Morning” on your cup, seemingly encouraging the formation of a bond between baristas and customers. However, it is unfortunate that such aspects cannot be felt in Starbucks stores in South Korea.

“Onward”

“Onward” is a book that depicts the process of Howard Schultz, who retired as CEO of Starbucks, returning as CEO in 2008 to revive the struggling Starbucks. 2008 was a time of global financial crisis due to the subprime mortgage crisis. Lehman Brothers went bankrupt and disappeared from history, causing not only the U.S. economy but also economies worldwide to suffer significant blows.

At the time, Starbucks was also focused on expanding its size while neglecting its original philosophy, leading to a period of fluctuating growth. Store profits were declining year-on-year, and the emergence of relentless competitors threatened Starbucks’ position as a coffee empire.

Throughout this process, Howard Schultz, who had already retired as CEO, decided to return as CEO and wrote a book detailing how he overcame various crises and restored Starbucks to its position as the “world’s top coffee empire.” Particularly noteworthy is that the book contains Schultz’s own thoughts, allowing readers to understand his genuine feelings towards Starbucks and how he pursued policies based on his thoughts, as well as the inspiration he gained during the process.

“A Book that Allows You to Feel Howard Schultz’s Passion”

Throughout the book, you can feel the passion of CEO Howard Schultz. It was a time to indirectly feel how much he loved the Starbucks store. In the midst of difficult economic conditions, his efforts to revive the Starbucks store with a long-term perspective allowed readers to feel Schultz’s unique philosophy.

Especially, the scene where all Starbucks stores nationwide closed for three days to retrain all baristas was very impressive. It was something that could never be attempted from a short-term perspective, and it was admirable how he could make bold decisions even in a situation where the company was not privately owned by the CEO but had shareholders. Ultimately, his decision was correct, and although it resulted in short-term losses, the retraining rekindled the passion among employees and provided an opportunity for Starbucks to outperform its competitors by offering even better coffee to customers.

“Problems that Accompanied Starbucks’ Growth in 2008”

When Howard Schultz returned as CEO in 2008, there were many problems. Internally, while expanding externally, Starbucks was gradually losing its essence. Baristas were becoming mechanical, forgetting how to brew delicious coffee, and as a result, the original taste of Starbucks coffee was disappearing, leading to a gradual decrease in the number of customers visiting the stores.

Due to the outdated POS system, employees were struggling to operate the stores, and due to the lack of a systematic logistics system, the situation where the materials were not delivered on time despite ordering them at each store was occurring frequently.

Internally, such problems were creating negative synergy, with employees becoming mechanical and store managers focusing only on increasing “sales” numerically. Starbucks was losing its belief in providing the third space and was in a situation where it was simply focused on increasing sales figures, leading to a declining situation.

Externally, due to the subprime mortgage crisis that began with Lehman Brothers in 2008, not only the U.S. economy but also the global economy suffered a major blow. This naturally led to a decrease in “consumption,” and Starbucks suffered a decline in sales as a result. Starbucks’ coffee could be considered a “luxury item” compared to other low-priced coffees, so it was natural that Starbucks would be affected in such a situation.

“Confronting problems head-on instead of avoiding them.”

However, Howard Schultz chooses not to avoid these “problems” and opts for a direct approach. First, he analyzes the problems seriously and contemplates how to address them. If unable to solve them alone, he seeks advice and assistance from experts such as consulting firms to actively tackle the issues.

From closing Starbucks stores nationwide for three days for barista retraining, despite short-term losses, one can sense tremendous determination and resolve. Furthermore, he continues to actively address the mentioned problems, laying down policies to strengthen Starbucks from within.

To enhance Starbucks’ internal strength, making bold decisions to close underperforming stores, even at the expense of laying off some employees, demonstrates his passion for Starbucks. Schultz pledges not to face such situations again while letting employees go, showcasing his dedication to the company.

His collaboration with experts to improve logistics and management, replacing POS devices, and seeking talent to address poor logistics situations, demonstrates a commitment to tackle problems head-on rather than avoiding them.

Approaching matters from a short-term perspective might lead to making pleasing statements to shareholders or analysts, but Schultz chooses to accept problems actively and address them even if analysts may not approve. Ultimately, by not avoiding problems and actively resolving them, Schultz’s efforts have likely contributed to Starbucks’ continued dominance in the global coffee empire.

“Communicative Leadership”

Episodes from the book suggest that Howard Schultz can be considered a CEO who actively communicates his opinions while appealing to others. His act of sending letters containing his opinions to employees underscores the emphasis on “open communication” with employees.

While there are instances of leaked letters causing rumors about Starbucks, especially in today’s online era, such occurrences might be inevitable for large companies like Starbucks, given their extensive workforce.

Despite experiencing setbacks, Schultz communicates sincerely with employees and shareholders through heartfelt messages, ultimately leading to customer engagement and ideation through the “My Starbucks Idea” website, as mentioned in the book.

“Starbucks Instant Coffee Project: Starbucks VIA”

Starbucks ventures into the instant coffee market, making Starbucks products easily accessible in places other than Starbucks stores. The book also introduces Starbucks’ instant coffee project.

It began when biologist Don Valencia introduced Schultz to coffee made from his freeze-dried coffee beans. Schultz then appointed him as head of R&D at headquarters to develop instant coffee similar in taste to brewed coffee served in stores.

Eventually, Starbucks VIA was developed and launched in 2008. However, Valencia passed away in 2007 before VIA’s release. This story is also featured in the book.

“Starbucks ESG”

In recent years, there has been increasing emphasis on corporate social responsibility through “ESG.” Starbucks is portrayed as having adhered to ESG-driven management even before it gained attention. In terms of coffee, it is presented as trading only in fair trade coffee beans. Starbucks stores are also transitioning towards environmental consciousness by obtaining LEED certification.

Additionally, the book highlights Starbucks’ initiative in organizing an event in New Orleans, a city recovering from Hurricane Katrina’s devastation, showcasing corporate social responsibility.

The decision to hold the event in New Orleans demonstrates a commitment to ESG, considering the needs of the community. Ultimately, it serves as a mutually beneficial example where both Starbucks and the community benefit.

“Starbucks’ First TV Commercial: Election Ad”

Starbucks is known for not airing TV commercials, thereby spending less on advertising compared to other companies. However, it made a single TV commercial, an “election encouragement ad,” during the 2008 US presidential election, offering free drinks to voters who visited Starbucks after voting.

This advertisement, focusing on social responsibility, is famous for not being a typical commercial.

“Howard Schultz Leaves Starbucks in 2023”

After returning as CEO in 2008, Schultz retired from operational duties in 2023 at the age of 70, becoming Chairman Emeritus while continuing to support Starbucks’ future leaders.

Though Schultz stepped back from Starbucks’ management, his contributions to building the coffee empire remained significant. His philosophy of focusing on each customer and communicating sincerely demonstrated the success of Starbucks as the “third place.”

The book reflects Schultz’s philosophy embedded in Starbucks’ management, detailing how Starbucks overcame crises and grew into a global corporation.

Given the rapidly changing world and challenging economic outlooks, perhaps it is time to return to Schultz’s emphasized “basics” and arm ourselves with his advocated values of love, confidence, innovation, and entrepreneurial spirit.

”Onward: How Starbucks CEO Howard Schultz Fought for His Company and Its Values – Leadership Lessons for Everyone“