"It's Not About the Coffee": A Starbucks President's Recipe for Delighting Customers with CX
Join us for an insightful conversation with Howard Behar, a pivotal figure in Starbucks' legendary growth. As the President of Starbucks North America and the founding President of Starbucks International for 21 years, Howard participated in the company's expansion from just 28 stores to over 15,000. He also served on the Starbucks board of directors for 12 years before retiring. He's also authored two books on leadership titled "It's not about the Coffee" and "The Magic Cup," book titles that encapsulate his core philosophy.
In this episode, Howard tackles a fundamental challenge faced by rapidly growing businesses: How do you scale operations from a small number of locations to a global empire while preserving the deeply personal customer experience that made you successful? Howard argues that the answer lies not just in the product, but in a relentless focus on people – both employees and customers – understanding that Starbucks was always "in the people business serving coffee, not the coffee business serving people".
Listen in as Howard shares firsthand how this philosophy drove extraordinary growth and answers critical questions, including:
•How did the philosophy "we're in the people business serving coffee, not the coffee business serving people" shape Starbucks' approach to customer experience?
•How did Starbucks manage its rapid expansion from 28 stores to over 15,000 while maintaining a consistent, personal customer experience?
•How did leadership make decisions about investing in initiatives and supporting team
Mark as Played
Transcript
Episode Transcript
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(00:00):
Well, today on the Delighted Customers podcast, I am
very, very excited to bring someone really special from
the special from the Starbucks world on the show, Mr. Howard
Behar. Howard Behar's career and business spans over
50 years, all in consumer oriented
businesses covering several industries. He retired from Starbucks
(00:22):
Coffee after 21 years where he led both
domestic business as president of North America and
he was the founding president of Starbucks International. During
his tenure, he participated in the growth of the company from
28 stores to over
15,000 stores spanning five
(00:43):
continents. He served on the Starbucks board of directors
for 12 years before retiring. He's also
authored two books on leadership titled It's not about the Coffee and
the Magic Cup. With that, Howard, welcome to the
Delighted Customers podcast. Hi, Mark. It's
great to be here. Thanks for including me. So I am so excited. I have
(01:05):
to tell you, honestly, I am a patron of Starbucks and
probably spent way too much money there. That's right. My grandchildren thank
you. Well, Starbucks has been on my
wish list as a podcaster to speak to someone and I
was really blessed to get someone who actually did what you did there.
I want to tap into a little bit about your journey
(01:27):
and also explore it from a customer experience standpoint,
if that sounds okay to you. Sounds great. Let's do it. Okay. So
in the book, which I enjoyed so much, it's not about the coffee,
you said famously, we're in the people business
serving coffee, not the coffee business serving
people. How did this philosophy shape Starbucks approach
(01:49):
to customer experience? Well, when I first got there, we were in the coffee
business. And when I got there, I thought, gee, yeah, coffee
is our product, but that's not the business we're in. We're 100% in
the people business, both the people that work in the organization and
the people, the human beings we call customers that we
serve. And so I was trying to get everybody to understand what we were really
(02:11):
about. So, you know, words matter, language
matters. And so I was trying to come up with something that everybody would understand.
Amazingly enough, that little saying is alive and well after
almost 40 years at Starbucks. And you know, when you say
that, the saying, what were some of the key underpinning,
I guess, strategies or activities
(02:33):
that you, you initiated to begin to change
behaviors there and mindsets? Well, you know, it was
really just talking about it and showing the way and doing, you
know, people don't care what you say so much as they care what you do.
And so I not only talked about it, but I acted that way. So,
you know, that's, that's what drove it. When people saw what
(02:55):
mattered, then they started to copy it. And it's not complex.
You know, you can't have rules. What you have to have is models.
And that's what I try to do, is I tried to be the model for
that. And I just kept pushing it and talking about it and driving it home
and explaining to everybody of why it was important. And then
people started, you know, just following on. And then after a while, what happened
(03:18):
is, you know, like attracts like. So we were recruiting
lots of people to come in the organization, and the people that were there,
they. They latched onto that. It was about people. And then the new
people came in and realized what it was all about. And those are the people
we recruited. So it wasn't so complex. It was. You just had
to constantly reinforce it, recognize it, and reward it. Well. And. And
(03:39):
speaking of people, just read that at the end
of 20, 24 bucks coffee had over
360,000 employees. Amazing.
That's like a midsize city. Yeah, exactly.
And when you were there, right, You. It was not that big. It
was 28 stores. And tell me about how
(04:02):
you seem to manage that rapid expansion and didn't
dilute the personal customer experience that it was known for. It was all
about who you brought into the organization. Everything is about people. There
is nothing, nothing at Starbucks that isn't about human beings.
And so it's the people that made it grow once they understood the greater
purpose of the organization, what we are trying to achieve. And I have
(04:24):
another saying called the person who sweeps the floor should choose the broom. And
once everybody got that they had the responsibility for
choosing their own broom, then they made it happen. I'd like to tell you that
I did it or Howard Schultz did it. It wasn't us. It was the people
that did it. Now, we knocked down the hurdles, we got the
resources in place, and we gave the people a lot of confidence,
(04:46):
and we supported them and we rewarded them, and they did it. Can
you talk a little? You just mentioned hurdles. Can you talk. Talk about
Maybe this could be a good lesson for other leaders as well. What were some
of the hurdles that had to be knocked down before you could move
forward? Well, number one, we had to get resources.
We had to get capital to expand. That was. That was a big
(05:08):
thing. But the most important thing is we had to get the right people in
the organization. And so, you know, we were out recruiting all the
time. I said there was never somebody that I met that I didn't evaluate whether
or not they would be good at Starbucks. I used to walk the malls looking
for people, just talking to store managers and stuff like that. I found somebody
good. I gave my card and I told them to call me. So it was,
(05:30):
you know, the two primary things were getting the right people, as Jim
Collins says on the bus, and then getting the resources
in place that you needed to do it. And those were big hurdles. Sometimes.
Sometimes we chose the wrong people. And. And we had to make a change.
