Notes on Onward by Howard Schultz

I don't drink coffee, but I thoroughly enjoyed Onward by Howard Schultz, the story of Starbucks and its long, complex history (I like hot chocolate and tea). The audiobook I listened to was quite long,, and at times it felt more like Starbucks marketing than actual story and analysis. However, for the most part, I enjoyed hearing about the challenges the Starbucks CEO faced and how he and the right people around him helped turn around the business that we all know and love. I also grew to have a much deeper appreciation for the process around growing and roasting coffee, the training and culture behind the baristas and Italian coffee shops, and why "going out for coffee," something so commonplace now, is actually quite special and worthy of analysis.

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The author/CEO starts the story with his own background. He grew up in New York in the "projects" and started in the marketing department for Starbucks, a company that just sold coffee beans at the time. He went on a formative trip to Italy, where he felt the intense cultural love for espresso bars and the community created in the neighborhoods through coffee. The coffee shop has become the "third place" in one's life (with home and work being the other two).

He took this idea back to the US and started his own coffee shop. In the process, he bought his former employer Starbucks and grew it to what it is today.

Some key points that I found interesting in the introduction is how they treated employees and managed their team. Starbucks gives all employees (including part-time) equity options and health insurance. They also lowercase all titles and call employees "partners."

The book focuses its attention on the problems in the US economy, their effect on Starbucks, and how Schultz came back to be a second-time CEO to deal with problems and turn the company around.

Part 1: Love

Ch. 1: A Beverage of Truth

• One day, Starbucks closed all its stores to retrain all its employees at once to pour better shots of espresso. The CEO sent DVDs and DVD players to all stores to communicate with all employees directly and train them in the right procedure.
• This took major courage and lost a lot of profit.
  
• Main values baristas should promote: love, human relationships

Ch. 2: A Love Story

• Entrepreneurs must love what they do because there is immense pain.
  
• Wrote frequent memos to employees
  
• Trip to Italy, coffee bar experience, immense sense of community around coffee
  
• Starbucks at the time didn't want to sell beverages, just beans.
  
• So he left and started his own coffee bar, Il Giornale.
  
• Bought Starbucks from its owners
  
• Gave options to part-time employees

Ch. 3: Surfacing

• After Starbucks established itself, he switched from CEO to focusing on international Starbucks openings.
  
• Social responsibility
  
• Expanded to music, books, films
  
• Hubris, problems with the next CEO's decisions
  
• Mentality focused too much on growth
  
• Deterioration of customer experience
  
• Dilution of experience
  
• No blame; all were responsible.
  
• Missing aura, spirit
  
• Efficient espresso machines too tall, stops eye contact and engagement with customers
  
• Automatic espresso machines are efficient but remove the sense of theater.
  
• Aroma lost due to shipping method
  
• Wrote memo of all these issues

Ch. 4: Nothing is Confidential

• Memo got leaked, lost trust in team
  
• Realized they need social media presence to respond to new technology
  

Ch. 5: Magic

• Burnt breakfast sandwiches killed the coffee smell, even though good for sales
  
• Had to change this

Ch. 6: Loyalty

• Never intended to return as CEO but couldn't stand by while quality worsened
  
• Company focused more on Wall Street and growth than initial inspiration
  
• Kekst and Company (consultancy) helped with secret management crisis

Part 2: Confidence

Ch. 8: A Reservoir of Trust

• Nice story of change in control
  
• Long past of good work

Ch. 9: A New Way to See

• SYPartners organized brainstorming retreat.
  
• Studied other icons like the Beatles
  
• Sacrifice short term
  
• Call employees partners, lowercase titles
  
• Training day: closing all stores on one day
  
• Visited other merchants for inspiration
  
• Focus on coffee quality
  

Ch. 10: Playing to Win

• Developed lighter and more balanced blend (Pike Place Roast)
  
• Experimented with new methods to serve coffee customers asked for
  

Ch. 11: Elevating the Core

• Comps: Same store sales compared to previous year
  
• Eliminated public disclosure of comps to avoid short term focus
  
• Acquired Clover brewer startup to increase coffee quality
  
• His speeches were impromptu, based on love of Starbucks and coffee.

Ch. 12: Get in the Mud

• World belongs to the few who get their hands dirty.
  
