Monday, December 12, 2011

Onward by Howard Schultz

Onward: How Starbucks Fought for Its Life without Losing Its Soul by Howard Schultz is a good enough book but should only be on the reading list of those who are passionate about coffee or are interested in business turnarounds.  Beyond that, this book has limited appeal. This is Schultz's second book.  His first was Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time.

Howard Schultz is the passionate CEO of Starbucks.  He loves coffee.  He loves the company that he grew into the ubiquitous purveyor of coffee worldwide.  Sometimes, his company even makes a good cup of coffee.  As a business, it is hard to argue with their success.  Until 2007, Starbucks was a consistent growth company, which kept expanding and expanding.  In 2007/2008, they hit a wall.  Quality declined.  Customer satisfaction declined.  Revenues didn't grow.  After retiring as CEO earlier in the decade, Schultz convinced himself and his board that he should be brought back to reinvigorate the company.  In dramatic fashion, he shutdown all of the stores for a day to retrain the staff (i.e., "partners") on how to make coffee; he disposed of the hot sandwiches that were stinking up the stores; and, he closed many unprofitable locations.  What he wouldn't do is cut back on the quality of the coffee or benefits for employees.  Those were values near and dear to him.  The turnaround succeeded and the company found its groove again.

The results for the company were impressive.  The boldness of Schultz's moves are noteworthy.  Shutting an entire chain of retail stores for a day was a bold move.  There is a lot to learn from him as a turnaround operator--have a defined mission and set of goals; know the values  you cannot compromise on; act decisively; be willing to consider all options, even very difficult ones.

So what's wrong with a great turnaround story?  Nothing.  It is the book itself that has flaws.  The book tends to repeat itself (lots of material about how well employees are treated and how even part-time employees get benefits).  Also, the book at times becomes an advertisement for the company.  It occasionally reads like an infomercial.  Finally, Schultz seems to preach at times rather than tell his story.  It is a fine line but it comes across to the reader.  What is great about the book is the honesty and Schultz's openness.

Two elements of his turnaround are worth mentioning.  Schultz swears the best cup of coffee comes from a French Press.  I tend to agree.  He found a small company in Seattle that invented an inverted press system called Clover.  It is used to brew coffee.  The results are fantastic.  (I had a cup of coffee from the Clover system on 86th and Columbus Ave.  What a cup of coffee!).  Second, I was a bit surprised to learn that Starbucks' web-presence was so anemic in 2007/2008.  But, I guess if you are focused on the coffee, you can miss a few things.

By way of contrast, I am going to re-up my recommendation to read Steve Jobs.  While Schultz comes off as a far nicer human being, Jobs also had to turn around himself and his company and did the latter at least with dramatic success.

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