And, you know, at the beginning, we struggled to get. Getting capital, but, you
know, after a while, you know, we started. We were raising money
(05:52):
with local investors, and then we started to go to venture firms, and
we raised. Raised our capital that way. And then, you know, we had to get
people to believe. You know, a lot of people believe that it was a Seattle
phenomenon that, yeah, everybody, it's cold weather, it's raining, everybody
drinks coffee, but we believe that coffee was consumed
everywhere. And we just. We just followed that belief and we
(06:14):
started growing. Was there something that you look for in a
person? You mentioned you'd personally bump into someone, but as you guys
grew, you'd have to develop some sort of, I
guess, some sort of pattern or strategy that you told your leadership, hey,
look for. Maybe these are the kind of people we want to bring in. What
were some of those characteristics? They had to be have
(06:35):
empathy. They had to show
vulnerability. They had to be kind, caring, and
they had to believe that love belonged in business. And they had
to have the requisite people skills. You know, they had to have
the human skills, social emotional skills. And if they had
those, then we could teach them everything else. Now, certainly, we were
(06:57):
hiring some skilled people in accounting and engineering and
architecture and stuff like that. But primarily they had to have the human
skills. They had. They had to have strong social emotional skills.
And you're. You mentioned accounting and so forth, but are you also
talking about leadership, some of these skills, some of these traits? Yeah, yeah, they
had to have leadership skills. But, you know, we could teach them a lot of
(07:20):
the ins and outs, but what they had to come with is a kind heart
and with empathy. And we were a company that was driven by servant
leadership, that we recognize that leaders recognized that we
were here to serve our people, not the other way around. And
so we looked for people like that. When I interviewed, I didn't ask
questions about how good their accounting skills were. Somebody else did that. I
(07:41):
ask questions about, you know, what do your parents like about you? What do
your parents not like about you? If you have a brother or sister, what do
they think of you? What do your parents wish you would have become versus what
you became? What's the most difficult human interaction that you've ever
had? What's a conflict that you had and how did you solve it? I was
looking for those kinds of things. Really interesting and
(08:03):
a little bit counterintuitive to what you see today.
Oftentimes, yeah, but interesting. So, suny, can
you talk about how you empowered your employees or partners
in terms of delivering exceptional experiences? Well,
it was. I used to say, just say yes.
Right. Find a way to just say yes. That's what got us. And
(08:25):
if you, you know, you look at Starbucks and the variety of things that a
drink that will make it any drink, any way you want it. Nobody was doing
that, you know, and so I was in that mode of just find ways
to say yes. No matter what the question was, say yes. Now
know, obviously, there's some things that got requested like, you know,
that we couldn't comply with. But we. We never said no. We just
(08:48):
said, well, that's not something we could do, but we can do this. And so
we were always looking for ways to say yes to our. To the
people that we are serving. And when you do that, time after time, people want
to come back. Other things that we did, we, you know, the member of the
program Cheers, where everybody knows your name. Right, right. The tv.
Yeah. So we encouraged our people to become familiar with the people
(09:10):
that we're serving. If you had somebody that was coming in day after day, it
behooved you to know who they were, what their drink was, and to build
a relationship. And so, you know, even though
we're just serving coffee, it's still about relationships. You
know, it's still about people, and it's still about serving another human being.
And so when you do that with the same love in your heart
(09:32):
that you have for the people that you work with, then it transfers and people
recognize it. We weren't perfect by any stretch of the imagination. Still not
perfect. But that was always the attempt. Howard, I want to go
rewind a little bit to what you said. You used the frame servant
leadership. And I think, you know, we can assume we know what that means, but
I'd love for. To double tap on that and let you share what you mean
(09:54):
by servant leadership. Well, to me, there's three steps
to servant leadership. The first step is that you help your
people grow as human beings. That's number one. And the most
important number two, you help them grow as professionals, be better
at what they do. And number three, you help them achieve their own personal
goals in life. And when you do that, then they want to serve your
(10:16):
organization because they realize that you care about them. And, you
know, I always try to give them recipes, not rules. You
know, say, here's what we're trying to achieve. You may like carrot cake, but
not like carrots. So maybe you don't want to put very many carrots in the
carrot cake, right? Maybe you like lots of frosting so you can have
carrot cake your way. And that's what we try to do to our people. And
(10:37):
so we try to treat everybody with the same respect and dignity that
we expect to be treated ourselves. And people recognize that
because after a while, you know that old saying, people want to know how much
you care, not how much you know. And so we tried to show how much
we cared, and that's what we did. From a customer experience
standpoint, when you were there, did you use or how
(10:59):
did you use customer feedback? Did you have ways to
listen and respond to what you were hearing from
customers? How did you do? How did you go about that? Well, you know, in
the early days, there was no technology there to do what we wanted.
But we had customer comment cards that customers would fill
out. I myself personally would read every customer comment
(11:21):
card, and then I would hand them out. At start of every staff
meeting, I would have. We would go around, Maybe there were 15 or 20
people, and I'd hand out customer comment cards just
randomly. Nobody knew what they were going to get. Maybe it was part of their
responsibility, maybe it wasn't. And then they would read the card and we would talk
about it. The goal wasn't to look, to blame anybody. It was to make
(11:43):
sure that we understood what was going on and we were hearing
firsthand. And then, you know, there's nothing like being in the stores. I
was traveling all the time. I was in the stores all the time. And I
would go sit down with customers and I'd ask them, you know, what do you
like about Starbucks? What don't you like about Starbucks? What do you wish we would
change about Starbucks? I asked those three questions to all the baristas and
(12:04):
store managers. And after a while, you learn what's working, what's not
working, and you make small adjustments along the way
to make that happen. And so, you know, it's not that, you know,
now everybody uses all the technology. I'm not so sure that
that's so great. I think there's nothing like the human interaction,
the human conversation, to really dig down Deep, because
(12:27):
it's. They're not. People are not just checking boxes, you know. How was
your meal? Was your meal good? Yes. No. Maybe, you know, now it
was. What did you specifically like about your meal? What didn't you like about
your meal? What do you wish we could. Would have done better with that meal
or that cup of coffee? And so there's nothing like that. And I think.
