Taking the Long View: Building Success That Lasts
You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement.
WOODROW WILSON
What are your primary responsibilities as a leader? Are they to drive profitability, maximize the potential of your people, and strengthen your brand equity? In their book A Leader’s Legacy, James Kouzes and Barry Posner suggest that true leadership “brings with it a responsibility to do something of significance that makes families, communities, work organizations, nations, the environment and the world better places than they are today.” While Kouzes and Posner’s words might seem like lofty and untenable platitudes, the leaders at Starbucks view themselves as being responsible for more than business success. In fact, Howard Schultz integrates the broader social good with the overall viability of Starbucks business by noting, “Since Starbucks earliest days, I have believed in a strong link between our company’s performance, our values, and the impact we have on the communities where we do business. This interdependence is at the heart of our mission…. Such interdependence is also right for our business, especially in the times we now live. Consumers have long rewarded brands with their loyalty when they feel a company’s mission and aspirations align with their own.”
In fact, at Starbucks, the leadership’s aspirations regarding social responsibility are defined in one of the company’s guiding principles, that involving neighborhoods. That principle reads:
Our Neighborhood
Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action—bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility—and our potential for good—is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.
Throughout this chapter, we will look at just a few of the socially responsible areas where Starbucks sets “the new standard” and “leads.” For our purposes, we will look specifically at behaviors leadership demonstrates in the course of setting goals, taking action, and measuring progress in the areas of environmental stewardship, ethical sourcing, community development, and job creation.
If you were to Google the phrase “saddling future generations,” you’d come up with more than 356,000 results. Most of these references apply to the perceived shortcomings of political leaders globally who borrow money to pay for present-day services and leave the repayment of those loans to future generations of taxpayers. While this behavior is expedient for a politician’s reelection, many critics see it as myopic and irresponsible social policy. The parallel in business is a leader who achieves short-term profitability at the expense of long-term sustainability. Such a leader might consume large quantities of finite raw materials and “saddle future generations” of leaders with a supply shortfall. For example, leaders in agribusiness and commercial fishing have been accused of short-term profit taking in the form of overfarming or overfishing.
At Starbucks, leaders not only consider the short-term impact of the resources they consume, but also look for ways of doing business that decrease consumption over the near and long term. Additionally, these leaders seek to drive initiatives that will help influence other organizations to consider responsible stewardship of finite resources. This impact on other organizations is particularly evident in the areas of sustainable building design, the recyclability of Starbucks cups, and manufacturing processes (for example, the environmentally friendly changes to the Starbucks cup sleeve).
While I have spent time talking about culturally relevant building design (such as the Bank store in Amsterdam) and designs that offer new delivery platforms (such as the walk-up/drive-up concept in Denver, Colorado), Arthur Rubinfeld, chief creative officer for Starbucks and president, Global Innovation and Evolution Fresh Retail, indicates that the galvanizing and energizing force among Starbucks store designers is “a stake we put in the ground around 2008, when we announced our goal to lead the world in global, sustainable retail building practices in company-owned stores worldwide. Environmental considerations have long been a part of our company, but in 2008, we claimed a specific aspiration and shifted our role to not only be stewards but responsible educators. We are building stores with sustainable products by utilizing metal, wood, and stone/organics, as well as recyclable and recycled materials. As importantly, we are making sustainability more visible so people around the world might consider an environmental lifestyle. We’re educating consumers about water conservation, energy conservation, and we have taken a leadership position when it comes to eco-conscious stores. There is immense satisfaction in inspiring others.”
One highly visual example of the sustainable store design can be found in a Starbucks concept store referred to as the Reclamation Drive Thru, located in Tukwila, Washington.
Reclamation Drive Thru, Tukwila, Washington, USA.
