case study motivation starbucks

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How Starbucks’s Culture Brings Its Strategy to Life

• Varya Davidson
• Paul Leinwand

They focus on a few positive attributes and amplify them.

In most organizations, culture and strategy tend to be discussed in separate conversations. Executives know that culture is important and that a negative culture can hurt company performance, but they often don’t know what to do about it. Or they attempt to improve the situation by launching a culture initiative to “make the workplace more positive.” What most executive teams typically fail to do is to connect the company’s culture with how the company makes its strategy work.

• Varya Davidson leads the people and organization business for Strategy& in Australia, Southeast Asia, and New Zealand and sits on the Katzenbach Center’s global leadership team. She is a partner with PwC Australia, and has worked with leading public and private sector organizations across Europe, the Middle East, North and South America and Asia-Pacific.
• Paul Leinwand is a principal at PwC U.S., a global managing director at Strategy&, and an adjunct professor at Northwestern’s Kellogg School. He is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (HBR Press, 2022).

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12.7 Leadership Development: The Case of Starbucks

Figure 12.15

Mike Mozart – Starbucks – CC BY 2.0.

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for convenience and accessibility to great coffee. In 1971, three friends made that desire a reality and established the first Starbucks coffee house in historic Pike Place Market on Seattle’s waterfront. In 1990, Starbucks drafted its first mission statement, and the number one principle was to “provide a great work environment and treat each other with respect and dignity.” How has the company lived up to that declaration 20 years later?? Starbucks has consistently made Fortune magazine’s “100 Best Companies to Work For” list and in addition is included on a list of the best places to work for LGBT (lesbian, gay, bisexual, and transgender) equality. Working conditions in the service and retail industry are notoriously low paying with long hours, but Starbucks manages to offer benefits for part-time and full-time employees as well as higher-than-average salaries for store managers. Why, one might ask, does Starbucks try so hard to set itself apart?

Leadership development is a core element of the business process at Starbucks, which ensures that the organizational culture of the company is maintained with every CEO successor. Starbucks is forward looking in this respect and strives to attract future business leaders and managers. The idea of planning for one’s own succession can often make people uneasy, but this idea is openly embraced at Starbucks. The company plans far in advance to replace its top-level successors. The importance of leadership is not only ingrained in the upper management team, but Starbucks also ensures that this is an understood value throughout the organization. In 2004, the Coffee Master program was introduced to teach employees about regional coffee flavors. Graduates of the Coffee Master program earn a prestigious black apron and a special insignia on their business cards. In creating this ethos, Starbucks excels at its ability to attract an educated workforce with a high satisfaction level where individuals often move up to become effective leaders within the company.

With the recession of 2009, Starbucks has been forced to rethink its traditional strategy of accelerated growth by closing over 30,000 stores. CEO Howard Schultz has cut his salary to less than $10,000 a year, down from $1.2 million. Despite these slowdowns, Starbucks continues to call employees “partners” and offers a dynamic place to work. As a result, the company had more than 150,000 people apply for jobs last year, a sure indication that the company’s ability to cultivate talented leaders is as strong as ever.

Based on information from Helm, B. (2007, April 9). Saving Starbucks’ soul. BusinessWeek . pp. 56–61. Retrieved April 30, 2010, from http://www.businessweek.com/magazine/content/07_15/b4029070.htm ; Cohn, J., Khurana, R., & Reeves, L. (2005). Growing talent as if your business depended on it. Harvard Business Review , 83 (10), 62–70; Stanley, A. (2002). Starbucks Coffee Company. Tuck School of Business at Dartmouth (no. 1–0023). Retrieved April 23, 2010, from http://mba.tuck.dartmouth.edu/pdf/2002-1-0023.pdf ; 100 best companies to work for. (2010, February 8). Fortune . Retrieved February 14, 2010, from http://money.cnn.com/magazines/fortune/bestcompanies/2010/snapshots/93.html ; Miller, C. C. (2009, January 29). Starbucks to close 300 stores and open fewer new ones. New York Times . Retrieved February 15, 2010, from http://www.nytimes.com/2009/01/29/business/29sbux.html .

