Business Blog: Hoover’s Business Insight Zone

Apropos of our conversation the other day about Starbucks trying to regain its “founder’s mojo,” I recommend this Joe Nocera piece — written in the form of an open letter — from the New York Times. In it, he takes to task Howard Schultz, the once and current CEO, for his failures of leadership, and for failing to grasp the state in which Starbucks now finds itself. A sampler:

But revitalizing the Starbucks experience is not going to be enough. Not even close. You also have to accept certain realities that right now still seem beyond your grasp. You talked, for instance, about slowing the growth rate in the United States, and even closing some stores. That’s good — so far as it goes. But if you are just cutting back by a couple of hundred stores, that won’t cut it. “The basic model of opening stores and fueling expansion should stop in the U.S.,” said Marc Greenberg, an analyst at Deutsche Bank.

What was particularly discouraging was hearing you tell investors to look to the international markets, where Starbucks has “only” 5,000 stores, for accelerated growth. That suggests to me that you still don’t get it. You can’t fix a car going 60 miles an hour. If you are going to fix what ails Starbucks you have to forget about growth. And you have to stop thinking of your company as a sexy growth company. Those days are over.

It’s so very hard for anyone — Schultz or anybody else — to accept that the magic is gone. Confirmation bias tends to run rampant; it tells you that, yes, we’ve been doing the right things fundamentally, but we need to execute them better, and that, yes, I’m the person to do it.

Good luck, Mr. Schultz. I happen to agree with you that people need a welcoming “third place” to build community and to seek a haven from life’s pressures. Contra Mr. Nocera, I think Starbucks could actually still fulfill this role — if you make some big changes to what you’ve been doing. For that, you’d be well-served to take Nocera’s words to heart. If you can escape the silo of confirmation bias in which you’ve found yourself.