Anthony Perez, senior manager, Global Store Design, was responsible for the project and shares the eco-conscious nature of its design: “Shipping containers source our coffees and teas from around the world. But many end up in scrap yards once they reach their average 20-year lifespan. Reclamation Drive Thru was inspired by a desire to help keep items used throughout our supply chain, like old shipping containers, out of the waste stream. The result: a 450-square-foot Drive Thru and walk-up store made from four end-of-life-cycle shipping containers. One small 20-foot container holds garbage, recycling, and storage, but other than that, the whole store is contained within the shells of four containers that have been reclaimed, refurnished, renewed, and revived. And it works! … This small project came at a perfect time here at Starbucks as we challenge ourselves to deliver LEED certified stores across the U.S.”
LEED certification refers to meeting Leadership in Energy and Environmental Design criteria. If these criteria are met, the result is a voluntary third-party verification by the U.S. Green Building Council, indicating that the building has been designed and constructed and is being operated in an ecologically sound manner. It is an approach to creating a built environment that conserves water and energy, reduces greenhouse emissions, decreases waste sent to landfills, and increases occupants’ health and safety. Many business leaders have passed on remodeling or building physical spaces that meet LEED standards because they fear that building costs will be considerably higher. However, the Natural Resource Defense Council suggests, “Green building skeptics sometimes argue that it’s difficult or even impossible to build green without paying a big cost premium. But real-world examples show that you can complete a LEED certified green building project for an average of 2 percent more in upfront costs, and sometimes even below standard market construction costs. Plus, any extra first costs you pay can be recovered through faster lease-up rates, rental premiums and increased market valuation.”
Responsible management of capital expenditures is important, and when it comes to Starbucks stores, so are responsible sustainability efforts. Jim Hanna, director, Environmental Impact at Starbucks, notes, “Around 75 percent of our controllable environmental footprint comes from our retail operations…. For us to have any credibility as a responsible company in this arena, we had to tackle our stores first.”
Ben Packard, former vice president, Global Responsibility, puts Starbucks leadership position on LEED in perspective by noting, “We have been working with the organization responsible for LEED certification, the U.S. Green Building Council, since 2001. Rather than setting our own standards on sustainable buildings and then going out to validate our effort, we knew it would be important to have a trust mark conferred by an independent certifying agency. LEED criteria were designed for office buildings and not retail spaces, so I became involved as chair of the retail development committee at the U.S. Green Building Council to work with other retail industry and environmental leaders in making appropriate adjustments to the criteria. Once those retail standards were established, we pursued LEED certification aggressively.”
In a Starbucks LEED certified store, some energy- and water-saving elements might be noticeable by customers. These would include items like LED lightbulbs; energy-efficient equipment such as icemakers, dishwashers, or blenders; low-flow faucets; and dual-flush toilets. Non-customer-facing energy-efficient, water-saving efforts would include energy management systems, which have shown reductions of 20 percent in heating, ventilation, and air-conditioning (HVAC) energy consumption; a water filtration system that produces 50 percent less wastewater than prior systems, and a sanitizing sink that saves a substantial quantity of fresh water while adhering to all applicable health standards.
To have an interactive virtual tour of a LEED certified Starbucks store, please go to http://tinyurl.com/orvk49d.
Each year Starbucks publishes a corporate social responsibility report that serves as a report card on the company’s progress toward social and environmental goals. In 2011, for example, the report validated that the company was “on track” to meet its goal of having all its company-owned new buildings make their way through the lengthy process of becoming LEED certified, noting that 75 percent of new company-owned stores had, in a year, already achieved LEED certification status.
The lessons learned from Starbucks journey to LEED include the importance of setting ambitious sustainability goals; seeking third-party criteria to validate your achievement of those goals; playing a role in refining these criteria for your industry, if necessary; executing against those goals; and transparently reporting your progress toward your objectives. In a smaller business setting, you may wish to access tool kits provided by the Office of Small Business Programs at the U.S. Environmental Protection Agency (an example of which can be found at http://tinyurl.com/m7tl7td).
