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Howard Schultz started his career in the coffee business thirty years ago, pursuing one goal: to create the personal relationship between people and their coffee (Berfield, 2009). Now he is the CEO and Chairman of Starbucks, one of the most beloved brands in the world, which is worth at least $3 billion. It was not an easy path to the top, but he succeeded, and not only because of his passion for coffee, but also his great leadership skills. The purpose of this paper is to describe Howard Schultz’s leadership style and show how his professional strengths and skills helped him to build a successful company.
Margarita Morozova
Professor McCabe
MAN 2021,
22 April, 2017
Howard Schultz Analysis Project
Howard Schultz started his career in the coffee business thirty years ago, pursuing one goal: to create the personal relationship between people and their coffee (Berfield, 2009). Now he is the CEO and Chairman of Starbucks, one of the most beloved brands in the world, which is worth at least $3 billion. It was not an easy path to the top, but he succeeded, and not only because of his passion for coffee, but also his great leadership skills. The purpose of this paper is to describe Howard Schultz’s leadership style and show how his professional strengths and skills helped him to build a successful company.
Howard Schultz was born in Brooklyn, New York on July 19, 1953 (Behar, 2007). His family was not wealthy and his parents had to work long hours to feed their three children. Since his parents did not have much time to spend with their children, Howard often had to entertain himself and turned to sport, he was spending his days playing football, baseball and basketball. His passion for sport was rewarded, and he won a scholarship from Northern Michigan University. Remembering the family’s financial struggles, Howard tried to get everything possible out of his study at university; and in 1975 he got his Bachelor of Science degree in Communications. He was the first in his family to get a degree (Howard Schultz, n.d.).
After graduation, he returned to New York and worked for the Xerox Corporation. His dedication and hardworking personality distinguished him from others and could not be missed, so Schultz was recruited by Hammerplast, a Swedish houseware company, and offered a position of vice president; very quickly the company promoted him to a general manager. In 1981, he went on a business trip to Seattle, Washington, where he learned about Starbucks for the first time in his life. Later, Schultz would write that that very moment he walked into Starbucks, he knew it was his home. The owners of Starbucks Jerry Baldwin, Gordon Bowker, and Zev Siegl shared their knowledge and their passion of coffee with Howard. They offered him a job at their company impressed with his marketing skills and his deep understanding of business (Loudenback, 2015). Schultz was given the position of director of retail operations and marketing within the company, which at that time was famous for the coffee beans, they were selling.
Schultz dreamed of making Starbucks a globally recognized brand, serving premium coffee (Howard Schultz, n.d.). He succeeded. By the 1990s, Starbucks had its coffee shops worldwide, with locations and sales rising from year to year. By 1992, there were 165 Starbucks locations and by 1994, there were 425. Sales raised from $100 million in 1993 to $465 million in 1995. By 2000 Starbucks raised its annual revenue to $2.2 billion (Loudenback, 2015).
Howard Schultz’s basic leadership style is democratic, considerate, and employee-centered. His leadership inspires his employees, producing great loyalty, enthusiasm, and a high level of performance. What makes Schultz one of the world’s greatest leaders? First, he believes in hiring the right people. He personally inspires his managers and teaches them to use their leadership skills. Many managers have struggles because they would rather do all the work by themselves than delegate it to their employees, they believe that no one can perform it better than them. Howard communicates with his managers all the time and shows them that they can act as leaders as well (Lebowitz, 2016).
Schultz takes good care of his employees. Howard’s childhood was tough, one thing that he could not forget was how his father, a truck driver, was treated by his employers. Howard decided to go in the opposite direction, all people who work at Starbucks are treated as important members of a team. Schultz believes that his company achieved its success because of the relationship between employer and employees. Howard always had a concept in his mind: once you grow people, they will grow your business (Behar, 2007). That is why Starbucks workers are called “partners”, and they are not only given a lot of benefits such as health benefits, an opportunity to choose their own shifts, fair and competitive wages, but also the company gives them an opportunity to get a college degree, and after five years working at Starbucks, employees can buy shares in the company called “Bean Stock” (Chris, 2015). Howard Schultz believes if managers take good care of their employees, then the employees take good care of the customers. Schultz strongly favors a people-oriented leadership style, valuing employees and customers highly.
Second, Schultz is being consistent in delivering products and services (Chris, 2015). It doesn’t matter what Starbucks you go to, from New York to San-Francisco a Mocha Frappuccino or a Pumpkin Spicy Latte would taste the same, employees will be wearing the same uniform, and even the music would be the same.
Schultz respects culture and diversity. Every Starbucks store is designed according to its location, because every place has its own preferences and practices (Chris, 2015). Just a month ago Howard Schultz announced that the company was planning to hire 10,000 refugees. The company also encourages suppliers who are based in diversified communities.
Schultz created a mission and a vision for his company. As for the company’s mission, Starbucks tries to be more than just a place where people can enjoy their coffee and food. It is a place where customers can meet up with their friends, do their homework or work, arrange a meeting with colleagues, or just relax watching videos on a laptop using free Wi-Fi.
Also, Schultz believes in the importance of partnership. Finding the right partner, helps the business to succeed. For example, Starbucks is a partner with Apple, customers can now download Starbucks’ playlists from iTunes (Chris, 2015). In the early 2000s, Starbucks created a joint venture with Tata Global Beverages, a part of the biggest Indian conglomerate Tata Group, planning to establish together 3,000 stores in India (Williams, 2016).
Schultz believes that a personal approach to each customer is very important (Lebowitz, 2016). Baristas know regular customers by their names and know their preferences, so it makes regular customers feel special and want to come back. When the first Starbucks opened, all drinks were made with whole milk only, Schultz was refusing to use non-fat milk for Starbuck’s drinks because it didn’t taste good, but after more and more customers demanded a drink with non-fat milk, Schultz conceded showing that he valued the opinion of Starbuck’s customers (Chris, 2015).
Starbucks is continuing to grow, by now it has annual sales of more than $16 billion. In his book “Pour Your Heart Out” Howard Schultz revealed that his tremendous professional success is a tribute to his late father, who “never attained fulfillment and dignity from work he found meaningful.” (Loudenback, 2015).
To sum up, Howard Schultz is an effective leader who created such a successful corporation. It was discovered that he has a strong tendency of adopting a people-oriented and supportive leadership style. When employees are motivated to perform by the leader, the company performance will take care of itself.