Reversals

What if we cared all of the time ...
... the way we care some of the time?

It's never a question of "will thunderbolts happen," but what to do about them when they rudely interrupt a great plan and derail success. It is the destiny of every entrepreneur and their company to experience a reversal of fortune. Ask Blockbuster, Toyota or the New Orleans Saints. Thunderbolts are an equal opportunity disruptor. No one can appreciate that fact more than Howard Schultz who, in 2008, was drafted out of retirement to reoccupy the CEO office at Starbucks. The company was in trouble.

In the mid-2000s, Starbucks had outkicked the coverage, but as sometimes happens, damage reports trickle in long after the damage has been done. In 2006 and 2007, Starbucks chased the siren song of growth by building stores as fast as it could, rather than investing in sustainable opportunities. Howard Schultz reflected, "the top line grew very fast, but in a way that for a variety of reasons was impossible to maintain, especially when combined with the macro-factor of a tightening economy." Schultz knew his return to the CEO desk could not be based on voodoo or salesmanship, nor did he return with formulaic solutions up his sleeve. His charter was simple yet seemingly far distant; create long-term value, stabilize the effects of setbacks, and above all prioritize his emphasis on three primary constituencies: partners (employees in Starbucks syntax), customers and shareholders.

Grilling from Wall Street was brutal: UBS asked, "Does your new plan contain any home runs in it?" Joe Buckley at Bear Stearns asked, "How can you grow the company if you're slowing store openings?" Sharon Zackfia of William Blair tossed a hardball, "How do you try to disaggregate what's economic versus self-inflicted?" Deutsche Bank piled on: "It's very strange to hear about so much damage and not have it dimensionalized at all. We're numbers guys and you're not giving us any."

Heading into a gale, Schultz addressed colleagues and customers on a call entering his reunion year:

Let me try in my own way to answer this. I've been here more than 25 years. I've seen every aspect of growth and development of the company and I am dissatisfied, perhaps more than anyone else on this call, with where we sit today. I have as much at stake personally as well as my own reputation. I'm making a commitment and a promise that we're going to do everything we can to make sure the relationship we have with you from a financial standpoint is one in which you will be a proud shareholder of the company, and recognize we're making the right strategic decisions and taking decisive action to put in place things that have not been done before.

Schultz reminded his partner-employees, customers, and retinue of financially interested cohorts that it would be a long road back, starting with product research and innovation resulting in a marketing crescendo exemplified by a new Starbucks' opening TV salvo on Saturday Night Live. A torrent of digital and social media exposure followed.

No one is exempt from setbacks. It's those golden moments when the past and present overlap, people across a team or a company care and a new direction is born. The question then becomes, which leaders have the acuity to recognize it?