In addition to receiving recognition like the Green Building Design Award from Global Green USA and a 2012 Good Design Is Good Business Award conferred by Architectural Record for the company’s efforts toward LEED certifications, Starbucks has also been acknowledged for its overall accomplishments in energy conservation and its reliance on renewable energy. It has been recognized as a Green Power Leadership Award winner by the Environmental Protection Agency, since Starbucks is a top U.S. purchaser of renewable energy. For example, in 2011, Starbucks purchased more than 421 million kilowatt-hours of green energy through Green-e® certified renewable energy credits. Those wind-generated electricity purchases powered more than 50 percent of Starbucks U.S. company-owned stores. The company has set goals of reducing its energy use by 25 percent from 2008 levels and having 100 percent of its electricity consumption generated through renewable energy by 2015.
Merging innovation with efforts to reduce energy consumption, Starbucks has teamed up with the Bonneville Power Administration and a collective of public utilities in the northwestern United States to explore whether changes in human behavior can result in substantial energy savings. Instead of relying solely on energy-saving technology, Starbucks leaders will challenge store partners to compete with partners in other stores to see who can create the greatest energy reductions. The leaders at Starbucks are taking responsibility for short-term energy efficiency and long-term environmental stability. In the process, they are leading others in the pursuit of more sustainable business practices. This leadership position could not be more evident than in the area of recycling.
Just as Starbucks leaders worked with the U.S. Green Building Council to establish LEED criteria for retail buildings, so too have company leaders collaborated with other experts and leaders in the area of recycling to create a solution that decreases the waste associated with Starbucks cups. As I was completing my previous book about the company, Starbucks was poised to launch the industry’s first hot beverage paper cup with 10 percent postconsumer recycled fiber. By demonstrating the safety of the recycled content in its cups, Starbucks had been able to encourage the U.S. Food and Drug Administration to change its position prohibiting the use of postconsumer recycled content in paper products that came in contact with food.
While the use of postconsumer recycled content in cups was an important step, it did not mean that the cups themselves were necessarily recyclable. This was problematic for the leaders at Starbucks, who had set a goal of ensuring that 100 percent of their cups would be reusable or recyclable by 2015. Ben Packard, former vice president, Global Responsibility, notes, “Our cups are made of paper, but that paper is covered with a polymer. This means in cities where the recycling market will take that material, the cup is recyclable. In other cities, the polymer makes it nonrecyclable. This type of variability prompted us to begin hosting a meeting in 2009 which we call the Cup Summit.”
The Cup Summit has continued to grow annually and brings together individuals from all areas of the plastic and paper cup value chain. These stakeholders include raw material suppliers, government officials, beverage and retail businesses, cup manufacturers, nongovernmental organizations, recyclers, and academic experts from institutions like MIT. According to Ben, “Initially, we thought our solution would come from changing materials, but we were encouraged to challenge all assumptions and map every aspect of a cup’s journey. As such, we literally had a map from tree to garbage dump on which we outlined all the things that would have to change and how we would need to go about effecting those changes.” Because of the knowledge gained through the Cup Summits, the leaders at Starbucks have already implemented recycling in a number of U.S. markets by developing close relationships with the leaders of various municipalities. The company has also initiated recycling pilot projects across the United States and collaborated with Canadian and U.S. paper mills to explore compatibility and ways to drive demand for cups with postconsumer content.
Jim Hanna, director, Environmental Impact, notes that Starbucks is committed to the recyclable cup issue because it is good for the environment and because it is important to customers. He offers, “Our footprint is most affected by our built environment as well as the energy and other resources that go into running our stores, but when we talk to our customers and other stakeholders, they are asking about our progress on the recyclability of our cups. The Starbucks cup is a touchable, tangible, visible icon of the company, and it symbolizes our environmental performance.” When an environmental issue is salient to your customers, it has to rise on your project priority list.
A similar iconic and tangible aspect of the Starbucks cup experience is the cup sleeve. In 1997, Starbucks introduced the sleeve made of corrugated paper in an effort to reduce the waste that occurred when customers requested that their hot beverage be double cupped. The sleeve offered an insulating layer between the customer’s hand and the Starbucks cup, with the added benefit that it could be constructed with postconsumer recycled fiber, since the sleeve never made contact with the coffee. At the time it was launched, 60 percent of the composition of the sleeve came from this recycled material.