I think leaders today miss that. You know, they're looking for the easy way
(12:49):
out, and there's really no good easy way out. You really need
to go in and dig and you need to. You need to build
relationships, you need to ask questions, and you need to listen to the answers,
not just with your ears, but with your eyes and with those little antennae we
have in our head. Excellent. Okay, so, Howard, you're expanding. You're growing
rapidly back in these years.
(13:10):
And I'm wondering, as you, as you
grow, and you've got lieutenants,
sergeants in the field, they are vying
for resources for their area of the
business. This is very similar to a CX leader who
is vying for support resources to
(13:32):
try to either redesign an experience
that's not going well or could be getting better, responding to customers,
friction points, et cetera, and trying to get resources to do their
job. And yet there is a bunch of birdies who also want money. When you
thought about how to make decisions and support one
of your leaders that reported up through, either directly or through you,
(13:55):
what were some of the key criteria that you used to say,
yes, we're going to go ahead and support that? Well, you know, we
had to present. They had to present their cases. Right. And
they had to be performers. You know, if you didn't get. See, performance
matters in this world, performance matters in servant leaders. You got to
get the job done, and you got them. You got to achieve the commitments that
(14:17):
you make. And so, you know, we would certainly support with
greater resources those people that were really getting the job done. But
having said that, sometimes people weren't getting the job done
because there was a resource that they didn't have. And so we had
to listen, we had to. We had to really pay attention to what they were
asking for and why they were asking for it. And, you know, I
(14:40):
had. I always thought that you had to take risk. You know, I
remember when I first came, I retired once at Starbucks. When I came
back to help out in North America, the guy that was running operations in North
America, a guy named Jim Alling, he said to me, I think that we're under
Staffing our stores. Well, I'm an old line retailer. You didn't add
staff until you had the sales. But he believed that we needed to add
(15:01):
people in order to increase the sales. So I said to him, okay, you
know, I trust you. Let's take 300 stores and go
and attest it. Well, you know, we did that and
lo and behold, he was absolutely right. We added
people in the stores and the sales increased. We were
understaffing our stores and unable to serve our customers well. And
(15:23):
so you just, sometimes you have to take chances and you have to take risks
and not everything you do will work. And so you know, you had to
be just conscious of, of what your people were asking for, what
your customers were asking for and just paying attention and then would be willing
to try things and be willing to make mistakes and have things not work.
Well, I'd love to. I appreciate you sharing that and the risk that you took
(15:45):
and the willingness as a leader to listen to and give it an
opportunity for one of your leaders there who really believe that they needed more
people in the stores to support it. We hear a lot about
the ROI of customer experience and having to prove that.
And if you don't do that as a CX customer experience leader, you know
you failed. You have yourself to blame. And I, and I
(16:08):
know that there are several models, many models you could
use, customer lifetime value and a whole bunch of others that you could
use to justify the ROI of cx. And oftentimes
CX leaders get blamed for not doing a good enough job
of basically the financial, proving the financial
case. What would you say? I'm trying to get a sense of what you would
(16:30):
say to that and how you dealt with that. Again, among the chirping birds
here who are vying for supportive funding, the ROI
piece of it, what would you say to the struggling CX
leader who's having a tough time quantifying the return
on investment? Well, not everything you do can you put
a number to right? Sometimes you just have to believe
(16:52):
and you have to and you have to be aware of what's going on. That's
why asking questions and being out in the field is so
important. So I'll give you another good example. So I had, I
had of strategy that reported to me and he believed at
that time we didn't have ovens in our stores warming ovens. And he
believed that customers would like their pastries warm. Now
(17:14):
I didn't have to be brilliant to figure that probably made some sense.
Right? I mean I like a Warm muffin versus something cold, you
know. So I made a pitch to the
cfo. I said, I want to put some warming ovens in the stores. We're going
to test it. I forget the number of stores. It was maybe 2, 3, 400
stores we were going to test it in. And he looked at me, he said,
(17:36):
well, you got to prove it to me first. I said, I can't prove it
until I do it. And I can't just put five ovens in. I got to
put enough in that we get a broad enough view of it. And he said,
well, you can't have the money. And I just looked at him and I took
my keys and I pushed. I had my car keys on my desk. I pushed
the keys across the table. I said, if you want to run the business, here
(17:57):
are the keys. Sometimes you gotta push. And because
I didn't have a number to prove it, I
believed in it. Many things you have to do. Not everything
you do is gonna have the answer or the solution
written on the wall with. With all the numbers you need. And if you
do this, you're gonna increase sales by 50%. You don't know Frappuccino.
(18:19):
We brought Frappuccino in. It was a test. We didn't know. And
Frappuccino, because we tested it, it and it became
a four billion dollar business. And so, you know,
sometimes you can get too caught up in the analysis.
You know that old word analysis paralysis, Right?
Too caught up in the data. Yeah, yeah, yeah.
(18:41):
Here, let me put it to you this way. If you go home tonight and
you ask your wife, or you walk into the house and you ask your
wife, how was your day? Right. You don't need to. You
can tell what her day was like without her saying a word, can't you? You
don't need much analysis. You can just look at her face, right?
Or if your wife says to you, honey, I'm unhappy in this marriage, how much
(19:03):
more data do you need? Right? You don't. You don't need to do a whole
research project to figure out, you better fix something, right? So,
you know, not that data isn't important. I'm not arguing against it.
I just don't get frozen in that. Yeah. When you were
leading Starbucks North America and growing Starbucks
internationally, you probably had the same situation where you're vying for the
(19:25):
same sort of scarce resources like everybody else was. Can you think of a
particular challenge that you had that you can look back now and say, yeah,
that was a really big challenge and that. And One in particular, maybe
that you overcame. We were. I felt that we weren't paying enough
to our baristas. We were basically paying minimum wage. So in
order to do that, if I wanted to increase the wages
(19:48):
in the stores, I had to figure out a way to pay for that
some way. And so I ran all the numbers and we figured
out what it was going to take to pay for it. And so
we implemented it. We took it at a minimum, a dollar
above minimum wage an hour, and
we rolled it out. Well, lo and behold, we'd made an error
(20:10):
in our calculations. We thought it was going to cost 1% of sales, it
cost 2% of sales. Now I had a problem. I had to figure out how
to fix it, but I wasn't going back, right? A deal was a deal, and
I made the commitment and we wanted to move it forward and I truly believed.
