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The H BR I nterview

108

Harvard Business Revlew

July-August

2010

HBR,ORG

?'
Howard Schultz is the
former chairman and two-

time CEO of Starbucks.

Starbucks CEO Howard Schultz

on

the

challenges

of
a
OF.

turnaround at the company he made household name. Interviewed by Adi Ignatius

leading

a

,

l

?

&,
J
'

...

"We Had to Own theistakes"
¡,
.r

J

,?",.'
.;

BY THE TIME

Howard Schultz

stepped

down

as

chief executive of

Starbucks, in
l'

2000, the coffee chain was one ofthe world's most

steady trajectory of growth. Eight years later Starbucks was suffering from a rough economy and its own strategic missteps, and Schultz felt compelled to return to the CEO seat. His previous tenure had seenpromising growth, but now he faced a challenging mission: to lead a turnaround of

recognizable

brands-and

on a

the company he had built. In this condensed and edited interview, Schultz discusses what it's like to retake the reins in the middle of
a

crisis.

HBR:

Wethought we knewthe Howard Schultz
You had
a

180,000 Starbucks people and their families.
And
even

story.vision, built a successful comon.

though I wasn't the CEO, I had been
chairman; I should have known

pany, and moved

But then Starbucks

ran

around
more.

as am

into trouble, and two years ago you had to
return
as

I

CEO. How hard has it been to

get

ourselves and to the
that
we

responsible. We had to admit to people of this company
were

things right?Schultz: The past two years have been trans-

owned the mistakes that

made.

Once

we

did, it

was a

powerful turning point.
a

candidly, personally. When I returned, in January 2008, things were actually worse than I'd thought. The decisions we had to make
for
me were ver y

formational for the company and,

It's like when you have

secret and

get it

out:

Theburden is

offyour shoulders.

To what extent did the financial crisis add to

difficult, but first there had to be
we as

a

the management crisis?
For
sorne reason we

time when company

stood up in front ofthe entire
a con-

seemed to become the
It's easy to

leaders and made almost

poster child for

excess.

fession-that the

leadership

had failed the

aboutit now, but

people

said that

laugh buying

July-August

2010

Harvard Business Review 109

THE HBR INTERVIEW STARBUCKS CEO HOWARD SCHULTZ

a

latte at Starbucks wasn't smart. McDonald's put

e-rnails and

phone calls about
was a

an

issue I had

never

up bíllboards

dumb, Gas went

saying as high as five dollars in sorne places,
a
a

that four dollarsfor

coffee is

heard of. There

sensational story in the Sun, in
water

London, that Starbucks was wasting

coupled
den

with the financial crisis-and all of seisrnic

sud-

something
and it

called the

"dipper

well," My

through phone rang,

change in consurner behavior. always been our busiest times, but people changed their driving habits. There were times duringthe day when we didn't have enough sales per hour to justify the labor. And this for a cornpany that had always hit not singles or doubles but horne runs. We didn't really know how to respond, because it's not sornething you're taught, and we'd
we saw a

was a

Weekends have

the

dipper ing about,"

well, "1 ha ve

reporter asking me to cornrnent on no idea what you're talk-

Isaid. The reporter

said, "Mr. Schultz, I

suggest you Google Starbucks real fast." The Sun
clairned that
we were

pouring "millions of litres of
as a

precious
rnethod
was

water down the drain"

result of the

we

used to sanitize equipment. The report and
we

wildly exaggerated,
a

had been

working
we

never

had any such
to

reaching out
were

experience....
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