The sleeve was initially intended to be an interim solution as Starbucks leaders researched alternative strategies to alter the thermal properties of the company’s cups. In the end, it was determined that the sleeve was the most viable option—thus, it continues to be used today. Matt Cook, president of LDP Manufacturing, the supplier that provides the cup sleeves, suggests that the leadership at Starbucks pushed his company to improve the sleeve: “Starbucks leaders essentially asked us, ‘What does the next generation of a hot cup sleeve look like? Is it possible to create a product that has less material, increases recycled content, and offers the same or even superior thermal insulation?’ I can’t express to you the magnitude of that challenge, but we worked with Hinkle Corporation on the chemistry around the internal adhesives and ultimately produced a groundbreaking technology. It is the new hot cup sleeve, which Starbucks calls the EarthSleeve™.” Without compromising its thermal properties, the new sleeve uses 35 percent less paper and is made from 85 percent postconsumer recycled fiber (a 25-percentage-point increase from its predecessor). Certifying organizations have determined the sleeve to be fully compostable, and Western Michigan University has determined it to be repulpable. With nearly 3 billion cup sleeves produced in 2011 alone, Starbucks calculations suggest that the EarthSleeve™ will save more than 100,000 trees.
While cups and sleeves are high profile, most of Starbucks recycling efforts are not customer-facing. Many initiatives involve things like syrup bottles, milk jugs, and cardboard boxes. However, the leaders at Starbucks are never content with those behind-the-counter efforts. They understand that sustainability is not something that is done as a marketing or publicity effort; it is an authentic commitment to the future viability of businesses and to future generations of customers. While smaller business owners aren’t likely to be able to support recycling research, they can take simple steps like looking for a printing company that uses recycled paper or seeking out vendors that supply environmentally friendly products. In the end, it is not enough to talk about sustainability. True leadership requires a willingness to invest in the long-term health of one’s business and active collaboration with others, out of a genuine sense of responsibility.
REFLECTION ON CONNECTION
1. How are you ensuring that your leadership decisions are not “saddling future generations” of leaders with sustainability challenges?
2. Where have you not only responsibly managed energy-efficiency, recycling, or green building issues for your business, but also partnered with other leaders to advance these issues in your industry?
3. What are the most salient customer-facing and non-customer-facing environmental issues you are addressing?
In Chapter 2, I discussed C.A.F.E. Practices, Starbucks commitment to the success and sustainability of suppliers in its coffees’ countries of origin. I also noted that Starbucks had worked with Conservation International in the creation of these practices so that the needs of coffee farmers would be met. To that end, the leadership has set out three specific farmer-related sourcing objectives:
• “Ensure 100% of our coffee is ethically sourced by 2015.”
• “Invest in farmers and their communities by increasing farmer loans to $20 million by 2015.”
• “Improve farmers’ access to carbon markets, helping them generate additional income while protecting the environment.”
By 2011, Starbucks was on track with each of these objectives, as 86 percent of its coffee was ethically sourced under C.A.F.E. Practices, $14.7 million in loan commitments had been made to farmers, and programs in Mexico and Indonesia were paving the way for more farmers to have access to carbon markets and environmental protection.
Starbucks has a massive supply chain challenge that extends beyond coffee farmers. At the store level alone, it requires more than 83,000 deliveries a week to enable its stores to operate when a partner opens the door in the morning. The supply chain must also address the future growth and expansion of the business across products, categories, and channels. In many ways, the Starbucks brand rests on whether the supply chain can take ideas and create a physical manifestation of them in the marketplace. Despite those challenges, the leaders at Starbucks must ensure that their suppliers are diverse and that they are committed to business ethics and humane operations. Starbucks leaders understand that they can outsource physical activity, but they cannot outsource responsibility for the quality of their products or the way people are treated in the creation of those products.
