In 1983, Howard Schultz was an employee of Starbucks, a small chain of coffee stores that mainly sold beans (and no drinks), when he was sent to Milan for a trade show. As Schultz observed Italians visiting their local cafés, he loved what he saw, describing it as a “sense of community, a real sense of connection between the barista and the customer.”
A few years later, after Schultz convinced Starbucks’s owners to sell him the company, the new owner attempted to build that same type of connection here in the U.S.
To do so, Schultz knew he had to take care of his people. He called them “partners,” not employees, a symbol of a more collaborative working relationship. Over the years, Starbucks offered perks that were typically unheard of for part-time workers in food service, benefits like health insurance and contributions to college education.
Nowadays, though, Starbucks seems to have lost the reputation for looking after its people.
No doubt, at least part of the reason for that is Schultz has stepped down as CEO, multiple times, returning as the company struggled under his successors. A few years ago, after taking over on an interim basis, Schultz even went on a “listening tour,” visiting stores across the country to find out how the company had lost its way.
Starbucks’s brass, and even Schultz himself, became hopeful when the company tapped Brian Niccol, former CEO of Chipotle, to take over the helm. In the world of fast food and fast casual dining, Niccol was a superstar. Most recently, he had completed a major turnaround at Chipotle, a company that saw sales double in Niccol’s first year as CEO, along with a major rise in stock price.
Everyone wondered the same thing: Could Niccol do the same for Starbucks?
In the beginning, I liked what I saw. Niccol vowed to return Starbucks to its roots, with a renewed focus on serving “the finest coffee” and a plan to update stores to make them more welcoming. Niccol also returned fan favorites, like condiment bars so customers have more control over customization.
But as more details of Niccol’s turnaround plan surfaced, concern grew. Baristas would be required to adhere to a much stricter dress code. They were given a set of guidelines, even a script, detailing their interactions with customers. Baristas were instructed to write something “genuine” on each customer cup, with threats of repercussions if they didn’t.
This is the fatal flaw in Niccol’s turnaround plans. The workplace has evolved, and command-and-control management is no longer effective, at least not long term. That’s especially true in the service industry, where trust empowers employees to connect with customers.
Beyond that, Niccol’s latest policies are antithetical to how Schultz built Starbucks in the first place—a company that prided itself on putting its people at the center of everything it did.
In contrast, Niccol and his team would benefit from taking a close look at a recent turnaround story, led by a CEO who, like Niccol, had experience resurrecting a dying brand: James Daunt of Barnes & Noble.
A former investment banker turned bookstore owner, Daunt took over the helm of America’s largest bookstore chain in 2019, which had been in steady decline for years. Since Daunt took over, Barnes & Noble has experienced a resurgence, leading to an expansion of dozens of new stores in 2023.
This wasn’t Daunt’s first successful turnaround. The British businessman did something similar in the U.K., where he revitalized another chain of flailing bookstores, Waterstones.
So, how did Daunt get lightning to strike, twice? His hallmark strategy was simple: Give power to local store managers.
“We sort of take three steps forward and then one step back,” Daunt once said in an interview with The New York Times. “The forward is my constantly encouraging and pushing for the stores themselves to have the complete freedom to do absolutely whatever they want—how they display their books, price their books, sort their sections, anything. Those freedoms are difficult if you lived in a very straitjacketed world where everything was dictated to you.”
In essence, Daunt turned local Barnes & Noble stores, and Waterstones stores before that, into indie bookstores. The strategy worked because of the trust he put in his people, and the power he gave them.
Of course, there’s more than one way to turn a company around. Niccol found success at Chipotle. But a focus on efficiency and policies over people is diametrically opposed to Schultz’s dream for Starbucks: that Italian-inspired vision of local connection between barista and customer.
I believe Niccol’s overarching goal to return Starbucks to its roots is a good one. But the company’s ability to produce that experience of connection will depend on the people who are serving the drinks—and that will require rebuilding a culture where Starbucks employees feel supported and cared for, not threatened.
If Starbucks can get back to taking care of its people, its people will take care of the customers. And the turnaround will take care of itself.
—By Justin Bariso
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This article originally appeared on Fast Company’s sister site, Inc.com.
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