Yes Business Can
Repairing the damaged U.S. economy will surely be among the top priorities of President-elect Obama's new administration. But it is not reasonable to assume that our great country's future economic prosperity lies in the hands of one man, or will necessarily follow simply from a change of administration in Washington.
Despite the mistrust that American businesses have engendered as of late, history suggests a different truth: that while government can create a framework and conditions that will support positive economic change, it is American business that will turn things around, and deliver the prosperity and sustainable economic stability and security that can follow.
But today, an increasingly challenging economic climate around the world and a historic decline in consumer confidence at home are combining to cause many business leaders to stop leading their businesses forward. They have become fixated on the short term. And when short term results alone drive or unduly influence management decisions, the temptation to push off sound longer-term investments, those that will fuel innovation and strengthen the enterprise for the future, can become overwhelming.
With that mindset comes the false belief that investments in people and training can wait; that corporate social responsibility can be put on the back burner.
I believe passionately that this is precisely what American business leaders should not be doing today. Now is the time for business leaders to step up ... and to lead. Just as the American public voted on Tuesday for a sea change in the way our country approaches the long-term "business" of being America, so too do business leaders have an obligation and a responsibility to think of the long-term benefit their companies must provide for shareholders, employees and customers.
Today, perhaps more than ever before, we need to remind ourselves where we came from, what we are about, what we stand for and where we are going. We must recommit ourselves to living up to the principles and the core values that helped us establish our businesses in the first place.
Now is a time to be bold. Now is a time to invest, truly and authentically, in our people, in our corporate responsibility and in our communities. The argument--and opportunity--for companies to do this has never been more compelling. A recent opinion piece by former Vice President Al Gore Jr. and David Blood makes this point eloquently. "Sustainability and long-term value creation are closely linked," they wrote earlier this week in the Wall Street Journal. "Business and markets cannot operate in isolation from society or the environment."
I share that belief, and it has guided me and my partners over the past three decades, as we have grown Starbucks into the company it is today. Sure, we are the first to admit that Starbucks is by no means perfect. We have made our share of mistakes. But I can tell you unequivocally that as Starbucks confronts today's economic challenges, it will do so while remaining true to our principles and fostering a culture that genuinely embraces our collective humanity.
Last week, Starbucks gathered 10,000 of our store managers together for a leadership conference in New Orleans. I am proud to report that among many other benefits of the conference, our leaders performed more than 50,000 hours of community service in that still-struggling city. During the conference we also announced a set of ambitious but realizable goals for the way we source our coffee, how we help to sustain our environment, and what we can do to work with, and continue to contribute to, the communities in which we do our business and the world as a whole.
Despite the tight economic conditions, we made this significant investment in our people now for the same reason many companies would consider eliminating it: the current climate is yielding more discerning and thrifty customers. Consumers are spending less and will more closely scrutinize products; they will embrace only the companies and brands they trust and with which they identify.
Consumers develop a memory based on their experiences, and it is critical that business remains sensitive to that reality -- particularly in times like today -- and to not just be pushed along, or off course, by economic tailwinds or cross currents.
While I believe that an approach that values people as much as profit is in step with where we are as a nation, some may say that this approach is counter-intuitive. Others may claim that it is the opposite of the standard MBA playbook during a down cycle.
But in my view, the approach Starbucks is committed to is the only one that will enable us to deliver long term value to shareholders, partners and customers. And I am convinced that other companies whose leaders embrace this approach will reap meaningful, long-term rewards as well.
Last Tuesday's election results mark a new page in our collective history. And while U.S. businesses are in the midst of extremely challenging times right now, I have no doubt that the core strength of American ingenuity, and the courage of American business leaders, are the engines that can propel our country and the world back onto the path of prosperity.
If we believe in ourselves and remain true to our core values we will all succeed. Today perhaps more than ever before, I am convinced that responsible capitalism is the way forward.
Howard Schultz is Chairman and CEO of Starbucks Coffee Company.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
After the Sonic's debacle, I have no trust for Schultz's, he's a business owner trying to make a buck, end of story.
Sorry, a bitter former Sonic's fan.
I don't go to Starbucks, anymore...too expensive
Howard - Just to clear up a few things;
The 50,000 hours of "volunteer" work was not volunter at all. You mandated it to your partners. No one had a choice.
The overwhelming majority of your field leadership team (district and regional maangers) were not eager to go to New Orleans. They felt that ridiculous amount spent on travel, food, lodging and materials to introduce your new mission statement and guiding priciples would have been better spent keeping their highly competent peers that lost their jobs in July for another year.
Lastly, you have been mentioning humanity a lot lately. You are spending money to help the "humanity" in Indonesia, Africa, South America and other coffee growing regions, but what about in your backyard? If you had offered demotions to all the recently promoted Assistant Managers, Store Managers, District Managers and Regional Managers you could have kept all the retail personal you laid off. Then they would still have a way to pay their bills and insure their families. Showing them that level of concern would have meant so much, they would have doubled their efforts to help you turn this boat around.
All those 1000+ people you axed in July are 16 weeks away from running out of unemployment. With this job market (that you helped to create with your rampant expansion that you are now trying to reverse) they have no options. They are moments from losing their houses, cars and becoming just another statistic.
