Our appetite for growth, for innovation and for transforming the company in many different ways probably has never been stronger. “ “
CONTINUED FROM PAGE 31 32 ;e Costco Connection APRIL 2011 coffee shops closed, with this sign on the door: “;;;;; ;;;;;;;; ;;;;;;;; ;;;;;;;;. ;;;;’; ;;; ;;’;; ;;;;;;;;;; ;;;;;;;;; ;; ;;;;;; ;;; ;;;;;.” It was an extraordinary measure to retrain the company’s 135,000 baristas on the art of pouring the perfect shot. But closing stores for an afternoon was really just a small part of a complete corporate makeover. It started at the top. Schultz had stepped own as CEO in 2000, relinquishing day-to- day management of the company to focus on global strategies. But on a Sunday evening in early 2008, he summoned the company’s enior managers to his Seattle home for a dramatic announcement: After months of wrestling with the idea, he had decided to return as the company’s CEO. He made the same announcement to a thousand Starbucks employees (called “partners” at Starbucks) at corporate headquarters the next day. “We have to find and bring the soul of our com- pany back, find our voice,” he told the crowd, to strong applause. The makeover that was to take place over the next 24 months reached throughout he company, dissecting everything from its organizational structure to distribution methods to an antiquated checkout system in the stores. The most painful step was store
closures. For years, Starbucks had enjoyed a
sales-to-investment ratio of two to one—
that is, a store typically brought in $2 for
every $1 it cost to open within 12 months.
But hundreds of stores were missing that
mark, including many newly opened ones.
Most of the stores on the hit list had been
opened within the previous three years.
COURTESY OF STARBUCKS
leaner company would be a better one—and that it could survive the challenges of the recession. “What I think we had going for us during our transformation is that there was till a large reservoir of trust from our custom- ers and obviously from our people,” Schultz says. “But we had to demonstrate that, as lead- ers, we were going to transform the company in a way that would not dilute the integrity of the brand and the integrity of the culture.” In late 2008, Shultz and his team trav- eled to New York for a biennial conference with investors and Wall Street analysts. Despite all the steps taken over the previous year, comp sales were still down worldwide. Schultz addressed the group, outlining the cost-cuttings and the new programs the company had undertaken. When we all meet again in two years, he boldly predicted, we’ll all talk about where Starbucks stock was, and where it is today.
Fast-forward through those two years to
last December, and Schultz again stood before
analysts in New York. He triumphantly
reported that in 2010 Starbucks’ revenues had
reached an all-time high of $10.7 billion; company stock, trading for around $8 just two
years previously, had jumped back into the