So we figured out how to solve the problem. You know, we, we cut on
some, some things. We raised prices a bit and we figured out
(20:32):
how to make it work. And it made a difference in who we could recruit.
And so it was a problem. Howard Schultz was mad as hell.
You know, imagine when The P&Ls came out and he looked at those numbers. What
happened? I thought you said. And I said, hey, we blew it, but we'll fix
it. And I happened to be on vacation at the time. I had to come
running back from vacation to figure out what to do. But we figured it out.
(20:53):
But, you know, those were the things that, that really, it was really
about how we were serving our people. And sometimes those things cost
money. I have two more questions I want to ask, then I'm going to ask
you the final question. It's all fascinating to me. I want you to, if
you could respond, share your opinion and thoughts about the recent
Starbucks Back to Starbucks initiative under new leadership.
(21:15):
I think September, the new CEO came in. And what
advice would you give to ensure they stay true to their roots while
evolving to modern customers? Well, I don't. I think it's
using our history to inform our future. I don't think it's back to
Starbucks. I think it's forward to Starbucks. But we can use our history
and what we believe in to inform our future. And so
(21:37):
what, what Brian is doing, a new CEO, you know,
he's basically saying, here are the things that we did before
that liked, you know, like lots of chairs in the stores
and when it's appropriate to write a note on the cup and just
saying thank you or whatever. It happens to be going Back bringing the condiment
stands back where people could put their own milk in their cups. And little, it
(21:59):
was little things like that, but it's really the people centric things
that he's doing. Covid really did a lot of damage to us, you know, because
it was. Nobody knew what to do. We didn't know how to manage the
business. We took chairs out of the stores because people, we couldn't have people
sitting in the store, you know, and all those kinds of things. But, but
that's what I think that he is trying to do. And I really think that
(22:22):
it's, it's going towards the future of Starbucks. Using
our history to inform our decisions. Excellent. Yeah.
So many things, so much pride created. I mean,
coffee was around forever. Right? But somehow this, I don't know how
many billion dollar business. And I would argue it's, it's all about the
experience and good coffee. Yes, but wouldn't you say a lot.
(22:45):
Of people, you can go a lot of places and get a cup of coffee
that you like. At the end of the day, it's how you
were treated. The product has to be good. Right. And we have to make it
the way you want it. But at the end of the day, how are you
treated? Do you feel like you were cared about? Do you feel like
you mattered and that we weren't just trying to get your dollar
bill, that we were actually trying to serve you in some way that made
(23:07):
you feel better about your day? I used to say to our faresis that they
were social workers and they had 10 seconds to determine where that
person was at that particular time in their day. Did they just
get a traffic ticket that cost them 100 bucks and that used up a big
chunk of their food money for the week? Or did their kid just get a
free ride to Harvard and they're waiting to be able to tell somebody because they
(23:29):
were excited? So you had to pay attention, you know. And that goes back to
the empathy that you were talking about. Yeah, empathy. Yeah, exactly. Paying
attention. What advice do you have for maybe the
young to mid career person listening to the show about
their careers? Like what? As you've had a full career
now, what advice would you share with someone who's young and up and coming?
(23:51):
Well, first of all, you're not building a resume, you're building a life.
It's really important to see it that way because when you're building a life,
then you're focusing on the purpose of why you're here, what you're trying
to do, who you Are. What are your values? What are the 8
to 10 core values that inform all the decisions and the actions you
take? You should definitely have a personal mission statement. What is
(24:14):
it you're trying to achieve with your life? And, you know, I've done that.
I've had that for. Since I was in my mid-20s. And
I have a document. I'll show it to you, but your audience
won't be able to read it. But this is a picture in Howard of 50
words or less. I've had this since I was 27 years old. And
on it has my personal mission statement, which goes like this. To
(24:37):
live my life every day, nurturing, inspiring the human spirit, beginning
with myself first and then for others. The reason why I say
self first is because I've grown to understand after living this long
that if you're not okay with you, it's very difficult to help somebody else. And
then I have my eight core values. And those eight core values
inform how I make decisions in life and then how I do everything.
(24:59):
My six P's, everything I do in my life has to have a purpose greater
than myself. And everything I do has to be about serving people. And
so that's how I try to manage my life. And I've written it down. I
think you have to write these things down, because if you don't, then they've just
becomes wishes, hopes, and dreams. And then you have to have a plan.
You should live your life with intention. Where are you headed? Why
(25:21):
are you headed there? What is it you're trying to accomplish in your life?
And, you know, I think at the end of the day, there is no
job or title that you will have in your life that isn't about serving
another human being. So that's what I would encourage young leaders to
focus on. What's their greater mission in life? What are they trying to achieve?
What are their core values? How do those core values inform the actions and
(25:43):
the decisions that they make in their lives? And then have a paragraph or
two of how you do everything in your life and live your life with
intention, Set goals, have them written down. And,
you know, throughout all the aspects of your life, from your spiritual life to your
material life to your personal growth, to what you want to accomplish
at work, you know, have a plan. I love that. I love
(26:05):
that. Would we be able. Would you be willing to share that with me
offline and we can put in the show notes? Yeah, yeah, sure. If you send
a note to Kathy, she'll. She'll send out if you're listening or watching.
We'll send. We'll include that in the show notes for this episode.
Howard, I've got one more question. I'd love to talk to you longer, of course,
but maybe we'll have you if you're willing to come back on the show after
(26:27):
a while. Yeah, but the question is, what delights? The name
of the show is the Delighted Customers Podcast. What delights you as a
customer? I feel somebody cares about me when I walk in. They're
not trying to sell me something. They're trying to serve me. That's what delights me.
And they make me feel better about myself when I'm with them.
