Onward (60 page)

“Welcome to Starbucks’ INNOVATION Store.”

The bright, hand-chalked sign welcomed several of us into a mock store at Starbucks’ business offices, which serve as the support center for all of our stores in China. It was lunchtime, and our small group was seated at a long rectangular table dressed with a white tablecloth. I was not sure what to expect, but I was hungry and, looking at the small porcelain plates and silverware in front of us, I had a hunch that scones, blueberry muffins, and breakfast sandwiches were not on the menu. I leaned forward on the table, head resting against my hand, just smiling as I listened to our local partners explain what we were about to taste. I almost felt relaxed. After the past 18 months of rapid-fire problem solving, it was a pleasure to sit, listen, and wait to be pleasantly surprised by our partners’ self-directed innovation.

Our China team had spent the past few months experimenting with new recipes, infusing local flavors into foods and beverages that, one day, Starbucks might serve in its Greater China stores. During the next hour, a parade of new drinks and dishes were placed in front of me, one after the other, many with ingredients Starbucks had never used.

Peanut Mocha Frappuccino.

Iced Oriental Beauty with Aloe.

Then, a thick green drink called Black Sesame Green Tea Frappuccino. I took a sip. Delicious. It was a local twist on one of Starbucks’ best-selling beverages, Green Tea Frappuccino, that had been created in Japan.

“Green tea is an essential ingredient in Chinese culture,” the woman immediately to my right explained to me. “And black sesame is another ingredient that the Chinese use in cooking.” I nodded. Annie Young-Scrivner was the newest addition to the Starbucks leadership team. I had just hired her to be global chief marketing officer, and it was her first week on the job. She was a dynamic presence.

Annie came to Starbucks from PepsiCo, where she had most recently been chief marketing officer and vice president of sales for Quaker Foods and Snacks. A smart, charismatic leader, Annie is someone who I believe will bring to the team the global, multibrand experience the board had been urging me to acquire, as well as deep international perspective, most notably in China. Annie was born in China, and her parents moved to the United States when she was in grade school. She is fluent in Chinese and, over the course of her career, had lived in Shanghai, where she served as region president of PepsiCo Foods for Greater China, and worked in 27 other countries. The thickness of Annie's passport rivals any I have seen. She understands the Asian market as well as the culture to a degree few people in Seattle currently do. Annie elaborated. “In China, black sesame is looked at as a product that has efficacy. It helps your skin, and the women think that it keeps their hair from turning white as they age. The sesame itself is used in a lot of breads, pastries, and as a cooking ingredient for flavor.”

Next, lunch's main course. As each small plate was placed before me, it was obvious that our partners were truly thinking outside of the box. Sesame noodle salad. Spicy Thai beef wrap. Soup. Lasagna! Everything tasted fresh and flavorful, and while I knew our Asian stores probably would not serve noodles—research already told us that our customers in China did not want Starbucks to serve food they could easily get on any street corner—I was impressed by the creativity I was experiencing.

As was Michelle, who sat to my left. She had joined me on the trip, although not purely in a Starbucks capacity. In the past few weeks, I
had made the decision to go ahead and unleash one of the company's other brands: Seattle's Best Coffee, or SBC. The 550-store retail and packaged coffee business had been a stepchild quietly operating in Starbucks’ shadow. I chose Michelle as its president and gave her unspecific marching orders: Unlock SBC. Here in China, she was researching SBC business prospects.

Finally, dessert. A single scoop of ice cream
affogato
with a thick black sesame sauce. At the center of the table sat fruit kebabs and plates of small chocolates and pastries, even mini-sandwiches. Most notably, these dishes were meant to be shared in small group gatherings, social occasions that Starbucks’ food offerings currently did not cater to. But sharing is an intriguing idea, especially for crowded Asian cities such as Shanghai, where personal space is rare and people chose to entertain and gather in public spaces, like Starbucks.

Such sensitivity to regional lifestyles and palates is a critical piece in how Starbucks shows up around the world. Yet I knew that we had to resist the obvious. When we opened in Switzerland in 2001, we had been pressured to put the regionally favored beverage known as
kaffe crème
on our menu, but on opening day we sold dozens of Frappuccinos and barely any kaffe crèmes. Our international customers, we were coming to understand, wanted to taste Starbucks, not the store next door. But they were delighted when we put a Starbucks twist on their traditions. In Taiwan, when our partners created a product called coffee jelly, a gelatin made with coffee, the popular cool beverage migrated around Asia and became one of the region's best-selling seasonal products.

So even though every food and beverage we sampled in Shanghai that afternoon would not make it into Starbucks’ stores in China, I left our offices encouraged by the possibility that every country where Starbucks operates might exhibit the same entrepreneurial drive. Somewhere on the day's menu was another coffee jelly. Perhaps another Frappuccino. Or VIA.

