Is a New CEO the Answer for Starbucks?
Eric McNulty
Crisis and Change Leadership Educator, In-Person and Virtual Keynote Speaker, Author, and Mentor
On August 13, 星巴克 abruptly ousted its CEO, Laxman Narasimhan, who had had the job for just a year. The new CEO, Brian Niccol , comes from Chipotle Mexican Grill, and it is clear that the board and investors are expecting big things from him. Of course, they had the same expectations of Mr. Narasimhan.
I don’t know either of these executives well enough to give a detailed critique. However, as a customer, I can say that it has felt for some time that Starbucks didn’t really know what it wanted to be. The stores are ever more bland, more focused on throughput than customer experience, and offer service that is often harried--paying more attention to machines than customers. Starbucks started as a special, premium offering and then seemed to strive for ubiquity. “Special” and “ubiquity” are mutually exclusive concepts, and perhaps that is the root of the problem.?
Investors want the stock back to its previous highs and more. And I doubt they care much about how he gets there. I’m more an adherent of Peter Drucker than Milton Friedman. That is, the job is to make and keep customers (profitably), not to simply generate shareholder returns.
As a leadership challenge, this looks once again to be a big bet on a heroic individual leader. Research by my Harvard colleagues, Rakesh Khurana (Searching for a Corporate Savior) and Boris Groysberg (Chasing Stars: The Myth of Talent and Portability) suggest that those bets rarely turn out as well as expected. And this is the same board that hired Narasimhan just twelve months ago, revealing potential blind spots in their judgement.
How might this turn out well? Here’s are five bits of unsolicited “first 10 days” advice for a new leader for less than the cost of a latte:
1.????? Make this about “we,” not “me”: Yes, Niccol has been given the reins, but no single individual is going to turn around a company with tens of thousands of stores and hundreds of thousands of workers. There is great talent buried in most organizations. Help those people rise because this will be a team effort,
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2.????? Center on purpose: What would happen if Starbuck’s vanished from the Earth tomorrow? Until you have an answer more compelling than “competitors would swoop in,” any transformation efforts will fall flat. That answer will come from customers and workers, not investors. Consider hiring an anthropologist before you book a strategy or marketing consultant.
3.????? Wear the green apron: Spend 3-4 of those first 10 days behind the counter working with customers and alongside employees. Give as little notice as possible. People will scream. Tell them to pound coffee grounds. It’s the only way to know a retail busines.
4.????? Give permission to speak… and listen hard. Deep knowledge of what ails Starbuck’s exists inside the organization as do ideas on how to create a vibrant future. Before imposing a master plan, harvest that knowledge. Enlist your people, including customers, in articulating the problem and crafting the solution.
5.????? Always talk long-term with investors: Big change takes at least 2-3 years. Get people used to that. Let investors who want a quick Frappuccino sugar high go somewhere else. You want shareholders who are as interested in the company as they are in their returns. More research from HBS (sorry to be so Harvard heavy this week) shows that CEOs get the investors they deserve.
If Niccol is to last longer than Narasimhan, the new CEO needs to cultivate a community of leaders, not don a superhero’s cape.
Links to sources in the comments.
American abroad for years and years | Wordsmith | Award-winning Author and Communicator | Digital | Survive on coffee and hiking
3 个月Excellent article! Sadly, too many Boards think the hero CEO will save all, as if they do it alone. It seems here they are throwing money at him with a private jet for his commute etc. that from an employee perspective already seems like a fail. When companies only look to short-term returns, as you point out, then there won't be a real change for a long-term better. It will be interesting to see how this pans out.
Crisis and Change Leadership Educator, In-Person and Virtual Keynote Speaker, Author, and Mentor
3 个月And this post I wrote for strategy+business also came to mind: https://www.strategy-business.com/blog/Learning-the-Leadership-Lessons-of-Retail
Crisis and Change Leadership Educator, In-Person and Virtual Keynote Speaker, Author, and Mentor
3 个月A good post on this by Peter Polson: https://www.dhirubhai.net/feed/update/urn:li:activity:7229132256043307010/
Professional Editor & Resume Writer | Specializing in Executive Biographies & LinkedIn Profile Optimization
3 个月Eric McNulty One leader can guide, but lasting success comes from collective effort. The superhero myth often overshadows the power of teamwork.
I am passionate about helping people and companies change the world in a meaningful way.
3 个月I especially like #3, Eric McNulty. That’s why in part, Undercover Boss was always so interesting to watch. When you see the frontline perspective and the realities of the job, that’s very different than conference calls and reviewing unit performance in a boardroom.