Discussion Questions

• Why does Starbucks Coffee consider internal leadership development such an important part of its core business process?
• What possible negative repercussions can the aggressive growth strategy that Starbucks exhibits have on its leadership agenda?
• With the slowdown of business, how can Starbucks ensure that the importance of leadership development does not get overlooked?
• How does your experience with leadership and management compare with the case of Starbucks?

Organizational Behavior Copyright © 2017 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Starbucks Employee Engagement with Starbucks

Employees are the very heart of the Starbucks brand- yet despite its strong culture of “serving up good” through a global offering of social impact opportunities, Starbucks employees were lacking in awareness of these opportunities. 

Aiming to better engage store employees in the social impact initiatives led at the corporate level, Starbucks partnered with Purpose to develop a bespoke engagement strategy. Through research, focus groups, interviews & landscape reviews, Purpose created a strategy that included core values to unite corporate & in-store employees, ownable roles for every employee to play in contributing to social impact & ideas for channels and resources that could make the experience enjoyable to all.

To activate this engagement strategy, Starbucks launched a neighborhood grants program which has now received over 8,000 grant nominations from 13,000 employees- and in June 2020, The Starbucks Foundation committed $1 million in Neighborhood Grants to promote racial equity and create more inclusive communities.

Despite Starbucks’ incredible offering of social impact opportunities across the world, initiatives rarely made it into the lives of store employees — the partners at the heart of the brand.

While Starbucks has a strong culture of “serving up good” through service and community connection initiatives, the company recognized that their employees lacked information about what work was happening and what engagement options were available to them. Only 1 in 30 baristas we spoke to had ever heard of Starbucks stores doing social impact work.

Starbucks aimed to make working at the company feel like the best job in retail by offering opportunities for store partners to live their values at work by taking part in global social impact initiatives.

By supporting store partners to serve their communities, Starbucks set out to supercharge the positive impact the company makes on the neighborhoods it serves, and make working at Starbucks feel like more than just a day job.

Theory of Change

Purpose partnered with Starbucks to unearth insights about what was holding store employees back from participating in global social impact initiatives, and determine what might motivate them to take part.

Through polling, focus groups, interviews and landscape reviews, Purpose developed a bespoke engagement strategy for Starbucks to utilize when creating and implementing impact initiatives that would touch the lives of store employees.

Interviews with Store Partners

To begin our research, Purpose conducted interviews with a number of store employees — from baristas to upper management — to understand what they knew about volunteering and service initiatives at Starbucks, and how they felt about getting involved.

Interviews illustrated the awareness gap — but also showed that without time, resources, and permission allocated to social impact activities, partners days were too busy to take time out for ‘extra work.’ Social impact opportunities at Starbucks sounded exciting, but were far from accessible.

Polling Store Managers

Purpose fielded an online survey via Workplace with a focus on Store Managers to further interrogate findings and assumptions that came to light during focus groups. The survey was fielded to over 130 employees, and gathered concrete perspectives on social impact from partners across geographies.

Survey results gave us insight into why Starbucks management chose Starbucks, and what they believed made the company special. We heard that of all the reasons people join Starbucks, it’s the community, connection, and teamwork a job at Starbucks offers that makes people stay.

Barista Focus Groups

To dig one foot deeper, we facilitated four focus groups in New York City, consisting mostly of Starbucks baristas. In conversations with 30+ employees, we learned more about the issues they cared about — which ranged from animals and the environment to advancing racial equity and justice in their own neighborhoods.

However, partners told us one thing loud and clear: in order to participate in social impact, they needed to feel a personal, local connection to the cause.

With insights in hand, Purpose created a strategy for engaging employees in global social impact work moving forward.

The strategy aimed to equip corporate leaders with the values store employees need to see reflected in social impact opportunities, and the roles they can play within those opportunities. It also outlined several meaningful programmatic options for corporate to deploy.

