HOWARD SCHULTZ: 'I have significant concerns about the direction of the country'

Julia La Roche
Reporter
Starbucks CEO Howard Schultz

Starbucks (SBUX) executive chairman Howard Schultz challenged a room full of business executives on Wednesday to address the problems facing America in the current political environment.

“I don’t need to tell this audience that are all assembled today — whether you’re Republican or Democrat or [you] voted for the president or not — we probably can all agree the country is drifting in a direction that we all need to be concerned about,” Schultz said in an interview with Macy’s (M) CEO Terry Lundgren at a luncheon hosted by the Economic Club of New York.

“And in the interest of being transparent and saying something that might be controversial, I would say the country is in need of an economic, cultural, and moral transformation.”

In April, Schultz stepped aside from his role as CEO, handing the reins over to COO and president Kevin Johnson. Schultz explained that the company had reached the stage where the scale and complexity require “a new generation of leadership.” He said he’d focus his creativity on building the company’s premium brand called the Starbucks Reserve Roastery.

Additionally, Schultz has been spending time thinking about the future of the country.

“I have significant concerns about the direction of the country,” he said. “And [we’re] trying to understand how we as a company can use our scale for good and leverage the fact that Starbucks is in almost every community in America. And once we do, [we’ll] try and elevate the national discourse and the national conversation on things that create a more compassionate society and more compassionate government.”

Schultz views the company’s success as being defined by its culture, values, and principles. He pointed out that there’s a strong focus on what he calls “servant leadership.” In carrying out this mission, he even leaves two empty seats at all board meetings — one that represents the customer and one that represents the employees.

“I also say, culturally, we’ve imprinted into the management of Starbucks over many years that not every business decision is an economic decision,” Schultz said. “We’ve always believed success in business is about the fragile balance of profit and conscience.”

This balance between social responsibility and making money is going to be more important for business leaders going forward, he explained.

“We have a government that’s dysfunctional and polarized and we have an administration, regardless of whether you voted for the president or not, we’re going down a path where many, many people are going to be left behind in this country. And what that means to me is businesses and business leaders are going to have to do a lot more for their people and the communities they serve going forward.”

Schultz doesn’t shy away from talking politics

Schultz is known to speak out on social issues and posting open letters on Starbucks’ website. Sometimes that means pushback and criticism.

“I would say that leadership and moral courage is not a passive act,” Schultz said. “I think it’s very easy to lead and be courageous when the wind is at your back… I want to be thoughtful, I want to be disciplined, but I want to be honest. I think probably one of the undervalued characteristics of leadership is being vulnerable, and I want to demonstrate vulnerability through transparency to our people.”

Starbucks has been accused of being a political arm for Schultz.

We don’t view it that way.”

Howard Schultz

He added that the company’s core purpose goes beyond the stock price and making money. He sees the company as having a social responsibility.

In recent years, Starbucks has taken on issues from race, guns, and veterans.

In 2013, Schultz sent a letter asking that customers no longer bring firearms to the stores. Some states allow for “open carry.” At the Economic Club luncheon, he clarified that Starbucks is not against the Second Amendment, and neither is he.

“After Sandy Hook people were literally walking into stores with guns,” Schultz said, “One day, in San Antonio, somebody walked in with an AK-47. I just felt, I think this is a time where we need to have a little bit of common sense and sensibility.”

Another social issue the company attempted to take on was race relations by creating the “Race Together” campaign in the spring of 2015.

“We had a situation at Starbucks at the time that Ferguson and Oakland and Staten Island and Cleveland was going on where — and this has never happened in the history of the country — where a white customer in a southern state refused to be served by a black barista,” Schultz said. “And, when that was brought to my attention, I decided that this was an opportunity to try and elevate the conversation inside our company.”

Within hours of launching the campaign, though, it was basically hijacked by social media users and the company lost the narrative.

“Our collective responsibility”

“If you asked me today in my almost 40 years of being at Starbucks what I am most proud of, I would put that almost at the top of the list that we had the courage to raise the issue and discuss race in our country. I think we all need to recognize that there are things going in America today that if Martin Luther King, Bobby Kennedy, and LBJ when he signed the Civil Rights bill, if they all saw and witnessed what’s happening… there’s a lot of issues here that I think are not being discussed at the national level.”

He concluded: “This goes back to what is our collective responsibility as citizens and businesses as business leaders to elevate these conversations and not ignore them because we certainly have a problem in America that’s as significant today, in my view, as it was in 1968 with regards to race relations.”


Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.

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