What's humane about
Also. Howard old pal, how about having your employees stop running the hot water at Starbucks sites NONSTOP to "avoid germs." You are wasting billions of gallons of water on this unnecessary and frankly inexplicable practice. Stop the waste!
Given the performance of Starbucks stock over the last year...
Now that gas is below $2 a gallon here in KC, perhaps Starbucks could help us out by bringing the price of a mocha down, too? In all seriousness, good posting. Much respect.
Brooklyn is in tha House!
Nice article.
I wish that being an employee of Starbucks was as romantic as Howard Schultz makes it seem. Corporate Social Responsibility starts at home first. That means, paying your workers a livable wage, which, right now isn't happening. Once that happens, perhaps I'll buy into this rhetoric.
Corporate responsibility. Isn't that when corporations are on the ropes, and ask the government to behave responsibly in bailing them out?
Detroit wants a bail-out, but refuses, for marketing reasons, to sell in the USA the highly fuel-efficient cars they sell in Europe. Case in point: "The 65 mpg Ford the U.S. Can't Have," in the September 4, 2008 issue of BusinessWeek. URL: http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm
And why isn't it available here? Ford says it because Americans won't buy diesels.
Well, there were any number of "experts" who said we wouldn't buy a black, wouldn't buy Obama.
Let Ford get some new "experts," or let them go the way of the dodo bird.
Try to find a diesel light-truck (e.g.; Ranger) for sale in the US. There isn't one. They make them for sale all over the world, but won't sell them here.
Mr. Schultz, this is a very thoughtful essay. Surely this country would benefit if all CEO's shared your commitment responsibility. But I have always been taught that If I critique how others run their lives (or their companies), I should probably have my own house in order first. In light of recent changes to the human resources "strategy" at Starbucks, specifically the "Optimal Scheduling" policy, one may be inclined to wonder if, since Starbucks has modified their human resources philosophy, they have also modified the core values to which they are purportedly being true.
http://www.thebigmoney.com/articles/saga/2008/10/29/starbucks-blues
Corporate social responsibility is somewhat of an oxymoron, especially coming from Starbuck's.
Starbuck's put the little guys, the neighborhood coffee houses and shops out of business, took the individual feel away and replaced it with a cold, green, retail coffee shop with weak and bitter coffee.
CALL YOU CONGRESSMAN AND SENATOR !!!!!
TELL THEY TO FORCE CREDIT CARDS COMPANYS TO GO TO A 30 DAY BILLING CYCLE.
MOST CREDIT CARDS ARE ON A 22 DAY BILLING CYCLE.
THAT IS 16.6 MONTHS A YEAR ---- BUT THEY ONLY SEND OUT 12 STATMENTS.
THEY ARE COMPOUNDING COMPOUND INTEREST !!!!!!!!!!
NO WAY ANYONE WHO CARRIES A BALANCE CAN EVER GET IT PAID OFF.
This is a very healthy forum. This is what we need. A debate of ideas from all prospectives. We are basically "starting over" at this point in our country's history. It will take much intellectual elbow grease to grow and ferment ideas into reality to boost the economy. It will take all of us to do this. The actual wealth of this country is the people in it. It is my overdue optimism that with the experience of such diversity within our country, new ideas may be projected by digging deep into ourselves and working to find the treasures that will make us all rich in spirit and longevity for the years to come. Actually, Jeffrey678, I got a hoot out of your comment regarding the HummerRV idea. Perhaps another comedic idea is "Car Parks" whereas unused automobiles are used, restructured, and turned into homes...
Schulzt's logic seems counterintuitive at this point in history, but it is what will make this economy grow again. The money is there for companies to invest in people. Companies must stop laying off or threatening to do so, so that the American consumer can start buying again. It is a circle that may defy our immediate logic yet it is quite simple---the only "people" who have enough money to invest is the American government. They gave business billions of dollars. Those dollars must be lent and businesses must borrow. In doing so, jobs, training, etc. continues and the consumer feels more comfortable in buying. The American public needs some job security so they can spend and companies must be prepared to put something in "upfront", understanding that profits will come when consumers and employees spend the money they earn. Furthermore, the deficit is not what you look at now; there will be time for that when the economy revives.
The statement about the "only people who have enough money to invest is the American government" is not correct. Right now there is an unprecedented amount of cash sitting on the sidelines in cash or in treasuries waiting for somewhere to go. Once things stabilize we'll see that enormous amount of cash put to work in this economy.
Would someone please provide a coherent explanation of just what "corporate social responsibility" is?
I own stock in many companies and, as long as they make money and operate within the law, I really don't care whether or not they carry out their "corporate social responsibilities".
Please provide a list of ten companies that "operate within the law" on their own!
Looking for a few to invest in for retirement!
Or "corporate personhood".
I disagree! Do NOT Minimize the Importance of Honest Government!
______________________________________________________________________
Why did Confidence in our Markets collapse? No Government enforcement of regulations!
Why did Crude reach $147 per barrel and then collapse to $61, a 19 month low? No Gov. Enforcement!
Why did "Illegal Naked Shorts" run Lehman and others into bankruptcy or near? No Gov. Enforcement!
Why did "TRICKY" Mortgages by subsidiaries of Investment Banks collapse Wall Street? No Gov. Enfor!
So do not minimize the importance of HONEST Government
You must be logged in to comment. Log in or connect with
