Leadership Analysis on Howard Shultz
It’s not coffee, It’s a way of life Being a leader seems rather simple by definition.
One that Is followed by other is a leader. However, the trivial aspects are uncovered when you ask what makes followers follow a leader, how far are they willing to follow them, and does where the leader want to go a reason for the following? The leader I chose Is Howard Schultz, Chairmen and CEO of Cutbacks. His book is titled Onward: How Cutbacks Fought for Its Life without Losing Its Soul. Schultz describes his vision for what a company should be and how he Implemented this vision Into Cutbacks overtime.
HIS vision Is value, ND unlike many others In his shoes, is not distracted by profit As many leaders have something of a crucible at some point early on, Schultz has made very little mention of his early life shaping who he Is today as a leader but rather his experience with Cutbacks and its transformation overtime. At each barrier throughout his and his organizations career, he learned how to get around it and, in turn, learned how to lead others around It as well.
I do not believe that Howard Schultz was a leader who found a meaner to lead.
I believe that he found a passion and desire so strong that he knew the only way he could ever see his villous Is It he led the charge. Although many to the Ideas that were used to make Cutbacks what it is today came from one man and his vision, without Klutz’s unique style of leadership, It Is safe to say Cutbacks would no longer exist. What is significant about Schultz and what separates him from many others is the way he conceptualizes the way he thinks things should be. His values and beliefs are concrete and when he related them to the coffee industry, he refused to let even one be sacrificed in the process.
The base of what he thought a merchant should be can e seen as one of the many Ideas Schultz had that was crucial In the development and monumental growth of Cutbacks. He says “That’s what merchants do. We take something ordinary and infuse it with emotion and meaning, and then we tell its story over and over again, often without saying d word”. After d trip to Italy and seeing the presence of espresso in culture, Schultz saw that the product can mean much more to the customer than Just something to drink and get a mid-day kick from.
As Dunk Donuts fulfills the role of getting you though the day with quick caffeine.
E saw that Cutbacks could provide much more meaning to the customer than Just the effect you get when you drink coffee. After sharing this love for the culture of coffee with original Cutbacks founders they declined his steps moving forward and Schultz went on to start his own coffee house and his first memo included this mission statement: II Georgian will strive to be the best coffee bar company on earth.
We will offer superior coffee and related products that will help our customers start and continue their work day. We are genuinely interested in educating our customers and will not improvise our ethics or integrity in the name of coffee bars will change the way people perceive the beverage, and we will build Into each II Gleaner coffee bar a level to quality, performance and value that will earn the respect and loyalty to our customers.
From the love and care it takes to make a special espresso drink to the knowledge and experience that can be gained about how coffee and espresso really came to be, a customer can become much more appreciative of their mid-day routine caffeine stop, even if it costs a couple extra dollars.
Another simple idea that as a foundation for what Cutbacks is today is where he sees the coffee house should take place in the community and in society as a whole. He called home your “1st place”, work your “2nd” place, and the coffee shop your third.
Everyone has their home where certain activities take place and work (the same) but without a third place there is something missing from someone’s everyday life. Where do you read, socialize, or Just relax if you are not yet ready to go home where often might entail other types of work? He thought that Cutbacks could serve more than Just a place to et coffee but a public place that could provide a much needed environment to socialize, read/study, or even Just to think. It was ideas like this that Schultz was not willing to let go of and, in turn, made Cutbacks such a giant in American society.
Schultz has really illustrated what it meaner to be persistent.
Whether it was arguing with Cutbacks back in the early ass’s for over a year to eventually convince them to make him the director of marketing, or completely breaking off from the organization to start his own coffee house because Cutbacks did not see the vision e had for what a coffee house should be. He had, what some would see as, stubbornness in him because he knew that his vision was not fueled by capitalism but by passion and he was not willing to sacrifice that for anything.
After breaking off from Cutbacks and starting II Georgian to continue his apparition for an ideal coffee house he was successful enough to buy out Cutbacks within 16 months of his departure. Howard Schultz possesses a very unusual amount of courage in his leadership style. When you think of what a leader really is at its most basic definition t is one who is followed by others. When Cutbacks stepped into uncharted territory Schultz was able to connect with employees furthest away on the chain of command, the baristas.