Very nice. Howard Behar, the book. And actually, there's two books. It's not
(26:49):
about the coffee and the magic cup. What an awesome experience
and what an honor and privilege it was to have you on the show. Thank
you very much. Before we get off, I would like to give your audience my
cell phone number and my email address in case somebody has a
further question they want to ask. And my cell phone number is
206-972-7776.
(27:12):
And you can call or text me. I'll always get back to you. It may
take me a while, but. But I always get back. And my email address is
hb my initialsowardbihar.com
so, you know, I'm not in the consulting business. You know, I'm not trying to
sell you anything. I just want to always reach out to people that if they
want have a further question, they're able to ask it. That's so generous and
(27:33):
that what a great example of servant leadership that is. Thank you. Thank you,
Howard. Thanks, Mark.
Well, today on the Delighted Customers podcast, I am
very, very excited to bring someone really special from
the special from the Starbucks world on the show, Mr. Howard
Behar. Howard Behar's career and business spans over
50 years, all in consumer oriented
businesses covering several industries. He retired from Starbucks
(00:22):
Coffee after 21 years where he led both
domestic business as president of North America and
he was the founding president of Starbucks International. During
his tenure, he participated in the growth of the company from
28 stores to over
15,000 stores spanning five
(00:43):
continents. He served on the Starbucks board of directors
for 12 years before retiring. He's also
authored two books on leadership titled It's not about the Coffee and
the Magic Cup. With that, Howard, welcome to the
Delighted Customers podcast. Hi, Mark. It's
great to be here. Thanks for including me. So I am so excited. I have
(01:05):
to tell you, honestly, I am a patron of Starbucks and
probably spent way too much money there. That's right. My grandchildren thank
you. Well, Starbucks has been on my
wish list as a podcaster to speak to someone and I
was really blessed to get someone who actually did what you did there.
I want to tap into a little bit about your journey
(01:27):
and also explore it from a customer experience standpoint,
if that sounds okay to you. Sounds great. Let's do it. Okay. So
in the book, which I enjoyed so much, it's not about the coffee,
you said famously, we're in the people business
serving coffee, not the coffee business serving
people. How did this philosophy shape Starbucks approach
(01:49):
to customer experience? Well, when I first got there, we were in the coffee
business. And when I got there, I thought, gee, yeah, coffee
is our product, but that's not the business we're in. We're 100% in
the people business, both the people that work in the organization and
the people, the human beings we call customers that we
serve. And so I was trying to get everybody to understand what we were really
(02:11):
about. So, you know, words matter, language
matters. And so I was trying to come up with something that everybody would understand.
Amazingly enough, that little saying is alive and well after
almost 40 years at Starbucks. And you know, when you say
that, the saying, what were some of the key underpinning,
I guess, strategies or activities
(02:33):
that you, you initiated to begin to change
behaviors there and mindsets? Well, you know, it was
really just talking about it and showing the way and doing, you
know, people don't care what you say so much as they care what you do.
And so I not only talked about it, but I acted that way. So,
you know, that's, that's what drove it. When people saw what
(02:55):
mattered, then they started to copy it. And it's not complex.
You know, you can't have rules. What you have to have is models.
And that's what I try to do, is I tried to be the model for
that. And I just kept pushing it and talking about it and driving it home
and explaining to everybody of why it was important. And then
people started, you know, just following on. And then after a while, what happened
(03:18):
is, you know, like attracts like. So we were recruiting
lots of people to come in the organization, and the people that were there,
they. They latched onto that. It was about people. And then the new
people came in and realized what it was all about. And those are the people
we recruited. So it wasn't so complex. It was. You just had
to constantly reinforce it, recognize it, and reward it. Well. And. And
(03:39):
speaking of people, just read that at the end
of 20, 24 bucks coffee had over
360,000 employees. Amazing.
That's like a midsize city. Yeah, exactly.
And when you were there, right, You. It was not that big. It
was 28 stores. And tell me about how
(04:02):
you seem to manage that rapid expansion and didn't
dilute the personal customer experience that it was known for. It was all
about who you brought into the organization. Everything is about people. There
is nothing, nothing at Starbucks that isn't about human beings.
And so it's the people that made it grow once they understood the greater
purpose of the organization, what we are trying to achieve. And I have
(04:24):
another saying called the person who sweeps the floor should choose the broom. And
once everybody got that they had the responsibility for
choosing their own broom, then they made it happen. I'd like to tell you that
I did it or Howard Schultz did it. It wasn't us. It was the people
that did it. Now, we knocked down the hurdles, we got the
resources in place, and we gave the people a lot of confidence,
(04:46):
and we supported them and we rewarded them, and they did it. Can
you talk a little? You just mentioned hurdles. Can you talk. Talk about
Maybe this could be a good lesson for other leaders as well. What were some
of the hurdles that had to be knocked down before you could move
forward? Well, number one, we had to get resources.
We had to get capital to expand. That was. That was a big
(05:08):
thing. But the most important thing is we had to get the right people in
the organization. And so, you know, we were out recruiting all the
time. I said there was never somebody that I met that I didn't evaluate whether
or not they would be good at Starbucks. I used to walk the malls looking
for people, just talking to store managers and stuff like that. I found somebody
good. I gave my card and I told them to call me. So it was,
(05:30):
you know, the two primary things were getting the right people, as Jim
Collins says on the bus, and then getting the resources
in place that you needed to do it. And those were big hurdles. Sometimes.
Sometimes we chose the wrong people. And. And we had to make a change.
And, you know, at the beginning, we struggled to get. Getting capital, but, you
know, after a while, you know, we started. We were raising money
(05:52):
with local investors, and then we started to go to venture firms, and
we raised. Raised our capital that way. And then, you know, we had to get
people to believe. You know, a lot of people believe that it was a Seattle
phenomenon that, yeah, everybody, it's cold weather, it's raining, everybody
drinks coffee, but we believe that coffee was consumed
everywhere. And we just. We just followed that belief and we
(06:14):
started growing. Was there something that you look for in a
person? You mentioned you'd personally bump into someone, but as you guys
grew, you'd have to develop some sort of, I
guess, some sort of pattern or strategy that you told your leadership, hey,
look for. Maybe these are the kind of people we want to bring in. What
were some of those characteristics? They had to be have
(06:35):
empathy. They had to show
vulnerability. They had to be kind, caring, and
they had to believe that love belonged in business. And they had
to have the requisite people skills. You know, they had to have
the human skills, social emotional skills. And if they had
those, then we could teach them everything else. Now, certainly, we were
(06:57):
hiring some skilled people in accounting and engineering and
architecture and stuff like that. But primarily they had to have the human
skills. They had. They had to have strong social emotional skills.
