Howard Schultz joined Starbucks in 1982 as director of retail operations and marketing. He became CEO in 1987 and took the company from 17 stores then to 2,498 in 2000 when he handed the CEO role to Orin Smith and became chairman and chief global strategist. Smith retired in 2005 and Jim Donald became CEO. Two years later, during the depths of the recession Starbucks nearly drowned in its caramel macchiato. After decades of breakneck expansion under Mr. Schultz, tight-fisted consumers abandoned it. The company's sales and share price sank so low that insiders worried Starbucks might become a takeover target. So in 2008, by which point there were 15,001 stores worldwide, Schultz returned to the CEO role with what he called a "transformational agenda" that included wooing back customers, remodeling some stores and closing 900 others (predominantly in the United States), streamlining the supply chain and changing the executive team.
In his several decades of leading Starbucks, he provides a good example of a leader who has demonstrated both healthy and unhealthy leadership attributes.
Healthy leadership
Taking Starbucks through the "transformational agenda" had the effect, according to one commentator of leaving "Mr. Schultz a changed man. Starbucks, these people say, is no longer 'The Howard Schultz Show'. The adjective that many use to characterise his new self is 'humble' – a word that few would have applied to him before." And Schultz says of himself that "he can no longer run Starbucks through the Cult of Howard … he readily acknowledges that he badly misread the economy and underestimated the extent to which his customers would pull back during the recession".
During this traumatic period in Starbucks's history Schultz learned to listen to his executives and take their advice. In December 2008 during an executive rehearsal for a meeting with Wall Street analysts Schultz kept interrupting. "Vivek Varma, who had recently joined Starbucks as head of public affairs, told him that he should leave. No-one could remember anyone talking like that to Mr. Schultz. But he left."
A different example of the adoption of healthier leadership habits concerns the rollout out of Starbucks instant coffee Via in January 2009. Market research was showing that sceptical customers needed a lesson about instant coffee. Some executives worried that a big rollout might flop. Ms. Gass and a few others told Mr Schultz that Starbucks should delay Via and introduce it in two cities before going national. "That was hard for him," Ms. Gass says. But rather than overrule his executives, as he might have in the past, Mr. Schultz agreed. It turned out to be the right decision. After testing Via in Seattle and Chicago, Starbucks rewrote the plan for a nationwide introduction. In Schultz's words: "leadership is the courage it takes to talk about things that in the past, perhaps we wouldn't have, because I'm not right all the time."
One aspect of Schultz's leadership that has remained constant during his tenure at is being fanatical about Starbucks. He remains obsessive about the details. One customer tells the story of how he emailed Schultz to say that coffee lids in a particular outlet leaked coffee onto his shirt. Schultz's almost instant reply was that he was "On it." And his employees have respect and trust him on that score.
Unhealthy leadership
In the years 1987 to 2000 when Schultz was growing Starbucks from a small US West Coast chain to a global multi-billion dollar business (described, by Rupert Everett, a British actor, using an ill-health analogy as "a cancer") he had an in-company reputation for being an iconoclast, measuring success on his own terms.
He had many hates – research and development among them: A former executive recalls what happened to anyone with the temerity to suggest doing more research. "Everybody would cringe and say: 'You're new, aren't you?' Howard would say: 'We're not P&G.' " He's on record as saying "I despise research. I think it's a crutch." Advertising was another thing he was not interested in and he did not care much for cost control either.
Starbucks immense success hid some of the symptoms of ill-health that Schultz should have been paying attention to. With hindsight he remarked: "We got swept up …We stopped asking: How can we do better? We had a sense of entitlement."
Indicators and actions
It is dangerous to generalise from the specific, but the stories of Schultz's leadership that have been related in books and on film reveal some common indicators of healthy and unhealthy leadership.
Positive indicators
• a strong desire to learn, grow, and change
• the ability to take in and learn from the information (direct and tacit) coming from people about an organisation's leadership and then taking action to get it right
• being willing to take the hard hits and difficult conversations and see them as valuable learning
• listening
• promoting and actively 'walk the talk' on a strong set of humanistic values
Negative indicators
• Leading through command, control, and coercion.
• Being volatile, unreliable or untrustworthy
• Having scant ability to gain the trust and confidence of others
• Passing the buck, scapegoating, or blaming others rather than taking responsibility
• Encouraging "yes men", and not encouraging people to challenge the process.
Actions for healthy leadership
• Regular, even continuous reflection of performance and adherence to a principle that practice leads to improvement, though in leadership never perfection
• Even senior managers can benefit from the help of mentors and coaches (and peers or direct reports who are around the leader a lot) who will tell them what they have done well, what they haven't and how they could do better.
• Learning from other leaders through the stories about them, observing their performance and behaviour, and assessing what they do well and badly. But remembering that everyone must develop a leadership style that suits their personality.
• Becoming a perpetual "student" of leadership. There is never an "arrival point".
• Even top managers can benefit from training and development programmes.
What's your view on unhealthy leadership? How would you describe healthy leadership?
Naomi Stanford 