Combined with recommendations on tools and resources required as well as how to measure impact, the final product acted as a framework for partner participation.

After the rollout of the global social impact strategy, Starbucks approached Purpose for help with qualifying their current social impact employee engagement opportunities against the new framework.

Together, we ran each of Starbucks impact initiative through assessments to ensure the programmes delivered on the accessibility, valued-based, local experiences the strategy promised. Where gaps in initiatives were identified, Starbucks reworked programmes accordingly to ensure they were right for partner engagement.

The corporate team at Starbucks was particularly excited about applying an impact-centered approach to the core of their social impact offerings. To help colleagues across marketing, store relations, and global social impact understand the new methodology, Purpose facilitated a day-long workshop to train staff on how to use a theory of change to ensure programmes are designed strategically, audience first, and with impact at their core.

Starbucks activated their engagement strategy by refreshing their Neighborhood Grants program to make employees the driver of each grant. In the program, employees were invited to nominate the local  organizations that serve the communities where they live and work, to truly center the needs and opportunities employees observe as they interact with their communities in Starbucks stores every day. Since the launch, there have been over 8,000 grant nominations from 13,000 employees, which continues to grow.

The refreshed partner engagement strategy for global social impact changed the course of community investment and employee engagement at Starbucks, for good. By making all social impact programmes tailored to partners personal passions, Starbucks became more than a place to work — it became a place for partners to bring their authentic selves to work each day, serve the communities they love, and live their values.

When Black Lives Matter protests spread across the country in the summer of 2020, Starbucks was equipped to heed employee calls for action — committing $1M in grants to racial justice organisations nominated by store employees themselves. As COVID struck, they asked partners to lead the way in determining how the company could help.

The partnership has shown us that the impact a company can make when we meet employees where they are is boundless.

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Starbucks Corporation: Case Study in Motivation and Teamwork

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More From Forbes

Starbucks, reinvented: a seven-year study on schultz, strategy and reinventing a brilliant brand.

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BY JULIA HANNA

Harvard Business School Professor and historian Nancy Koehn has studied Starbucks and its leader, Howard Schultz , for close to 20 years. For her, the company represents much more than a phenomenal success story.

In a recently published case, "Starbucks Coffee Company: Transformation and Renewal," (available soon) Koehn and coauthors Kelly McNamara, Nora Khan, and Elizabeth Legris trace the dramatic arc of the company's past seven-plus years—a period that saw Starbucks teeter on the brink of insolvency, dig deep to renew its sense of purpose and direction, and launch itself in new, untested arenas that define the company as it exists today.

"This case distills 20 years of my thinking about the most important lessons of strategy, leadership, and managing in turbulence in the frame of a very relevant company," says Koehn, the James E. Robison Professor of Business Administration. "As a brand, leadership, and entrepreneurship scholar, I've been dogging Starbucks for a long time."

On a 1995 trip to Seattle, Koehn visited a Starbucks store for the first time and was struck by what she saw and felt. The notion of a "third place" between home and work to relax and enjoy the small, affordable luxury of a special coffee beverage seemed to resonate with the social and economic moment, she recalls. Six months later she met Howard Schultz, an entrepreneur who acquired the company in 1987, and was struck by his seriousness of purpose and the breadth of what he wanted to accomplish.

Starbucks Chairman Howard Schultz (Photo credit: Wikipedia)

The case, Koehn's fourth to focus on Starbucks, opens in February 2007. Schultz, no longer Starbucks' CEO but still its chairman, is worried the company is losing its ability to be true to its values while providing a store experience that conveys a sense of comfort, connection, and respect for its product and the communities Starbucks serves.

So Schultz composed a heartfelt, searching memo to senior leadership. In it, he bemoaned decisions (for which he accepted responsibility) that improved efficiency and increased economies of scale but robbed stores of some of their essential magic, such as the smell of roasting coffee and the sights and sounds of traditional Italian espresso machines and baristas at work.

