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Living Your Potential
In what way do you need to improve to live your potential? I need to...

From the Corner Office with Howard Schultz

The Rewards of Risk

 
 
Sandra  Bienkowski  April 27, 2009 

Fear of failure used to drive Starbucks CEO Howard Schultz. As a child in Brooklyn’s projects, he listened to his parents argue about who to borrow money from, and he answered the phone to tell bill collectors his parents weren’t home. Watching his father struggle in a series of blue-collar jobs, never making more than $20,000 a year, Schultz says, “I know all too well the face of self-defeat.

“I often clashed with my dad as I got older and was bitter about his underachievement and his lack of responsibility,” Schultz says in his 1997 book, Pour Your Heart Into It. “I thought he could have accomplished so much more if he had only tried. After he died, I realized I had judged him unfairly. He had tried to fit into the system, but the system crushed him. With low self-esteem, he had never been able to climb out of the hole and improve his life.”

Seeing his father never attain fulfillment from work and die without savings or a pension, Schultz vowed that if he were ever in a position where he could make a difference, he wouldn’t leave people behind. “Seize the day and accept responsibility for your future.”

Schultz played sports with the neighborhood kids from dawn to dusk as a child, and his natural athleticism paid off when Northern Michigan University offered him a football scholarship. At college he learned he wasn’t as good at football as he thought, and he never played. After losing his scholarship, he worked various jobs and sometimes even sold his blood for money to stay in school.

“It took years before I found my passion, but getting out of Brooklyn and earning a college degree gave me the courage to keep on dreaming,” Schultz says. “After tackling seemingly insurmountable obstacles, other hurdles become less daunting.”

In 1981, when Schultz was managing a sales force for Hammarplast, a Swedish kitchenware company, he noticed that a small retailer in Seattle called Starbucks was placing an unusually large order for a certain type of drip coffee maker. Interested in knowing more about the business, Schultz flew to Seattle to investigate.

Visiting the original Starbucks store, Schultz was fascinated with bins containing coffee from around the world: Sumatra, Kenya, Ethiopia and Costa Rica. Starbucks was then a tiny outfit in Seattle selling bags of whole-bean coffee. Schultz tasted a cup of Sumatra coffee, and by the third sip was hooked. He began asking questions about coffees from different regions around the world, and his passion and vision for Starbucks began to take shape.

It took Schultz a year to convince the three Starbucks owners to hire him. He had outlined his vision to them of how Starbucks could go national and create a brand synonymous with quality coffee. Just when he thought he had the owners convinced, they declined his offer, viewing him as too risky and wanting too much change. The owners wanted Starbucks to remain a retailer and not get into the restaurant business.

Schultz waited less than 24 hours, and with his passion for Starbucks he convinced the owners to take a chance on him. Starting out with a small piece of equity in a business with promise, the owners hired Schultz as director of operations and marketing. “I have often wondered what would have happened if I had just accepted their decision,” Schultz says. “Most people, when turned down for a job, just go away.” “Again and again, I’ve had to use every ounce of perseverance to make it happen.”

After a trip to Italy, where he visited coffeehouses overflowing with people and serving fancier coffee drinks made with espresso, Schultz realized Starbucks was missing the social connection Italians have with coffee. “The Italians had turned coffee into a symphony,” he says. “They understood the personal relationship people have with coffee, its mystery and romance.” Schultz thought his new vision for Starbucks could revolutionize the company. Once again, his bosses didn’t agree, viewing Starbucks as a retailer and not a restaurant or coffee shop, so Schultz quit and took his vision elsewhere.

Taking another risk, in 1985, Schultz started Il Giornale, his own chain of coffee bars. With the success of his company, and by raising enough venture capital, Schultz bought Starbucks two years later and converted Il Giornale Coffee Houses into Starbucks Coffee Company. “It’s about seeing what other people don’t see, and pursuing that vision, no matter who tells you not to,” he says.

Schultz learned the importance of determination. “So many times I have been told that it can’t be done. Again and again, I’ve had to use every ounce of perseverance to make it happen.”

Under Schultz’s leadership, Starbucks went from a handful of stores in Seattle to more than 15,000 stores and 150,000 employees. Today, Starbucks coffeehouses are in 43 countries. After stepping away from day-to-day operations and serving as chairman of the board for seven years, Schultz returned to the chief executive’s position in January and began unveiling his vision for an even brighter Starbucks future.

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