What is in this article?:
- Schultz inspires with story of Starbucks' rise, fall and revival
- 'Albatross around the neck'
- 'Moment of truth'
Balancing profits and social responsibility has led to the company’s success, c.e.o. says at NRA Show.
'Albatross around the neck'
Schultz returned eight years later, when the company had more than 16,000 stores, but also had lost its way. When the global financial crisis was about to hit in 2007, “the bloom was already off the Starbucks’ rose,” he said, insisting his absence as c.e.o. and ensuing return did not cause the changes, good or bad.
“But what happened in that 21st year, a disease had entered the halls of Starbucks,” he said of what he saw when he returned in 2008. “Comp store sales became the primary purpose for our existence. Every session, every long-term plan was designed on how we drive comps. They were directly linked to the albatross around our neck, the stock price.”
After returning, he promised to turn things around. He stood in front of the entire company, he said, and apologized. He broke down and cried. Comp store sales had gone negative for the first time, down 8.6 percent, and if the declines reached 14.8 percent, Starbucks would be insolvent.
“The most important person for Starbucks then and now is the store manager,” Schultz said. “They create excitement and the brand. The brand is built by the experience every day in our stores. The store managers were the key relationship to the turnaround.”
That’s why he brought them all to New Orleans, even though the same shareholders and board members who had just brought him back as c.e.o. questioned his decision to pay $33 million to do it. The first thing the managers did was spend 50,000 hours doing community service in the Ninth Ward, the area hardest hit by Katrina three years before. “We began to rekindle the values and guiding principals of the company, the balance and benevolence between profits and responsibility,” he said.
Then came the moment of truth, his $33-million speech.