Leadership Course

Professor: Resan Kikava

Harvard business case: Howard Schultz Building Starbuck’s Community

Team:

Mariam Khechuashvili
Mariam Shereshashvili
Tamuna Kevanishvili
Maia Modebadze
Doia Chakhtauri
Ali Bagheri

Tbilisi, Georgia
2020

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1. How do Schultz’ life experiences link to the kind of company he is building at Starbucks?

What philosophers say: Once Nietzsche said “What does not kill me makes me stronger”. For those who
experienced hurt on their skin have an ability to accumulate weaknesses to strength and step on themselves, earns
talent of desired ambitious. As coin has two sides they always define consequences of risky fighting to never give
up. Transformation inside his ago counts several steps.

Heart break: Schultz’ early hard memories of all of the time connects ongoing period, what was reminding was
heartbreaking childhood. His motto to dreams become true comes from hopeless, hardships, less respect, scar and
burden living of many years. Raised in a family where father has never achieved success, because lack of knowledge
and efforts, his unlucky life reflected to Schultz’s disappointed life. Only light seemed his homemaker mother, who
gave him nudge to continue studying at the college. He saw power of respect and opportunities which had not his
father because of lack of ambitious. Deep desire not to staying in poorness gave him motivation to plan his future by
himself and become a leader of his family. Sometimes people learn lessons, but do not realize them at that moment.
He needed power of dignity and respect. Perfectly realized and learned from other’s failure that underachievement
is consequence lack of responsibility. His drive to link personal life and way of the carrier for self-realization
became fear of failure. With deserve of girl’s father whoever he liked, unacceptability and heartbreaking of his low
level of life disappointed him. With all of these happiness, he lost a scholarship in sport carrier because of jaw
breaking.

Driver: Kids who is raised in imperfect family always tries to be ideal and hide shortcoming. And tries not to be
look like his life’s biggest short come – his father. Which means that father’s weaknesses became his strength and
treasures as an opportunities. “What doesn’t killed him, make him stronger”. Only tool he found was to giving
himself another chance to live with desires. From the second side, he would increase his life quality and level.
Third and mostly valuable part is to influence another’s life to fill them by your lack. Once his friend remarked “if
he had been successful, you wouldn’t have the drive you have now”.

Build: Starbucks was alive organism for him, which needs care to give you fruit such as passions, interest and
commitment. After father’s dead he realized, he had judged unfairly. Therefore, he channeled his drive to build the
company where his father would be proud to work. This is why on a fist plan came employee’s life quality with
health coverage for those who worked more than hour per week. His father changed 30 job where an uneducated
person just didn’t have a shot. Schultz created unique values and cultures for employee where he respect no matter
where they was coming from, or what was their color of skin. Because none respected and gave his father such
opportunity. He did it by his heart. This is why competitive difference and signature became culture and values. His
father didn’t have ability to purchase adequate house for family, so Schultz did it.

Became Leader: And once Niccole Machiavelli said if ruler wants to be appreciated, people should always feel
contrast between kindness and spite. To never forget where they are coming from. Therefore, reflecting on
Starbucks’s growth, he believed that his willingness to move out from comfort zone, asking questions, being curious
and not ignoring difficult situations is leader’s main value in a way of spotlight and victory.

2. What characteristics and experiences are most important in Schultz’s development as a leader?

First of all we would like to mention, that Schultz had one of the difficult and charging childhood ever, therefore
he was so strong and steady person. Starting from very deep childhood, maybe since he was 7 years old, he had a lot
of experiences to recall complicated things, his family was so poor, his mother was ill and they didn’t have health

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insurance, also his father had problems at work and never earn enough money to care of his family, cause of this
fact he always said that these days were really heavy for him and never will forget these life’s experiences. Also, he
said, that when he was facing so many hard thing, it helped to improve and undergo difficulties and know this skills
are always with him.

The main characteristics, which drives Schultz’s forces are self-confident, self-steadiness, principality, stubbornness
and strong desire of development, let me give you some examples, he always tried to take from other people
leadership skills, for example reflected on the life sessions formed him as a leader, because he realized that he
didn’t want to stop. He was direct person and said everything what was thinking, he seemed that his father wasn’t
enough educated and that’s why he had never had successes at work, because he thought that intelligence is one of
the important to be skilled and sophisticated and his father’s bed characteristics always helped him to improve his
ones, also he had diverse neighborhood at work, which help him to improve skills and had conversations and
meetings a lot of kind of people.

