Management Mistakes and Successes, Tenth Edition

Chapter 8. Starbucks—A Paragon of Growth and Employee Benefits Faces Storm Clouds

Howard Schultz was a dreamer. He saw a great learning opportunity with a most prosaic product, and he ran with it—despite all the skeptics and naysayers— to lead a venture to become the largest purveyor of coffee in the world, and to lead a fantastic journey for investors. Along the way, his firm became a model of enlightened employee relations and benefits, and of corporate social responsibility.

Starbucks went public in June 1992 at $17 a share. On the first day of trading, it closed at $21.50. If you had invested $10,000 then, your investment eventually would be worth some $650,000. While many firms offer options to key executives and technicians (as we saw in the Google case), Howard Schultz made them, as well as health benefits, available to everyone working for as few as 20 hours a week, even including those standing behind the counter at local stores. And these stores could be close, even across the street or down the block from each other.

Alas, by 2008, as an economic downturn hit the country, Starbucks' fortunes worsened and its charmed growth path became rocky.

HOWARD SCHULTZ

Howard Schultz rose from humble beginnings in Brooklyn. He was a quarterback at Canarsie High, a school so poor it didn't even have a football field. Northern Michigan University offered him a football scholarship, and he was out of Brooklyn at last. But he couldn't make the team, and resorted to bartending and selling ...