Thursday, April 21, 2011

Howard Schultz's New Book

I've just finished reading Onward: How Starbucks Fought for its Life without Losing its Soul, by Starbucks CEO Howard Schultz. I recommend that you take a look at the book, if you are interested in hearing the details of the company's transformation over the past few years. Schultz explains how the firm had allowed the unrelenting pursuit of top-line growth to undermine its unique strategic positioning and competitive advantage. Then, he explains how the firm has tried to return to its premium coffee roots. The book provides a unique portrait of how and why a firm can fall so in love with growth that it can erode its brand and competitive position. I especially enjoyed the details regarding how Starbucks recast its vision and strategy, and then rolled that out to employees. That rollout process certainly was interesting and thought-provoking.

While Schultz does take responsibility for some of the problems that occurred before his return as CEO, some might say he deserves even more blame. He pushed for incredibly rapid growth in multiple directions and did not recognize the dangers for quite some time. To his credit, he finally admitted the flaws in the strategy when the numbers began to decline. He didn't just blame the problems on the recession, but instead, he took a fresh look at everything the firm did. Schultz made a number of moves to improve Starbucks' products and service.

The book does leave some questions though. Has Starbucks completely learned the lessons of the past? While many of the recent moves have indicated a shift back to the core premium coffee roots of the firm, other moves seem similar to past drives for top-line growth above all else. Schultz clearly finds himself walking an interesting tight rope, trying to "recapture the firm's soul" while still pursuing growth.

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