Starbucks Leadership: example of efficient application of servant leadership
Howard Schultz has been at the helm of Starbucks leadership for more than two decades in total. He is rightly credited for making the business the world’s largest coffee retailer with 17133 company-operated stores and 16700 licensed stores in 84 markets employing 254,000 people.[1]
On June 2000 Howard Schultz stepped down and assumed a new position as chief global strategist to focus on international expansion in general and expansion in China in particular. New internally promoted CEO Orin Smith oversaw store count to increase to 10000 locations with more than USD 5 billion annual sales. However, at the same time Starbucks market share at US decreased due to increased competition from McDonald’s, Dunkin’ Donuts and other competitors.
Howard Schultz and new CEO Laxman Narasimhan
Schultz returned at the helm of Starbucks leadership as CEO on January 2008 in the middle of global financial crisis to replace Jim Donald, who had succeeded Orin Smith in 2005. After a series of massive changes such as closing many underperforming stores, re-training employee and enforcing fair trade in coffee supply-chain, Schultz stepped down as CEO for the second time and became executive chairman.
Kevin Johnson was appointed as a new Starbucks CEO effective from April 2017. Kevin Johnson admitted having ‘venti-sized shoes to fill” referring to successful leadership by Howard Schultz. At the same time, the new CEO stated “I’m not going to fall into the trap of trying to be Howard. I’m going to be authentic to who I am as a person and who I am as a leader”[2].
Howard Schultz returned for his third stint as CEO on April 4, 2022. This time the role was interim CEO until more suitable person is found. The main reason for his latest return was to actively block attempts by baristas to form unions. In September 2022, former CEO of Reckitt Benckiser Laxman Narasimhan was named a new Starbucks CEO to take charge of the company in October 2022. Reasons for the choice of Laxman Narasimhan as the new CEO include his three decades of experience managing global companies and employee-cantered approach in management.
Leadership style exercised at Starbucks can be classified as servant leadership and it has been efficiently applied by Howard Schultz. Employees are placed at the centre of the business and their contribution is generously compensated in tangible and intangible means. “One former Starbucks worker noted that “nobody at Starbucks ever ordered anyone to do anything. It was always: ‘Would you do me a favor?’ Or something similar.”[3]
Starbucks Corporation Report contains the above analysis of Starbucks leadership. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Starbucks. Moreover, the report contains analyses of Starbucks business strategy, organizational structure and organizational culture. The report also comprises discussions of Starbucks marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Fiscal 2021 Annual Report, Starbucks Corporation
[2] New Starbucks CEO Kevin Johnson on Employing Teamwork to Fill “Venti-Sized Shoes” (2017) Starbucks Newsroom, Available at: https://news.starbucks.com/news/starbucks-ceo-kevin-johnson
[3] Leinward P. & Davidson, V. (2016) “How Starbucks’s Culture Brings Its Strategy to Life” Harvard Business Review, Available at: https://hbr.org/2016/12/how-starbuckss-culture-brings-its-strategy-to-life