For me, it had also been great fun to stop for a few moments to taste and ponder what could be.

At its core, I believe leadership is about instilling confidence in others, and being in China at this juncture as Starbucks turned a corner was an opportunity for me to allay fears about the company's stability and
then get our people excited about what is possible. About dreaming big. And then bigger.

I also wanted to instill a comprehensive understanding of the lessons learned from Starbucks’ trials. In the earlier years of the company, it was my job to imprint Starbucks’ mission to ensure the brand's consistency across cultures, but now my role is to imprint our most recent wisdom, and in some respects to translate the leadership's new operational mind-set. I am very conscious of not making the same mistakes in China or anywhere else in the world that we made in the United States, and we will proactively share our new tactics and techniques.

As time and resources allowed, we would roll out our new point-of-sale system and the Mastrena to our stores in other countries. Clover, too. Our experts from Seattle would share our new store designs, Lean techniques, and social networking knowledge with managers and our joint-venture partners. We would instill a new level of cost discipline and use our more efficient supply chain to improve distribution around the globe. And we would continue to ensure that each barista knew how to pour the perfect shot of espresso: like honey pouring from a spoon.

I've said often that every enterprise and organization has a memory. And those memories create a path for people to follow. As I see it, the transformation was a brief but specific period in Starbucks’ history, and our memory of its collective lessons will inform our future. They are already informing my leadership:

Grow with discipline. Balance intuition with rigor. Innovate around the core. Don't embrace the status quo. Find new ways to see. Never expect a silver bullet. Get your hands dirty. Listen with empathy and overcommunicate with transparency. Tell your story, refusing to let others define you. Use authentic experiences to inspire. Stick to your values, they are your foundation. Hold people accountable but give them the tools to succeed. Make the tough choices; it's how you execute that counts. Be decisive in times of crisis. Be nimble. Find truth in trials and lessons in mistakes. Be responsible for what you see, hear, and do. Believe.

In the lakeside city of Hangzhou, I stood up once again to speak to our baristas and store and district managers. Almost a year ago, Starbucks’ stock had tumbled to $7.17, its lowest close since 2001. Yet this
week, in America, our share price hit an 80-week high, more than $20 a share. While I rarely talked about our stock price, I did mention this to our partners who had gathered on the second floor of one of Hangzhou's 13 Starbucks.

I stand before you today to say that the momentum in the US business continues and I feel we will end fiscal 2009 strongly, going into fiscal 2010 with as much confidence about the future as we've ever had.

But the courage, the creativity, and entrepreneurship that we need in China must come from you. We have to establish a very healthy balance between the Starbucks history and heritage and your own Chinese culture. I encourage you all to challenge the status quo, to start thinking about what we can do to become more relevant. Let's really demonstrate the hunger, the excitement, the entrepreneurship that made this company great. However, we can't turn Starbucks into a company that we don't respect and don't recognize. We must do it in a balanced way.

Starbucks’ transformation was being achieved not simply because we were effectively responding to external economic, technological, and social challenges, or correcting the problems we had brought upon ourselves. Rather, it was being achieved because of
how
our partners tried to solve these problems.

If Starbucks is to be a company my father would have felt proud to work for, a company that my wife and children and our partners’ families will hold in high regard, we have to maintain balance on many fronts. Balance between the emotional and the disciplined. Between instinct and information. Between global and local. The personal and the professional, and, of course, between profit and humanity. Doing so will not be easy as we expand our brand and businesses around the world. But the sheer power that Starbucks Coffee has to positively affect the lives of tens of millions of people—partners and their families, customers, farmers, shareholders—is as invigorating for me as opening my very first store.

Before leaving Shanghai, we visited a beautifully designed store in the center of People's Park, a tree-filled oasis surrounded by traffic and office buildings. As we left and made our way across the park on yet
another hot, humid afternoon, the store's manager, Li Yan, ran to catch up with us, holding something in her hand. She reached us and handed me a flat wrapped gift. I opened it right there to find, encased in a box, laminated documents in Chinese. At first I did not know what they were, but Li spoke and someone translated. “These are four copies of China's very influential newspaper,
People's Daily
.” Then Li pointed to the date of one of the newspapers. I squinted a bit to see what she was referring to. July 19, 1953. My birthday. She had presented me with an original copy of a newspaper from the day I was born. The three other newspapers were from special dates in Starbucks’ history: the day the company went public (June 26, 1992), the opening of our first store in Taiwan (March 28, 1998), and when we opened our first store in Shanghai (May 4, 2000). As we each held a side of the box and looked at the newspapers, Li explained that it was a present to me on behalf of her partners. I was beyond touched. Truly taken aback by the thought and effort behind such a personalized gift. “
Xie xie
,” I said. She thanked me as well and returned to her store.