• Asked people to email him directly
  
• Open forums for all to ask questions
  
• Compose frequent memos to employees
  

Ch. 13: Reason to Exist

• Written Transformation Agenda
  
• Focus on sense of community, human connections, moments
  
• Online social networks, CRM, forum to connect to community and get ideas

Part 3: Pain

Ch. 17: Whirlwind

• Hired Edelman PR agency for Pike Place Roast launch

Ch. 18: A Lethal Weapon

• Bad information technology in stores
  
• Closed 600 stores that were not sustainable
  
• Rising costs and sinking sales
  
• Targeted $2 sales per $1 dollar invested
  
• Added stores previously to reduce wait times but cannibalized business from nearby locations
  
• Success is not sustainable if only defined by growth and number of stores.
  
• Only number that matters is One: One cup, One customer, One partner.

Ch. 20: No Silver Bullets

• Sorbetto
  
• Vivano
  
• Loyalty program
  
• Multiple promotions at once cannibalized
  
• Large investment in Sorbetto equipment, bad currency rate, huge freight costs, huge cleaning costs, low margin
  
• Barista buy-in required for success
  
• Abandoned Sorbetto to cut losses
  
• Thirst for innovation blinded him
  

Ch. 21: I Know This to be True

• Said he's sorry and held big conference when laid off a lot of non-store employees
  
• Let people manage their own exits
  
• Set up free new email accounts for laid off workers
  
• Gave employee assistance packages
  
• Severance pay to all
  
• Allowed everyone to voice comments to him
  
• Surrounded himself with strong talent, pulling others out
  
• "Onward" is the sense of the dual nature of transformation.
  
• Honor past and reinvent future
  

Part 4: Hope

Ch. 22: Truth in Crisis

• Lehman bankruptcy
  
• Huge supply chain problems at Starbucks
  

Ch. 23: A Galvanizing Moment

• Went to New Orleans for big annual conference
  
• Touch Worldwide design firm made conference displays interactive with the help of SYPartners
  
• Introduced product RED
  
• Partnership with Bono
  
• Commerce and compassion
  
• New laptops and POS system
  

Ch. 24: Nimble

• BBDO ad agency
  
• Free coffee on election day, TV ad during SNL, and Facebook campaign

Ch. 25: Plan B

• Board of Directors made them push more to cut operating costs.
  
• Listed names of directors, backgrounds, and his friends. Every individual unique and pivotal to success.
  

Ch. 26: Stay the Course

• Loyalty card
  

Part 6: Courage

Ch. 27: Innovate

• Instant coffee invented by Sacramento medical scientist
  
• Intense R&D effort
  

Ch. 28: Conviction

• Lots of naysayers for instant but he believed in it
  
• Naming was difficult
  
• Came up with VIA
  
• Outside design firm created packaging
  
• Leaked news before release, bad initial blog reviews but over time taste tests proved it to be superior
  
• Reinvented category

Ch. 29: Connecting Dots

• Considered partnership with Blizzard Entertainment
  
• Didn't do it because it was far from their values
  
• Private digital content for in-store users
  

Ch. 30: Balance

• Met with merchant in Italy
  
• Merchant said he cannot have even two coffee stores (and maintain quality).
  
• Being a "merchant" = desire to tell a story
  
• Balance efficiency with romance
  
• Starbucks: 16,000 stores, 40 years
  
• Focused now more on interior design, sustainable construction
• Original designs per store, more independent mercantile feel for research and experimentation
  
• Lean operations
  
• Managers acting as owners and entrepreneurs, empowered to experiment in their stores
  

Ch. 31: Conscience

• Rwanda trip
  
• Farmer loans and support, fair pay
  
• Donated cows to farmers
  
• Health coverage for all part-time employees
  

Ch. 32: Winning

• Earnings began to grow again.
  
• Increased salaries by merit, continued to match 401k contributions throughout bad times
  

Ch. 33: China

• Trip to Shenzhen
  
• Innovation using local ingredients
  
• Instilling confidence in others
  

Tribute

• Created tribute blend for 40 year anniversary
  
• Loyalty
  
• Social media
  
• Lean
  
• International
  
• Mercantile experimental shops
  
• Sustainable agriculture
  
• Improved operations supply chain
  
• Store technology