One of the important thing also was different kind of jobs during his life, Also all jobs helped him to learn
something, things which didn’t like, for example when he was working in Xerox, he was always in charge and it
helped him to getting new leader skills and during these difficulties, he always tried to motivate himself.

3. Was Schultz correct to put his concerns about Starbucks’ direction in the email to CEO Jim Donald?

Howard Shultz built Starbucks brand with fundament of very important uniqueness of brand value. It was one of
the first company, which provided health insurance for its employees. For Howard it was crucial to give customers
emotions and relations that lack today’s society. Starbucks is not just coffee, it is “best coffee for the best you” since
the brand produces high quality beans to inspire and nurture the human spirit – one person, one cup, and one
neighborhood at a time. It is obvious that Shultz was building this company with very stressful background and
emotions are very important, but somehow Joe Nocera’s article is right. On the way of rapid grows company
definitely lost its value and Shultz want this value back, but he also wants to open coffee houses on different
location and get high profit.

Shultz aim is to open 40,000 stores but it really isn’t easy to protect and keep up all those “traditions” which
Starbucks had at the beginning. It seems, that he is obsessed with the idea about amount of store and all group
members have to work only to open more store as fast as possible. But during this process company lost its “soul”
and this process is too painful for Shultz. He has emotional attachment with the time, when he started built his
dream, after years he still trying to keep up his dream. But reality is that, it is difficult to keep brands identity and
high profit in the condition of rapid grows of market, when other companies are trying to fit customer’s wants.

In his email Howard obliging responsibility to everyone, included himself, but actually it sounds like he blamed his
workers for created situation. According case, everyone was included in decision making process and responsibility
is up to each team member, especially Shultz. He is main participant and as leader, he has the most important role
to inspire and support his team members. But in his email, we see his concern and complain mostly, rather than
support. Because of this, we think, that communication through this email wasn’t correct. He should be more
realistic, consider market situation, and choose one out of two option – to open as more stores as possible or keep up
company’s “soul”. If he wants to protect his company, he, as leader, should be motivator, supporter and inspiring for
his team members, to reach the goal together.

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4. How should Schultz navigate the challenges of sustaining Starbucks’ growth while staying true to its
authentic roots as a unique local coffeehouse?

Schultz wants the business to preserve its core value as a coffee-place where people have unique experience of
enjoying the process of coffee making. In the past the customers could watch the baristas scoop fresh coffee from
the bins and grinding it fresh in front of them, smell the aroma of the roasted bins and converse with the baristas. It
all created a unique experience for them, it was a place where they could feel at home, kind of a “third place” where
they could spend time and relax. This was an atmosphere which enabled customers pay $4 instead of 60 cents in the
past. But, the rapid growth has taken this experience away from Starbucks, and this is starting to reflect on the
declining prices of its stocks.

One suggestion is that Starbucks can hire one person as a front of the house in each store who will showcase the
process of making coffee. First, roast the coffee beans, then scoop the coffee and grind it, let the aroma spread
around. And, lastly pour the naturally made coffee in a cup. This can be done upon customer orders (who are
willing to spare some time to enjoy the process and converse with the barista) or/and just for showcasing the
process to help the store gets its old feeling back of comfort, authenticity and community.

So, it is not about selling coffee. Schultz knows it well that he must also sell the experience to attract more people
and stay competitive in the market. For this, he needs unique approach to the company’s strategy. In addition, of
what I have suggested above, Starbucks must try and find the ways to communicate with the customers differently
than other coffee houses. In other words, it must show that they care about their customer. Because if they do the
reflexive response is customer loyalty. It is important to understand the needs of the customers, to think like them.
So, if Starbucks trains its baristas in this fashion they will be able to establish unique relationship with their
customers. One example is using their first names. So, if a Starbucks thinks from a customer perspective it will be
able to establish itself as a leader in the industry and gain back the high stock prices. Because, the leaders job is to
listen to others. Why not to listen to the customers? They are the most important elements of the business
eventually, if they do not like your coffee or the experience ether get form you, they won’t buy form you. But, if
they do they will be yours forever.

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