An example of Starbucks willingness to take strong but respectful actions when its suppliers’ behaviors are suspect occurred when workplace safety allegations were made concerning a supplier’s U.S.-based manufacturing plant. According to Kelly Goodejohn, director, Ethical Sourcing, “In that case, we sent a message to plant management saying, ‘Over the short term, we’re going to stop doing business with you, but we want to understand what’s happening in your facility and then want to talk about capacity building and remediation.’” After Starbucks notified the manufacturer, the leaders had a third-party monitoring company with whom Starbucks works globally go into the manufacturer’s facility and conduct a three-day, in-person review. In addition to direct observations and meetings with plant leadership, the evaluation team spoke directly with employees in the plant.
In cases where third-party evaluations are required, Starbucks leaders hope those evaluations will result in verifiable remediation of the problem areas and allow for the maintenance of the supplier relationship. If that is not possible, those supplier relationships will be terminated. Kelly notes, “We recognize that the amount of money we spend with suppliers is significant and, as such, we have a responsibility to make sure that our values permeate throughout our supply chain. That is not an easy task because you’re dealing with a wide array of cultures and different corporate priorities. But we tie the importance of ethical sourcing back to the fact that taking care of your people and your community produces positive business results.” As Starbucks demonstrates a positive connection between humane treatment of workers and strong business growth, Starbucks suppliers are also demonstrating similar behavior for subcontractors and suppliers. In essence, being a humane and responsible company is good for business.
The leaders at Starbucks have a long history of working on issues of employment opportunity, leadership development, and economic growth. For example, in 1998, Starbucks worked with former National Basketball Association star Earvin “Magic” Johnson through his Johnson Development Corporation in a joint venture, referred to as Urban Coffee Opportunities, to build Starbucks stores in underserved urban neighborhoods. Magic, who sold his stake in the 105 stores involved in the joint venture back to Starbucks in 2010, noted, “Through our partnership with Starbucks, we were able to serve as an economic catalyst in urban cities through the creation of new jobs.”
By 2011, Starbucks had begun making a transition from Urban Coffee Opportunities to a new model for community stores in the Harlem neighborhood in New York and in Los Angeles’s Crenshaw community. That pilot approach was designed to take financial contributions from those stores and share them directly with a community-building organization in each of those regions. In announcing the new community store model, Howard Schultz noted, “Starbucks is partnering with two organizations doing heroic work to address the economic, social and education challenges in their communities…. These two partnerships are intended to help us learn how our company can successfully join with change-making community organizations in a localized, coordinated and replicable way.” Through these initial coordinated efforts, Starbucks shared approximately $245,000 with the two community organizations in the first year of operations. Based on the success of the initial community stores, Starbucks leaders announced that they were expanding the program to Houston, Texas, by contributing funds based on the performance of a newly remodeled Gulfgate Center Mall store to the Association for the Advancement of Mexican Americans. On a smaller scale, leaders can simply look for ways to support community activities through service organizations, schools, and community-based nonprofits. These types of opportunities forge reciprocal win/win relationships leading to business success and the overall health of the communities served.
The Starbucks Foundation, which was created in 1997 with the purchase price from Howard’s first book, Pour Your Heart Into It, has served as a launchpad for many of Starbucks community development projects, starting with a focus on literacy programs in the United States and Canada. Over the years, the foundation has broadened its efforts globally. At present, the Starbucks Foundation supports community development projects in coffee-, tea-, and cocoa-growing regions. These projects include such things as improving water sanitation, increasing health and nutrition, and providing microcredit and agricultural training. The Starbucks Foundation also has become involved with Ethos Water, a company started in 2001 with the simple mission, “help children get clean water.” Ethos Water, which is now a Starbucks subsidiary, has made more than $7 million in grants in support of that mission, with 5 cents from every bottle of Ethos Water purchased being dedicated to clean water efforts. The Starbucks Foundation also administers community service grants to nonprofit organizations and provides funds in the form of matching grants to organizations in which local Starbucks partners actively invest their own time and money.
Since there is not enough space in this book to dive deeply into all the projects and programs supported by the Starbucks Foundation, let’s look at a couple of initiatives that address the primary themes of education and leadership development. For example, the Starbucks Foundation established the Starbucks China Education Project. The project, which began in 2005, builds on the strong cultural values concerning formal education that are found throughout China. In support of this project, Starbucks committed $5 million (approximately RMB 40 million) to learning programs in China through a U.S. nonprofit organization called Give2Asia. Funds from the project are used in China to train teachers in rural areas, support scholarships for teaching college students, and aid teachers as well as students who were affected by the 2008 Sichuan earthquake.
