Howard Schultz on Fixing What Ails Starbucks

Ex-Starbucks (Seattle) CEO Howard Schultz has some advice for the leaders of the coffee chain he led to global prominence (but no longer actively participates in): “The path forward should be what has guided the company over decades of financial success: Inspire your people, exceed the expectations of your customers, and let culture and servant leadership lead the way.”

Schultz made those comments on his LinkedIn page, in the aftermath of Starbucks releasing its fiscal second quarter results ended March 31, which showed the company’s global comparable store sales declined 4% and its consolidated net revenues declined 2%, to $8.6 billion.

Schultz described those results as a “significant miss” and said since those numbers became public, “I have been asked by people inside and outside the company for my thoughts on what should be done. I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace. The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.

“Senior leaders—including board members—need to spend more time with those who wear the green apron. One of their first actions should be to reinvent the mobile ordering and payment platform—which Starbucks pioneered—to once again make it the uplifting experience it was designed to be.

“The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation that inspires partners, and creates differentiation in the marketplace, reinforcing the company’s premium position.

Through it all, focus on being experiential, not transactional.”

Though he’s no longer active in the chain’s management, Schultz remains Starbucks’ largest individual shareholder, holding shares that were valued at $1.5 billion at the end of last year, the Seattle Times reports.

In response to Shultz’s comments, the Times also reported that Starbucks released a statement saying, “We always appreciate Howard’s perspective. The challenges and opportunities he highlights are the ones we are focused on. And like Howard, we are confident in Starbucks long-term success.”