What Business Leaders Should Learn From Starbucks' Shut Down Day
Starbucks will close more than 8,000 stores on the afternoon of May 29 to conduct racial-bias training. The company-wide training comes after inappropriate management conduct led to the arrest of two black men waiting for a friend April 19 at a Philadelphia location. The arrests triggered public relations and media crises but, more importantly, it challenged Starbucks’ core values.
Starbucks met the challenge aggressively. As support for its decision to close its stores on May 29, executive chairman Howard Schultz said, “The company’s values are based on diversity and inclusion. We will learn from our mistakes and reaffirm our commitment to creating a safe and welcoming environment for every customer.”
The company’s motivation and training approach have been questioned. One commentator said, “However moral companies may appear, at the bottom they’re always responding to the market.” This statement is flat-out wrong. It implies that all businesses reactively respond to the market. Starbucks made a strategic decision to lead with a defined and nonnegotiable set of values. There are two types of businesses: those that live by their values and those that do not. Those with a nonnegotiable set of values are better prepared to deal with market demands and crises.
The Los Angeles Times reported: “Some research suggests that anti-bias training can backfire. … Employees can become resentful that they are being forced to do something.” This comment misses the point. Let’s trust that Starbucks will define the best possible training for its employees. Let’s also agree that any training module that Starbucks selects will be imperfect. It’s less about the specific training module and more about leadership in times of crisis.
A crisis in your company may look different from the one at Starbucks. However, Starbucks’ masterful handing of its crisis provides powerful leadership lessons.
Shock the system.
Living our values is easy in normal times. A crisis tests us. Leaders must know when unconventional action is required. Sometimes, shocking the system is necessary. The shock is a quick, aggressive hit. In Starbucks’ case, the mere gesture of shutting down operations is a bold statement that leaves no doubt management is serious about diversity as a core value. That unconventional act will speak louder than the training itself.
Put your money where your mouth is.
Estimates are that Starbucks will lose $12 million in sales as a result of the shutdown. While that is a small number relative to Starbucks’ size, it is a meaningful amount of money by any other measure. The real message is that some things are more important than short-term revenue. By taking these steps, Starbucks is also paving the way for an even brighter future by building stronger relationships with employees and customers.
Seize the opportunity to make permanent change.
During times of crises, people are more willing to listen and change. Starbucks will have the attention of every employees during the shutdown. This is the time to drive change forcefully to make sure everyone knows that there is no turning back. Misaligned behavior must have consequences.
Prove you give a damn!
When a crisis hits, leadership cannot be delegated. Leaders do not cast blame, and they must be forthcoming. It’s easy to spot leaders who rely on smokescreens or carefully staged replies. Honest dialogue and authenticity work much better. To support this point, Starbucks CEO Kevin Johnson traveled to Philadelphia almost immediately. Mr. Johnson could easily have blamed a rogue employee, conducted a few meetings, and flown home. Instead, he committed to “learning what we did wrong” and taking “the steps we need to fix it."
Contrast this to United Airlines’ initial handling of a public relations mess last year when a passenger was forcibly dragged from an airplane.
Avoid the “flavor of the day” phenomenon.
When you execute on an unconventional action, having a reinforcement plan is critical. In a short time frame, the Starbucks’ shutdown will fade from memory. New employees will join after May 29. Existing employees will depart. Because of growth and turnover, a company’s culture is always in a state of flux. Lessons from crises must be institutionalized and shared with all new employees. Without a plan to institutionalize, the best-intentioned plans risk drifting away.
When a crisis hits, understanding why is critical. Otherwise, we could be throwing solutions at the wrong problem. Most crises have their roots in the following problems: Leadership deficiencies—in particular, a lack of accountability for those who operate outside the company’s defined value system; Hiring, orientation or training problems; and an unclear understanding of, or disregard for, company values and processes. As an example, Starbucks encourages customers to spend time in its stores. For many, the store is remote office or a meeting place. At what point does a customer overstay his or her welcome? Who will decide what constitutes loitering? Without clarity, different store managers will arrive at different interpretations of company policy.
We can learn from Starbucks’ remarkable handling of the April 19 incident. We must lead from a nonnegotiable set of values. Crises may test our values, but they may not compromise our values. When a crisis hits, or our values are challenged, our leadership is tested. We must be ready to take unconventional action as warranted. We must demonstrate accountability and resist the urge to cast blame. We must understand the root of the problem. This allows for a thoughtful and tailored solution. Starbucks’ handling of the April 19 incident provides a powerful leadership lesson.