And you're. You mentioned accounting and so forth, but are you also
talking about leadership, some of these skills, some of these traits? Yeah, yeah, they
had to have leadership skills. But, you know, we could teach them a lot of
(07:20):
the ins and outs, but what they had to come with is a kind heart
and with empathy. And we were a company that was driven by servant
leadership, that we recognize that leaders recognized that we
were here to serve our people, not the other way around. And
so we looked for people like that. When I interviewed, I didn't ask
questions about how good their accounting skills were. Somebody else did that. I
(07:41):
ask questions about, you know, what do your parents like about you? What do
your parents not like about you? If you have a brother or sister, what do
they think of you? What do your parents wish you would have become versus what
you became? What's the most difficult human interaction that you've ever
had? What's a conflict that you had and how did you solve it? I was
looking for those kinds of things. Really interesting and
(08:03):
a little bit counterintuitive to what you see today.
Oftentimes, yeah, but interesting. So, suny, can
you talk about how you empowered your employees or partners
in terms of delivering exceptional experiences? Well,
it was. I used to say, just say yes.
Right. Find a way to just say yes. That's what got us. And
(08:25):
if you, you know, you look at Starbucks and the variety of things that a
drink that will make it any drink, any way you want it. Nobody was doing
that, you know, and so I was in that mode of just find ways
to say yes. No matter what the question was, say yes. Now
know, obviously, there's some things that got requested like, you know,
that we couldn't comply with. But we. We never said no. We just
(08:48):
said, well, that's not something we could do, but we can do this. And so
we were always looking for ways to say yes to our. To the
people that we are serving. And when you do that, time after time, people want
to come back. Other things that we did, we, you know, the member of the
program Cheers, where everybody knows your name. Right, right. The tv.
Yeah. So we encouraged our people to become familiar with the people
(09:10):
that we're serving. If you had somebody that was coming in day after day, it
behooved you to know who they were, what their drink was, and to build
a relationship. And so, you know, even though
we're just serving coffee, it's still about relationships. You
know, it's still about people, and it's still about serving another human being.
And so when you do that with the same love in your heart
(09:32):
that you have for the people that you work with, then it transfers and people
recognize it. We weren't perfect by any stretch of the imagination. Still not
perfect. But that was always the attempt. Howard, I want to go
rewind a little bit to what you said. You used the frame servant
leadership. And I think, you know, we can assume we know what that means, but
I'd love for. To double tap on that and let you share what you mean
(09:54):
by servant leadership. Well, to me, there's three steps
to servant leadership. The first step is that you help your
people grow as human beings. That's number one. And the most
important number two, you help them grow as professionals, be better
at what they do. And number three, you help them achieve their own personal
goals in life. And when you do that, then they want to serve your
(10:16):
organization because they realize that you care about them. And, you
know, I always try to give them recipes, not rules. You
know, say, here's what we're trying to achieve. You may like carrot cake, but
not like carrots. So maybe you don't want to put very many carrots in the
carrot cake, right? Maybe you like lots of frosting so you can have
carrot cake your way. And that's what we try to do to our people. And
(10:37):
so we try to treat everybody with the same respect and dignity that
we expect to be treated ourselves. And people recognize that
because after a while, you know that old saying, people want to know how much
you care, not how much you know. And so we tried to show how much
we cared, and that's what we did. From a customer experience
standpoint, when you were there, did you use or how
(10:59):
did you use customer feedback? Did you have ways to
listen and respond to what you were hearing from
customers? How did you do? How did you go about that? Well, you know, in
the early days, there was no technology there to do what we wanted.
But we had customer comment cards that customers would fill
out. I myself personally would read every customer comment
(11:21):
card, and then I would hand them out. At start of every staff
meeting, I would have. We would go around, Maybe there were 15 or 20
people, and I'd hand out customer comment cards just
randomly. Nobody knew what they were going to get. Maybe it was part of their
responsibility, maybe it wasn't. And then they would read the card and we would talk
about it. The goal wasn't to look, to blame anybody. It was to make
(11:43):
sure that we understood what was going on and we were hearing
firsthand. And then, you know, there's nothing like being in the stores. I
was traveling all the time. I was in the stores all the time. And I
would go sit down with customers and I'd ask them, you know, what do you
like about Starbucks? What don't you like about Starbucks? What do you wish we would
change about Starbucks? I asked those three questions to all the baristas and
(12:04):
store managers. And after a while, you learn what's working, what's not
working, and you make small adjustments along the way
to make that happen. And so, you know, it's not that, you know,
now everybody uses all the technology. I'm not so sure that
that's so great. I think there's nothing like the human interaction,
the human conversation, to really dig down Deep, because
(12:27):
it's. They're not. People are not just checking boxes, you know. How was
your meal? Was your meal good? Yes. No. Maybe, you know, now it
was. What did you specifically like about your meal? What didn't you like about
your meal? What do you wish we could. Would have done better with that meal
or that cup of coffee? And so there's nothing like that. And I think.
I think leaders today miss that. You know, they're looking for the easy way
(12:49):
out, and there's really no good easy way out. You really need
to go in and dig and you need to. You need to build
relationships, you need to ask questions, and you need to listen to the answers,
not just with your ears, but with your eyes and with those little antennae we
have in our head. Excellent. Okay, so, Howard, you're expanding. You're growing
rapidly back in these years.
