Onward – The Romance of Business

Onward, a memoir written by Howard Shultz, founder & ceo (the company does not use capital letters as it is not a position of authority) of Starbucks (1986 to 2000 & then again from 2008 to 2017) is an amalgamation of art, business & magic. This one takes you on a classic journey of an entrepreneur who scales up a business and hands it over to professional management for focusing his energies into business development in his role as chairman. Then, as fate would have it, his original vision of Starbucks seemed to be diluting and he took over as ceo to turn the business around.

This one stays true to the romance of experience that ONE CUP of coffee and getting hands dirty to set business in order! Below is my interpretation of the book –

• No business can do well for its shareholders without first doing well for all the people business touches. For us, that means doing our best to treat everyone with respect and dignity, from coffee farmers to baristas to customers and neighbours. Striving to achieve profitability without sacrificing humanity sounds lofty. But I’ve always refused to abandon that purpose, even when Starbucks and I lost our way
• When Starbucks lost its core of making that perfect espresso shot as per Howard, he chose to close ALL 7100 stores for training with a note outside stating the reason for closure. This was a bold move as the impact of losses, criticism and admission of inferiority to give competition a chance was huge!
• Pouring espresso is an art, one that requires the barista to care about the quality of the beverage. If the barista only goes through the motions, if he or she does not care and produces an inferior espresso, then Starbucks has lost the essence of what we set out to do 40 years ago: inspire the human spirit
• If the espresso was not good enough, I told everyone at the end of the video, they had my permission to put it out and begin again. Then there was milk. Stacking milk to create a creamy sweet consistency is crucial. Unfortunately, in the name of efficiency, our company had created some bad habits among baristas. This is common with most businesses that in the name of driving efficiency drift so apart from the true business that it a positive bottom line starts contracting the topline
• Howard’s vision of Starbucks came from Italy – This was so much more than a coffee break; this was theatre. In every bar I felt the hum of community and a sense that, over a demitasse of espresso, life slowed down
• On Business – That is what merchants do. We do something ordinary and infuse it with emotion and meaning, and then we tell its story over and over again, often without saying a word
• A well-built brand is the culmination of intangible that do not directly flow to the revenue or profitability of a company, but contributes to its texture. Forsaking them can take a subtle, collective toll
• This focus on customer experience is something I have never witnessed – New espresso machines that we had installed, while increasing efficiency, were too tall. This unforeseen barrier prevented customers from watching baristas create their beverages. The height also kept baristas from engaging with customers in the same manner that had enchanted me in Milan. We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma. If coffee and people are our core, the overall experience is our soul. And sandwiches!! He banned hot sandwiches (despite higher margins) as the smell of burnt cheese dampened the coffee aroma! Talk about experience here!!!!!!!
• The merchant’s success depends on his or her ability to tell a story. What people see or hear or smell or do when they enter a space guides their feelings, enticing them to celebrate whatever the seller has to offer
• His Transformation Agenda while coming back as ceo –

• 1. improve the current state of US retail business
  2. reignite the emotional attachment with customers
  3. make long term changes to the foundation of our business ( Wall Street takes it as short term dilution)

• Learning from metaphor of Beatles (in one of their off-site sessions) –
  1. Icons make sense of the tension of the times, offering hope and even mending a culture in turmoil
  2. Icons assert cultural authority, helping frame the way people view the times they live in
  3. Icons don’t confuse history with heritage, and always protect and project their values
  4. Icons disrupt themselves before others disrupt them
  5. Enduring icons are willing to sacrifice near term popularity for longer term relevance
• We thought in terms of millions of customers and thousands of stores instead of one customer, one partner and one cup of coffee at a time. We forgot that “ones” add up. Their new mission: ‘to inspire and nurture human spirit one person, one cup, and one neighbourhood at a time’
• Protect and preserve your core customers. The cost of losing your core customers and trying to get them back during a down economy will be much greater than the cost of investing in them and trying to keep them
• I can see the light. I know what we have to do. We have to show up. We have to do the work. And doing the work means identifying answers to tough problems. What matters is that we push for answers for the problems in front of us and are curious about the things we do not see, and look for wars to get better, smarter, more efficient, and push for reinvention and innovation
• The importance of Supply Chains –

• 1. And depending upon changes in weather conditions, orders varied. A humid day in Chicago meant stores could run out of non fat milk by midday. A rainy week equalled inventory overstock. Every time a barista had to tell a customer, “Sorry, we’re out of vanilla syrup” or “We didn’t receive our banana shipment so I can’t make your Vivanno”, the fragile trust between Starbucks and our partners and between Starbucks and our customers fractured
  2. How lean thinking helped in service environment – we were spending so much time fixing moments, but not actually solving problems. But fixing moments, like mopping a dirty floor, only provides short term satisfaction. But take take the time to understand the cause of the problem, like how to keep a floor from getting dirty in the first place, solves, maybe eliminates a problem for the long run

• On the Board of Directors making them make a Plan B of cost cutting (USD 400MM) & then asking the management to execute it as Plan A – Boards of directors do not exist to manage companies, but rather to make sure companies are managed well. Boards are at their best, I believe, when directors have complete transparency so they can provide informed guidance, offering an outsider’s experienced prospective to push a company’s management further than they might otherwise go
• How could any instant coffee – a universally sour, watery, and simply undrinkable liquid made from a combination of arabica and robusta beans – smell or taste even remotely like Starbucks rich dark roast? Starbucks finally cracked this code by making an instant coffee (VIA). This shows innovation and learning to conflicting thoughts is an important leadership trait (Read what Robert Kiyosaki says on the test of first rate intelligence here)
• A core capacity of leadership is the ability to make right decisions while flying blind, basing them on knowledge, wisdom, and the ability to stay wedded to an overriding goal
• More art than science, naming a product is akin to going on a treasure hunt without a map. There is no guaranteed route (On VIA)
• Effective leaders share their intertwined attributes: an unbridled level of confidence about where their organisations are headed, and the ability to bring people along
• This one was a paragraph but I want you to read & re-read this again & again. It really doesn’t get better than this –

• 1. Grow with discipline.
  2. Balance intuition with rigour.
  3. Innovate around the core.
  4. Don’t embrace the status quo.
  5. Find new ways to see.
  6. Never expect a silver bullet.
  7. Get your hands dirty.
  8. Listen with empathy and over communicate with transparency.
  9. Tell your story, refusing to let others define you.
  10. Use authentic experiences to inspire.
  11. Stick to your values, they are your foundation.
  12. Hold people accountable but give them the tools to succeed.
  13. Make the tough choices; it’s how you execute that counts.
  14. Be decisive in times of crises.
  15. Be nimble.
  16. Find truth in trials and lessons in mistakes.
  17. Be responsible for what you see, hear, and do.
  18. Believe.
• Growth, we now know all too well, is not a strategy. It’s a tactic