He also cited the company's rapid expansion and the potential "commoditization" of the Starbucks brand. "[W]e desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience," Schultz wrote.

The scope and richness of Koehn's case gives it the feel of a page-turning novel; in that sense, Schultz's memo is the inciting action for all that follows.

Remaining True To Core Values

The challenge that had confronted Starbucks in the early- and mid-2000s was one common to many organizations: Could the company continue to grow while preserving its culture and values? In some areas, the drive to expand, egged on by Wall Street, was compromising the company's ability to invest in its partners (Starbucks' term for its employees), deliver personalized customer service, and maintain a close connection to the local community.

In addition, McDonald's and Dunkin' Donuts had emerged as serious competitors, offering their own lines of specialty coffee beverages. Even so, Starbucks' financials for 2007, the year Schultz composed his memo, didn't look so bad. But the entrepreneur became concerned as he dug more deeply into the numbers. Sure, revenues were up almost 21% over the previous year, but had slowed by over a third; transactions per store were up 1%, versus 5% the year before. Same-store sales rose only 5%, the smallest increase in five years.

In January 2008, Schultz returned as Starbucks CEO, replacing Jim Donald, the man he and other senior colleagues had chosen to lead the company.

Starbucks Sails Again

The case chronicles the blizzard of decisions and initiatives that follow what could have been the company's death knell as the financial crisis hit home and consumers cinched their belts.

"Schultz understood that you can't lift your foot off the gas pedal when you're attempting to transform a company," Koehn says. "Severe as its financial needs may be, you also have to figure out what you will invest in. Schultz knew that if he waited until the company was out of the woods to invest in new products, communication channels, and ways of doing business it would be too late—Starbucks would no longer be relevant."

From the start, Schultz sent the clear, unwavering message that Starbucks' transformation would represent a return to its roots and an uncompromising commitment to core values, such as health care benefits for any partners working at least 20 hours a week.

At a March 2008 gathering of 200 senior-level company leaders, Schultz unveiled a Transformation Agenda that included seven "Big Moves":

• Be the undisputed coffee authority;
• Engage and inspire our partners;
• Ignite the emotional attachment with our customers;
• Expand our global presence—while making each store the heart of a local neighborhood;
• Be a leader in ethical sourcing and environmental impact;
• Creative innovation growth platforms worthy of our coffee;
• Deliver a sustainable economic model.

The case provides a behind-the-scenes look at how the coffee company moved forward on these goals, including the introduction of the milder Pike Place Roast; the story of its VIA Ready Brew line; the launch of a loyalty program; investment in and engagement with social media; focus on a global expansion strategy; and the extension of social programs. The company closed stores, restructured its manufacturing and supply operations, and, perhaps most significantly, took steps to reengage its partners and store managers. In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, however, that wasn't enough—he wanted to reach the company's store managers, recognizing them as essential to the transformation process.

"I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake," he wrote in Onward: How Starbucks Fought for Its Life without Losing Its Soul . The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be tanking. Starbucks' fourth quarter profits were down 97% from the same time a year earlier; for the fiscal year, net earnings were down 53% to $316 million. The Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million, but Schultz stuck to his guns.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks; in the "novel" of Koehn's case, it's the climax.

"Investing in a conference of that size is such an unusual thing to do when faced with a cash crunch," Koehn says. "Schultz understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people."

Schultz's experience qualifies him for closer study in Koehn's HBS course Power and Glory in Turbulent Times: The History of Leadership from Henry V to Steve Jobs. Not all managers are confronted in their careers with the sort of transformation challenge faced by Starbucks, but Schultz's reflections and actions are instructive for anyone charged with finding sources of strength, innovation, and renewal in today's turbulent business environment, Koehn says.

About the author:  Julia Hanna is associate editor of the HBS Alumni Bulletin .

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Human Resource Policies and Work Culture: A Case of Starbucks

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