In order to gain followers in his vision for Cutbacks he went to very risky lengths to be sure that he was being followed by all employees of Cutbacks and not lust those reporting to him. After his 8-year hiatus as CEO, Cutbacks was hitting a real standstill, Just as the majority of all other businesses were during the height of the recession. In 2008 Schultz said “As chairmen I hold myself personally responsible or the problems we have created”. Against many others advice, Schultz had all Cutbacks close down early leaving a note on the door that read “We’re taking time to perfect our espresso. Great espresso requires practice.
That’s why we are dedicating ourselves to honoring our craft”.
Baristas then watched a DVD organized by Schultz attempting to connect with the baristas on a personal level to encourage them to see the vision of what their product should be. Although this was a 6 million dollar stunt, and considered highly unconventional by many business leaders, it worked. Howard Schultz preformed unconventionally more often than not which truly does make him a leader as opposed to the contrary. The biggest crisis of Cutbacks and, Schultz would argue, of himself as well, is during the ass’s when the economy took a plummet.
As countless other corporations had to do as well, Cutbacks had to make cuts and reevaluate whether it was feasible to continue or not.
As Cutbacks was torched to shut down around unsuccessful locations, Schultz made a bold move by including remarkable severance packages as he took personal responsibility for the failure of many. He made an even bolder session to gain loyalty from even the lowest of his employees and stated that not only will workers (part-time included ) have access to full-coverage healthcare but stock options as well.
These benefits were unheard of for part-time workers and even fulfillment workers of Jobs such as an espresso barista. Although the barista Job title does not carry a desirable salary, Cutbacks gained a level of loyalty that cannot be measured by a figure. 5 years later Cutbacks held a stock growth of 25% as the DOD lanes was down 10% and the NASDAQ 60%.
In Lecture 4 we discussed how effective leaders illustrate the opposite of what is ladled the “self-serving bias”. This bias occurs when one tends to attribute positive outcomes to stable and dispositional aspects of themselves and less desirable outcomes to situational causes.
Here, Howard Schultz took the undesirable outcome of unsuccessful Cutbacks locations (their employees) and considered it as a personal failure. He expressed this by the unnecessarily generous severance packages he provided those he had to lay off. Instead of using a situational cop-out (recession) he took it upon himself to close down all United States Cutbacks location for the evening to better educate baristas on the culture of espresso and what he felt a coffee shop could and should be.
After monumental success following these major decisions by Schultz he did not attribute the later success to his decisions as a leader, but rather the personal efforts of the baristas at Cutbacks. This is a perfect example of how the self-serving bias can be used as a tremendous tool for a leader if, “simply’, reversed. In Bennie and Thomas article titled the crucibles of Leadership, they address the four essential skills of an effective leader. The first being the ability to engage other n shared meaning. Schultz does this through what he saw as the culture of coffee and how it can play a role in everyday American life.
The second is a distinctive and compelling voice and Howard must have had something of the sort as he quickly gained the capitol to buy out Cutbacks after leaving, as well as creating the video for baristas around the nation to better understand where true quality comes from. Third, an effective leader needs to have a sense of integrity; I feel as though every move Schultz has made speaks integrity and does not need further analysis. And Ruth and most important of all, an effective leader must have adaptive capacity or applied creativity.
Where as many leaders in Klutz’s position would have looked for every meaner possible to cut costs and put together pennies, Schultz announced a benefit and stock program option that made Jaws drop around the globe. Yes, it was risky, but it was creative in that he knew what he knew the amount of loyalty he would gain would be paying itself back for years and even decades to come. Schultz puts it very simply when he says muff have to strike a balance between profit and social conscience”.
Howard Schultz has proven to be an outstanding leader in so many ways during his career as a coffee entrepreneur.
However, there is one decision he made that I don’t believe to be the best route for a leader. For 8 years Schultz stepped down as CEO and remained as the chairmen of the board. I like this decision in that he was taking too much personal responsibility tort some to the tailored that were occurring within Cutbacks, but I don’t like in the image it portrays for all that were following him. Removing yourself from a leadership role such as this, regardless of the reasoning, ally takes a blow at the image you want to portray as a leader.
I best relate it to being on a little league baseball team and having to meet your new coach one Saturday morning right before a mid-season game because the original coach no longer wanted to be coach. Whether or not he had a legitimate reason for making the decision he did, I would bet a fortune that Saturdays game was not the team’s best and regardless of the players’ health. Regardless of Howard Klutz’s temporary step down as coach, he is a marvelous example of what a leader could and should be.