(13:10):
And I'm wondering, as you, as you
grow, and you've got lieutenants,
sergeants in the field, they are vying
for resources for their area of the
business. This is very similar to a CX leader who
is vying for support resources to
(13:32):
try to either redesign an experience
that's not going well or could be getting better, responding to customers,
friction points, et cetera, and trying to get resources to do their
job. And yet there is a bunch of birdies who also want money. When you
thought about how to make decisions and support one
of your leaders that reported up through, either directly or through you,
(13:55):
what were some of the key criteria that you used to say,
yes, we're going to go ahead and support that? Well, you know, we
had to present. They had to present their cases. Right. And
they had to be performers. You know, if you didn't get. See, performance
matters in this world, performance matters in servant leaders. You got to
get the job done, and you got them. You got to achieve the commitments that
(14:17):
you make. And so, you know, we would certainly support with
greater resources those people that were really getting the job done. But
having said that, sometimes people weren't getting the job done
because there was a resource that they didn't have. And so we had
to listen, we had to. We had to really pay attention to what they were
asking for and why they were asking for it. And, you know, I
(14:40):
had. I always thought that you had to take risk. You know, I
remember when I first came, I retired once at Starbucks. When I came
back to help out in North America, the guy that was running operations in North
America, a guy named Jim Alling, he said to me, I think that we're under
Staffing our stores. Well, I'm an old line retailer. You didn't add
staff until you had the sales. But he believed that we needed to add
(15:01):
people in order to increase the sales. So I said to him, okay, you
know, I trust you. Let's take 300 stores and go
and attest it. Well, you know, we did that and
lo and behold, he was absolutely right. We added
people in the stores and the sales increased. We were
understaffing our stores and unable to serve our customers well. And
(15:23):
so you just, sometimes you have to take chances and you have to take risks
and not everything you do will work. And so you know, you had to
be just conscious of, of what your people were asking for, what
your customers were asking for and just paying attention and then would be willing
to try things and be willing to make mistakes and have things not work.
Well, I'd love to. I appreciate you sharing that and the risk that you took
(15:45):
and the willingness as a leader to listen to and give it an
opportunity for one of your leaders there who really believe that they needed more
people in the stores to support it. We hear a lot about
the ROI of customer experience and having to prove that.
And if you don't do that as a CX customer experience leader, you know
you failed. You have yourself to blame. And I, and I
(16:08):
know that there are several models, many models you could
use, customer lifetime value and a whole bunch of others that you could
use to justify the ROI of cx. And oftentimes
CX leaders get blamed for not doing a good enough job
of basically the financial, proving the financial
case. What would you say? I'm trying to get a sense of what you would
(16:30):
say to that and how you dealt with that. Again, among the chirping birds
here who are vying for supportive funding, the ROI
piece of it, what would you say to the struggling CX
leader who's having a tough time quantifying the return
on investment? Well, not everything you do can you put
a number to right? Sometimes you just have to believe
(16:52):
and you have to and you have to be aware of what's going on. That's
why asking questions and being out in the field is so
important. So I'll give you another good example. So I had, I
had of strategy that reported to me and he believed at
that time we didn't have ovens in our stores warming ovens. And he
believed that customers would like their pastries warm. Now
(17:14):
I didn't have to be brilliant to figure that probably made some sense.
Right? I mean I like a Warm muffin versus something cold, you
know. So I made a pitch to the
cfo. I said, I want to put some warming ovens in the stores. We're going
to test it. I forget the number of stores. It was maybe 2, 3, 400
stores we were going to test it in. And he looked at me, he said,
(17:36):
well, you got to prove it to me first. I said, I can't prove it
until I do it. And I can't just put five ovens in. I got to
put enough in that we get a broad enough view of it. And he said,
well, you can't have the money. And I just looked at him and I took
my keys and I pushed. I had my car keys on my desk. I pushed
the keys across the table. I said, if you want to run the business, here
(17:57):
are the keys. Sometimes you gotta push. And because
I didn't have a number to prove it, I
believed in it. Many things you have to do. Not everything
you do is gonna have the answer or the solution
written on the wall with. With all the numbers you need. And if you
do this, you're gonna increase sales by 50%. You don't know Frappuccino.
(18:19):
We brought Frappuccino in. It was a test. We didn't know. And
Frappuccino, because we tested it, it and it became
a four billion dollar business. And so, you know,
sometimes you can get too caught up in the analysis.
You know that old word analysis paralysis, Right?
Too caught up in the data. Yeah, yeah, yeah.
(18:41):
Here, let me put it to you this way. If you go home tonight and
you ask your wife, or you walk into the house and you ask your
wife, how was your day? Right. You don't need to. You
can tell what her day was like without her saying a word, can't you? You
don't need much analysis. You can just look at her face, right?
Or if your wife says to you, honey, I'm unhappy in this marriage, how much
(19:03):
more data do you need? Right? You don't. You don't need to do a whole
research project to figure out, you better fix something, right? So,
you know, not that data isn't important. I'm not arguing against it.
I just don't get frozen in that. Yeah. When you were
leading Starbucks North America and growing Starbucks
internationally, you probably had the same situation where you're vying for the
(19:25):
same sort of scarce resources like everybody else was. Can you think of a
particular challenge that you had that you can look back now and say, yeah,
that was a really big challenge and that. And One in particular, maybe
that you overcame. We were. I felt that we weren't paying enough
to our baristas. We were basically paying minimum wage. So in
order to do that, if I wanted to increase the wages
(19:48):
in the stores, I had to figure out a way to pay for that
some way. And so I ran all the numbers and we figured
out what it was going to take to pay for it. And so
we implemented it. We took it at a minimum, a dollar
above minimum wage an hour, and
we rolled it out. Well, lo and behold, we'd made an error
(20:10):
in our calculations. We thought it was going to cost 1% of sales, it
cost 2% of sales. Now I had a problem. I had to figure out how
to fix it, but I wasn't going back, right? A deal was a deal, and
I made the commitment and we wanted to move it forward and I truly believed.
So we figured out how to solve the problem. You know, we, we cut on
some, some things. We raised prices a bit and we figured out
(20:32):
how to make it work. And it made a difference in who we could recruit.
And so it was a problem. Howard Schultz was mad as hell.
You know, imagine when The P&Ls came out and he looked at those numbers. What
happened? I thought you said. And I said, hey, we blew it, but we'll fix
it. And I happened to be on vacation at the time. I had to come
running back from vacation to figure out what to do. But we figured it out.
