By: Annabelle Low, GMBA Class of 2018

On April 11, 2017, Howard Schultz, Executive Chairman, Starbucks Coffee Company, delivered a keynote lecture entitled “Building a Trusted and Enduring Brand in China and Around the World” as part of the Tsinghua Eminent Entrepreneur Lectures. Under Schultz, Starbucks has opened more than 25,000 stores in 75 countries. Schultz was shortlisted as 2011 Businessperson of the Year by Fortune magazine, and named one of Time magazine’s “200 most influential people in the world”. Here are three things that I have learned about building a global brand:

                                        Howard Schultz, Executive Chairman, Starbucks Coffee Company, delivers his keynote lecture

1. Play the long game.

Schultz put forth this core question: what is the responsibility of a for-profit company in the world today? When he is sitting in his boardroom, he thinks about two empty seats, and those empty seats are occupied by a customer and a Starbucks partner. Every time they debate a question, make a decision or embrace a new strategy, he asks himself if this decision would make the customer and the partner proud. If it would not, then that decision is the wrong thing to do, even it would make them more money. He argues that businesses should build businesses around values, such as love, humanity, empathy and compassion. In the environment today, Starbucks faces stiff competition, so much so that it is hard to create success. He argues that it is these values, and their relationship with their customers that differentiates them.

If the culture and values of a company are not integrated with those characteristics, he posits that the company would have a hard time attracting and retaining great people. People are not going to feel part of something larger than themselves, let alone facing the same direction. The greatest strategy in the world, Schultz says, will not be sustainable in a culture that is deluded with the fracturing of trust and confidence, in which people do not believe in the mission, the leaders, or the company’s purpose. The understanding that culture, values and guiding principles in many cases are as important, or more important than the strategy itself. Starbucks did not succeed everywhere they went overnight, but the resiliency of believing in their core purpose, the passion and commitment to try and do everything that they can to put people first, the recognition that they cannot exceed the expectations of their customers unless they exceed the expectations of their people. In China, for example, they entered the market in 1999 and lost money for a number of years. Many people in America thought Starbucks should shut down in China as it was not working.

2. Put your staff first, and they will take care of the company for you.

Schultz grew up poor. Despite his success today, Schultz still experiences the fear of failure, the insecurity, the vulnerability, all those things that are wrapped in shame. But with it came a level of compassion, sensitivity, respect, and dignity for everyone – in recognising that if Starbucks were going to build a great, enduring company, they had to do it in a different way. They had to link shareholder value with value for our people, and turned it upside down.  At the top of the pyramid was not the shareholder.  At the top of the pyramid was our people, and in the middle was the customer, and at the bottom was the shareholder.

Starbucks was the first company in America to provide comprehensive health insurance and equity, in the form of stock options, to their employees. Starbucks also offers four-year free college tuition for every single employee of Starbucks in America, through their partnership with Arizona State University. It also announced that they were going to hire 10,000 refugees globally, and work to reduce racism in America. There were critics who considered these moves to be shareholding diluting, and would not be sustainable. Yet, Starbucks has grown to over 25,000 stores in 75 countries, employing over 330,000 people, with a market capital of almost USD90 billion. Not every business decision they make is an economic one. In fact, Schultz argues that the non-economic decisions that they have made are the primary reason they have been financially successful. This is because in order to create a great, enduring company, in the environment that we are living in today, the primary currency is trust. As managers and leaders, their obligation, their responsibility is to exceed the expectations of their people and build trust with them so that they can exceed the expectations of their customers.

Starbucks calls their employees partners, because they believe that everyone is an owner. That morning, they sat down with a group of Starbucks partners and many of them bought their parents. They had a meeting with them because for the last five years in China, they have had an annual meeting of the parents of our partners.  Not to talk about sales or revenue or profit, or the stock price, but really to talk about the celebration of family and for them to demonstrate our appreciation and respect and to show the parents the understanding of their responsibility to take care of their kids. 

In that meeting this morning, we wanted to understand what it has been like watching some of their parents get sick, and unfortunately the tragedy of some of the parents who had passed away. In a survey Starbucks conducted few months prior, they found out the number one benefit that their partners in China want from Starbucks is the ability for them to be able to take care of their parents as they age. The stories Schultz heard that morning made them cry, because they heard such personal stories, such vulnerability and such courage of people sharing with them the fear and the concern that they have about their parents ageing and their inability to take care of them in the future. To this end, in China, beginning June 1, 2017, Starbucks decided that they would offer healthcare insurance for critical illness for the parents of their employees.

3. Success is best when it is shared.

Schultz shared an experience he had in South Africa. When he visited townships in Johannesburg, he was crushed by their poverty as he himself had also grown up poor. Yet, he noticed these young people had so much joy, happiness, and gratitude, because of family.  When they told him their stories, he kept hearing an African word that he had never heard before, and many of them were using it. He finally got up enough courage and asked them “What is that word? Ubuntu. You keep using it, what does it mean?”. They told him that Ubuntu is a word that Nelson Mandela used many, many times, and it means ‘I am, because of you’.  I am, because of you. The level of unselfishness, the level of sharing, the level of responsibility to others – the recognition that I am only as good as the person next to me, the recognition of what it means to be a team and the understanding, the true understanding, that all ships rise when success is shared. Schultz never understood Ubuntu fully until he heard them talk about it, not what Ubuntu really meant, but what it meant to them, and the understanding of how it applies to Starbucks. He reminded the audience that everyone is here today because someone in their life had helped them get here. No one has gotten to where they are alone. Therefore Schultz urged the audience to pay it back, to their neighbourhood, their community and family.