The Starbucks Foundation is also committed to youth leadership training globally through the Youth Leadership Grants program. Leaders at Starbucks reported in 2012 that “there are more than 1.2 billion 15 to 24 year olds, the largest global cohort of young people in history. Unfortunately, a growing number of these young people are disengaged and unemployed, often referred to as NEET (not engaged in employment, education, or training). The Starbucks Foundation is interested in supporting organizations that equip young people ages 15 to 24 years old.” Specifically, the Starbucks Foundation is providing Youth Leadership Grants to international organizations that assist young people in developing skills in business savvy, social conscience, and collaborative communication.
Starbucks commitment to maximizing the employability of youth goes beyond the grants extended through the Starbucks Foundation. For example, Blair Taylor was the CEO of the Los Angeles Urban League when he approached Howard Schultz with a set of concerns and a request. Specifically, Blair shared that he told Howard, “Kids in urban schools are not getting the experiential learning that kids in suburban schools receive. They’re not going away to Europe on their summer vacation or touring the Hamptons. They don’t get the opportunity to see outside of their neighborhoods.” Furthermore, Blair suggested to Howard “that urban school kids from inner-city schools and poor rural schools are keeping up pretty well with their suburban counterparts during the school year, but a gap emerges as a result of the differences in the experiences they have over the summer months.”
Blair advised Howard that, because of this, he wanted to take a delegation of 20 to 30 kids from Crenshaw High School, a low-performing high school in the Los Angeles Unified School System, to China in the summer of 2011. In order to make this trip a reality, Blair had to line up three corporate partners. Blair’s rationale for the trip to China was to give students from this inner-city Los Angeles school a view into the twenty-first-century global economy. According to Blair, Howard was the first business leader to jump in and support the effort. Blair stewarded a contingent of Crenshaw students and teachers in meetings with Chinese business leaders, entrepreneurs, and students from the number one high school in China. According to Blair, “We toured Shanghai, Beijing, and Tianjin. We rode the speed bullet train that travels at 200 miles an hour and got to see things that were life-changing for these kids. Most of these Crenshaw students had never been outside of Los Angeles County; 90 percent of them had never been on an airplane; some of them had never even seen the ocean, although they live 5 to 8 miles away.” At the end of the trip, Blair asked the students in his delegation why they thought they had met with premier high school students in China. According to Blair, “One young man raised his hand and said, ‘Because one day those kids are going to be running China.’ Then the young man paused and said, ‘And one day we are going to be running the United States, and we need to know each other.’ When these kids came back, they looked at themselves as world ambassadors and future world leaders—not as kids from a low-performing school.” In the next year, Blair Taylor left his position as CEO of the Los Angeles Urban League and became the chief community officer at Starbucks, helping the brand continue to provide unique opportunities to raise the expectations and skills of young people.
Starbucks efforts to promote ethical sourcing, global improvements in children’s access to clean water, education grants, and support of youth leadership initiatives all share a common thread. Each effort reflects a belief that a business must leverage its size and prosperity for good. I suspect that your customers will become increasingly aware of the environmental track record of business leaders and their concern for their suppliers and the communities they serve. Those efforts are likely to be an important consideration for a growing number of consumers. Socially conscious decisions will probably result not only in short-term sales success, but also in a brighter long-term future. Leaders must develop a perspective that considers the well-being of future generations—many members of whom may become employees or consumers.
REFLECTION ON CONNECTION
1. Have you set ethical sourcing guidelines and objectives?
2. How would you handle a supplier against which workplace safety allegations are leveled? Do you have an established process for evaluating, remediating, and, if necessary, severing relationships with suppliers who are not transparent or do not honor the human rights of those they hire?
3. Do your social responsibility initiatives go beyond grants and involve the active participation of your people? Have you identified key social giving targets such as clean water, education, and leadership to maximize the impact of your efforts?