(20:53):
But, you know, those were the things that, that really, it was really
about how we were serving our people. And sometimes those things cost
money. I have two more questions I want to ask, then I'm going to ask
you the final question. It's all fascinating to me. I want you to, if
you could respond, share your opinion and thoughts about the recent
Starbucks Back to Starbucks initiative under new leadership.
(21:15):
I think September, the new CEO came in. And what
advice would you give to ensure they stay true to their roots while
evolving to modern customers? Well, I don't. I think it's
using our history to inform our future. I don't think it's back to
Starbucks. I think it's forward to Starbucks. But we can use our history
and what we believe in to inform our future. And so
(21:37):
what, what Brian is doing, a new CEO, you know,
he's basically saying, here are the things that we did before
that liked, you know, like lots of chairs in the stores
and when it's appropriate to write a note on the cup and just
saying thank you or whatever. It happens to be going Back bringing the condiment
stands back where people could put their own milk in their cups. And little, it
(21:59):
was little things like that, but it's really the people centric things
that he's doing. Covid really did a lot of damage to us, you know, because
it was. Nobody knew what to do. We didn't know how to manage the
business. We took chairs out of the stores because people, we couldn't have people
sitting in the store, you know, and all those kinds of things. But, but
that's what I think that he is trying to do. And I really think that
(22:22):
it's, it's going towards the future of Starbucks. Using
our history to inform our decisions. Excellent. Yeah.
So many things, so much pride created. I mean,
coffee was around forever. Right? But somehow this, I don't know how
many billion dollar business. And I would argue it's, it's all about the
experience and good coffee. Yes, but wouldn't you say a lot.
(22:45):
Of people, you can go a lot of places and get a cup of coffee
that you like. At the end of the day, it's how you
were treated. The product has to be good. Right. And we have to make it
the way you want it. But at the end of the day, how are you
treated? Do you feel like you were cared about? Do you feel like
you mattered and that we weren't just trying to get your dollar
bill, that we were actually trying to serve you in some way that made
(23:07):
you feel better about your day? I used to say to our faresis that they
were social workers and they had 10 seconds to determine where that
person was at that particular time in their day. Did they just
get a traffic ticket that cost them 100 bucks and that used up a big
chunk of their food money for the week? Or did their kid just get a
free ride to Harvard and they're waiting to be able to tell somebody because they
(23:29):
were excited? So you had to pay attention, you know. And that goes back to
the empathy that you were talking about. Yeah, empathy. Yeah, exactly. Paying
attention. What advice do you have for maybe the
young to mid career person listening to the show about
their careers? Like what? As you've had a full career
now, what advice would you share with someone who's young and up and coming?
(23:51):
Well, first of all, you're not building a resume, you're building a life.
It's really important to see it that way because when you're building a life,
then you're focusing on the purpose of why you're here, what you're trying
to do, who you Are. What are your values? What are the 8
to 10 core values that inform all the decisions and the actions you
take? You should definitely have a personal mission statement. What is
(24:14):
it you're trying to achieve with your life? And, you know, I've done that.
I've had that for. Since I was in my mid-20s. And
I have a document. I'll show it to you, but your audience
won't be able to read it. But this is a picture in Howard of 50
words or less. I've had this since I was 27 years old. And
on it has my personal mission statement, which goes like this. To
(24:37):
live my life every day, nurturing, inspiring the human spirit, beginning
with myself first and then for others. The reason why I say
self first is because I've grown to understand after living this long
that if you're not okay with you, it's very difficult to help somebody else. And
then I have my eight core values. And those eight core values
inform how I make decisions in life and then how I do everything.
(24:59):
My six P's, everything I do in my life has to have a purpose greater
than myself. And everything I do has to be about serving people. And
so that's how I try to manage my life. And I've written it down. I
think you have to write these things down, because if you don't, then they've just
becomes wishes, hopes, and dreams. And then you have to have a plan.
You should live your life with intention. Where are you headed? Why
(25:21):
are you headed there? What is it you're trying to accomplish in your life?
And, you know, I think at the end of the day, there is no
job or title that you will have in your life that isn't about serving
another human being. So that's what I would encourage young leaders to
focus on. What's their greater mission in life? What are they trying to achieve?
What are their core values? How do those core values inform the actions and
(25:43):
the decisions that they make in their lives? And then have a paragraph or
two of how you do everything in your life and live your life with
intention, Set goals, have them written down. And,
you know, throughout all the aspects of your life, from your spiritual life to your
material life to your personal growth, to what you want to accomplish
at work, you know, have a plan. I love that. I love
(26:05):
that. Would we be able. Would you be willing to share that with me
offline and we can put in the show notes? Yeah, yeah, sure. If you send
a note to Kathy, she'll. She'll send out if you're listening or watching.
We'll send. We'll include that in the show notes for this episode.
Howard, I've got one more question. I'd love to talk to you longer, of course,
but maybe we'll have you if you're willing to come back on the show after
(26:27):
a while. Yeah, but the question is, what delights? The name
of the show is the Delighted Customers Podcast. What delights you as a
customer? I feel somebody cares about me when I walk in. They're
not trying to sell me something. They're trying to serve me. That's what delights me.
And they make me feel better about myself when I'm with them.
Very nice. Howard Behar, the book. And actually, there's two books. It's not
(26:49):
about the coffee and the magic cup. What an awesome experience
and what an honor and privilege it was to have you on the show. Thank
you very much. Before we get off, I would like to give your audience my
cell phone number and my email address in case somebody has a
further question they want to ask. And my cell phone number is
206-972-7776.
(27:12):
And you can call or text me. I'll always get back to you. It may
take me a while, but. But I always get back. And my email address is
hb my initialsowardbihar.com
so, you know, I'm not in the consulting business. You know, I'm not trying to
sell you anything. I just want to always reach out to people that if they
want have a further question, they're able to ask it. That's so generous and
(27:33):
that what a great example of servant leadership that is. Thank you. Thank you,
Howard. Thanks, Mark.
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