“We’re taking time to perfect our espresso. Great espresso requires practice. That’s why we are dedicating ourselves to honing our craft.”
February 2008, Starbucks made it on top news headline that it has shut down its US operations. Speculations and rumors started brewing in the media fearing for the worse.
For Howard, apart from the headache he suffered from the company’s recent losses, he knew the operation shutdown happened for right reasons. The losses and problems made him to take drastic measures for the company he built. In short, he ordered the shutdown because he cared.
Here’s the four must-learn best lessons from Starbucks’ shutdown in 2008:
- “It’s Not About the Company. It’s Not About the Brand. It’s About You.”
- “Investing On Your Staff Always Pays.”
- “Plan, Plan & Risk It.”
- “When Things Fail, Fall Back To Your Company Values.”
- Final Two Cent
It’s Not About the Company. It’s Not About the Brand. It’s About You.
When Howard decided to shut down his beloved company operations, he knew he did it for the right reasons. It was to ensure Starbucks do not lose touch with their customers. People were becoming more educated about coffee. They start demanding for something more sophisticating. Howard knew Starbucks had to evolve to make their coffee more appealing to the new generation of consumers.
Despite of the criticisms and possible losses from the scheduled shutdown, Howard knew it’s not about quarterly profit, annual bonuses etc. It’s about his customers. It has always been since the birth of his company. As long as the brand serves to the appeal of customers, he knew everything will be fine. And it did.
Investing on your Staff Always Pays.
“I was confident that we had done the right thing. How could it be wrong to invest in our people?” – Howard Schultz.
When Starbucks shut down in 2008, many critics failed to realize the reasons behind it. Starbucks saw the importance of educating and training their staff in order to achieve the company’s goals and objectives. They suffered losses and started losing customers. But it did not matter much. The end goal was more important – to achieve long term success.
They distributed training manuals to 7100 stores and 7100 tutorial videos educating their staff to care and brew coffee in a better way. It paid off. Customers were not only drawn to good coffee but also the philosophies implemented among the employees who are passionate about the brand.
Plan, Plan & Risk It
After attending numerous meetings with his top team, Howard became sure what he needed to do to steer his company to profit-making again.
He met with all the stakeholders of his company; his staff, customers, supplier, and top management too. He was very articulate on defining and resolving the problem. He knew in order to get the myriad of problems fixed, he needed to risk it. He had to take drastic measures.
He maintained to shutdown retail operations to spend time educating and implementing new company principles to his frontliners – the baristas.
It was unheard of. One of the biggest Human Resource activity effort ever recorded in the company’s history. He received insults and criticisms, it was harsh. But it paid off, his company recorded profit following the reopening of his newly evolved company. Lines of people began appearing. They like it. The concept work. All the plans which people thought was risky paid off.
When Things Fail, Fall Back to Your Company Values
“Respect and Dignity”
As Starbucks profit started dwindling prior to 2008, Howard knew he had to to do something. He organized back-to-back meetings trying to fix the problem.
He finally realized the reasons he started the company. He knew it was created not only to serve coffee to every customer, but to serve every stakeholder in the community as well. The Rwandan coffee farmer, the supply chain, the coffee support community and so on. It was more than about the coffee. Basically, it involves mankind itself.
He became clear about what needed to be done. Starbucks had to go back to its roots. Go back to what made it great. With a clear goal in mind, his effort became less difficult.
Final Two Cent
This is a classic tale of David versus Goliath. Between JFK and his generals during Cuban Missile Crisis. Between Howard Schultz against those who bet against him.
The humongous task he undertook was too huge where chances of failure became very likely. In my opinion, the best lesson we can take here is that running a successful business is never about fulfilling your desires alone; it is to fulfill the desire of every stakeholder in the community as well. If you take care of your customers, employees and entire supply chain, you are likely to succeed no matter what are the odds. Take care of people and people will take care of you.
Source: Lester, David (2011). “How They Started?”