Abraham Lincoln offered sage advice to leaders when he said, “Be sure you put your feet in the right place, then stand firm.” However, like much wise counsel, Lincoln’s words are easier understood than followed. Throughout 2011, Howard Schultz put his feet in a number of bold places by writing a memo to partners titled “Leading Through Uncertain Times” and an open letter to Americans that was printed as a full-page ad in publications like the New York Times. Howard essentially challenged readers to take swift action and stand firm for increased business involvement in job creation and decreased partisan gridlock in the U.S. Congress.
Specifically, Howard noted, “Let’s tell our government leaders to put partisanship aside and to speak truthfully about the challenges we face. Let’s ask our business leaders to create more job opportunities for the American economy. And as citizens, let’s all get more involved. Please, don’t be a bystander. Understand that we have a shared responsibility in solving our nation’s problems. We can’t wait for Washington. At Starbucks, we are trying to live up to our responsibility by increasing our local community service and helping to finance small-business job creation with Create Jobs for USA. Our company is far from perfect, and we know we can do more for America. But we need your help. We need your voice.” Howard asked readers to share their input on blogs, offer inspiring photos on Pinterest, and provide innovative ideas on Facebook. Howard also asked readers to include the hashtag #indivisible in their posts so that Starbucks could collect and amplify the shared ideas.
In addition to taking out an advertisement and facilitating online innovation and idea sharing, Howard Schultz encouraged campaign donors to withhold funding from either political party “until the Congress and the president return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people.” More than 100 CEOs from major U.S. companies and scores of other contributors heeded Howard’s call in an effort to get government officials to focus on debt reduction and job creation. At the same time, Starbucks was in full swing with its Create Jobs for USA program.
To launch Create Jobs for USA in November 2011, the Starbucks Foundation donated $5 million to support community development financial institutions (CDFIs) through the Opportunity Finance Network, a national network of CDFIs that invest in opportunities to benefit low-income, low-wealth, and other disadvantaged communities in the United States. Columnist Joe Nocera, writing in the New York Times, explains, “It didn’t take long for Starbucks to find the perfect financial partner…. Most, but not all, CDFIs are nonprofit, and their loan default rates are extremely low…. Opportunity Finance Network acts as an umbrella group to the best of them.”
Starbucks then created and made available a red, white, and blue wristband embossed with the word INDIVISIBLE for those who chose to make an in-store or online contribution of at least $5 to support Create Jobs for USA; 100 percent of the donations went directly to Opportunity Finance Network to support community lending across the country. In essence, Starbucks sought to create greater access to credit for small business owners in order to stimulate job creation and economic growth. The Create Jobs for USA program not only leveraged the participation of Starbucks customers but also amplified the power of capital. Joe Nocera adds, “Here is the most beautiful part about the whole arrangement. The donations to Create Jobs for USA will not be loaned to the CDFIs. They will be turned into capital … that equity can be leveraged 7 to 1 … if 10 million Starbucks customers donate $5, that will support $350 million worth of lending. That’s real money.”
In June 2012, Starbucks expanded contribution opportunities for Create Jobs for USA by creating, selling, and donating a portion of the proceeds from an artisanal INDIVISIBLE ceramic mug and other INDIVISIBLE items such as whole bean coffee and merchandise. The mug was produced at one of two surviving potteries in East Liverpool, Ohio, a town that was once the ceramic capital of the United States. Ulrich Honighausen, the owner of Hausenware, a tableware company based in Sonoma County, California, and the supplier of the INDIVISIBLE mug, noted, “I am a U.S. citizen raising three children in this country, and for years I’ve wanted to make ceramics in the United States. A week after I heard Howard first talk about job creation in the United States, I was at a housewares conference and started asking people where could I make ceramics domestically. When Starbucks officially launched their Create Jobs for USA program, I thought I had to do my part to help create jobs in America, and that led me to contract with a small factory in East Liverpool. I was so inspired by what I saw in Ohio—the craftsmanship, need, and opportunities there—that I started another factory in the area which will compete in a more automated way against imports.”
