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Howard Schultz: Risks and Dreams, Management and Culture

We have mentioned in this blog time and again how challenging it is to operate a restaurant business, much less a restaurant chain—it’s basically like putting an organized chaos to order. Running a restaurant takes thorough, careful organization, unyielding effort and immense hard work in this trying economy, and it wouldn’t hurt to learn a thing or two from the big players.

We have featured 5 of the most watched restaurant executives this year; the operational thoroughness of McDonald’s Jim Skinner; the headstrong ingenuity of Chipotle’s Steve Ells; the relentless perfection of Chef Joel Robuchon; and the focused determination of Nobu’s Nobu Matsuhisa, and saw how these top honchos fired up their passion for the business, fought their own challenges to hang on to their dreams, maintained their victories and continuously aimed for growth and perfection.

Now we shall look at Starbuck’s chairman, president and chief executive officer Howard Schultz, as he led the company to its 40th year of being a powerful player in America’s modern coffee culture.

Howard Schultz joined Starbucks in 1982 as director of operations and marketing, way back when the chain only had four stores. Starbucks by then was already eleven years old, and was doing well in Seattle, Washington, being owned by its original founder’s English teacher Jerry Baldwin, writer Gordon Bowker and history teacher Zev Siegel. At that time, the chain has already made a tremendous leap from when it started with $8,000 cash and loans to the accomplished chain that was already known as the largest coffee roaster in Washington.

But Starbucks hit its meteoric growth when Schultz came in. Having gotten inspiration from his travels to Milan, Italy, Schultz worked with the founders to model Starbucks into a retail café business fashioned and styled after the illustrious “old world” coffee houses of Italy. He faced some opposition from the other executives during that time, but by 1987 was able to successfully execute his plans, this time after purchasing the company from them; and was able to bring that Italian community and coffee culture he so badly wanted to bring to the American market.

And the rest, of course, is another set of history. Today, Starbucks is considered the largest coffee house chain in the world and has become a household name in 55 countries around the globe, with roughly 17,000 locations. Schultz himself has been extensively recognized for his leadership, passion and initiatives to strengthen communities. He was listed as one of Time Magazine’s most influential people in the world.

Now on its 40th year, Schultz feels that Starbucks has been blessed beyond their expectations. “We never thought that the company would get to this size and have the impact that we have,” said Howard Schultz. “None of us felt that Starbuck’s reach will be this extensive, but once we arrived, our perspectives just automatically aligned. Once you reach this place, your dreams instinctively become bigger and your aspirations grow along with it. We needed to ask ourselves how we, in our functional uniforms and superior bib aprons, can continue to grow, considering the enormous growth that we already had, and how to continuously make a difference.”

They realize that the focal point of Starbuck’s mission is still about attaining the fragile balance of profitability and social conscience. As Schultz said, “without profitability, social conscience is unsustainable.”

We remember the time, of course, when Starbucks thought it would go under in 2008, when for the first time in their history they had to close 900 stores worldwide and lay off thousands of employees in functional bib aprons. But Schultz was able to drive the chain back on track. “We had to navigate through our own issues as we admittedly had some self-induced mistakes. We also had to deal with the cataclysmic economic crisis. But those two years of trying to get back on track was our best work yet. We’re now a lot stronger because of the recession,” he added.

Now stronger than ever, Schultz have geared up the chain for more gigantic growth as it transforms itself through reinvention. Starbucks have all sets of new things lined up –new store design, via their coffee products. They have introduced mobile payment and EGifting on their Facebook page, trying to become more relevant in digital and social media in an effective effort to reach out and become more significant to their core customers and younger audience.

And we can say that it’s all because Schultz believed in his vision. In the World Business Forum last October, he gave this as one powerful key to success: risking more than others think safe, and dreaming more than others think practical. From gist to concept, and from concept to execution.