For a more detailed exploration of East Liverpool, Ohio, and the INDIVISIBLE mug, please go to http://tinyurl.com/cmzr7ds or point your QR reader to:
By April of 2012, Howard shared the initial success of Create Jobs for USA with CBS News: “We’re getting money in the hands of [CDFIs], (who then) lend it to small businesses, create jobs in start-ups and existing businesses. In fact, 80 percent of the money we’ve raised has already been (given) out. And we can document with great transparency where the money’s going and the jobs that are being created.”
An example of the benefits from funding through the Starbucks jobs program is Gelato Fiasco. In 2007, Josh Davis was 25 years old when he and Bruno Tropeano, his 24-year-old business partner, opened a Gelato Fiasco gelateria in Brunswick, Maine. Because of their success in Brunswick, a town of approximately 23,000 people, Josh and Bruno had their sights set on an expansion into Maine’s largest city, Portland, approximately 25 minutes to the south. Josh and Bruno found an optimal location for their new store, but they had to make a decision quickly to secure the 10-year lease. A call to their bank gave Bruno and Josh sufficient assurances of funding to lead them to sign their lease agreement. Unfortunately, after the lease was signed, their bank and several other lenders denied their loan requests.
As a last resort, Josh and Bruno went to a CDFI supported by the Create Jobs for USA program and received a $140,000 loan, allowing them to expand and add 10 new employees (full- and part-time) to their 21-person staff. Josh notes, “Starbucks turned what was going to be a truly unmitigated disaster into a real success story.” Not only did Gelato Fiasco open in Portland, but the new Gelato Fiasco store was located approximately a block away from a busy Starbucks store. Oh, by the way, the Portland Gelato Fiasco serves coffee. So what was Starbucks response to a neighbor/competitor that it had supported? According to Josh, “The staff at Starbucks actually posted an article about our business in their store. Even though we were setting up shop a block away, they acted out of abundance and not competition.”
Josh and Bruno were grateful for the trust placed in them and decided to take that gratitude and “pay it forward.” To that end, they created a gelato flavor for their wholesale business (which distributes gelato to supermarkets throughout Maine and New England) and directed a portion of the revenues from that flavor back to the Create Jobs for USA program. According to Josh, “The motto of the city of Portland, Maine, is ‘Resurgam,’ which means ‘I will rise again,’ and we thought that motto applied well to our situation, so we named our special commissioned flavor Sweet Resurgam and gave $1 per pint back to the Create Jobs for USA program.”
Few business leaders make a public call to fellow business leaders and politicians to set aside selfish differences and act in the greater good. Even fewer refocus themselves to partner with customers to generate solutions that produce tangible economic benefits, some of which might be perceived as competitive in nature. While many of Howard Schultz’s actions may be outside the scope of what is achievable for you as a leader, Howard serves as a reminder to all of us that we can do more than complain about social challenges—we can (and, moreover, we have a responsibility to) be a force for constructive change.
Leadership carries with it a responsibility to make the world a better place than you find it today.
There is typically a strong interdependence between a company’s performance, its values, and the impact it has on the communities it serves.
When it comes to sustainability, it is important that you set ambitious goals; seek third-party criteria to validate your achievement of those goals; play a role in refining those criteria for your industry, if necessary; execute against those goals; and transparently report your progress toward your objectives.
When an environmental issue is salient to your customers, it has to rise higher on your project priority list.
Sustainability is not something that is done for marketing or publicity purposes; it is an authentic commitment to the future viability of your business and to future generations of customers.
It is not enough to talk about sustainability; true leadership requires a willingness to invest in the long-term health of your business and to actively collaborate with others out of a genuine sense of responsibility.
Being a humane and responsible company is good for business.
Leaders must develop a perspective that considers the well-being of future generations—many members of whom may be employees or customers.
As a leader, it is essential (in the words of Lincoln) that you put your feet in the right place, then stand firm.
You can do more than complain about social challenges—you can (and, moreover, you have a responsibility to) be a force for constructive change.