Starbucks CEO Howard Schultz wants to save America

Posted by on December 31st 2012 @ 3:34 pm

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originally published in Arbitrage Magazine
December 30, 2012

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Howard Schultz is very worried about America. Two weeks ago, I heard him speak at New York University’s Leonard N. Stern School of Business. He didn’t once use the word “coffee.” He said “America” probably three dozen times.

Raised in a run-down project in Canarsie, Brooklyn, Schultz seems to represent an exception in the depressed light of 2012 America: A ray of hope; an American success story; evidence that the “Dream” is still alive and attainable, even if, as Schultz fears, it’s being threatened.

“America is on very, very fragile ground,” Schultz said at Starbucks’ recent annual shareholders meeting.

In unorthodox fashion, he began the meeting with a video montage which laid out, in sepia-toned photos and bold font types, the major issues facing today’s America: rising inequality, unemployment, public debt, partisan gridlock in Washington.

“As you can see,” he said as the video faded to black, “we are at a crucible moment.”

Schultz is a smooth operator. He obviously “gets” people. The pervasive acceptance of the Starbucks brand is a testament to this facility. He speaks in a calm and confident manner; mostly colloquial, but he’ll employ a big word to accompany a big point. Seeing him on stage talking so passionately about such big issues, I had to remind myself: This is a CEO, not a politician. But I wasn’t the only person he duped.

Toward the end of the shareholder meeting’s Q&A session, a jubilant man in an oversized raincoat and bow tie breathed into the microphone: “Passing along a statement from my mom…[she] would like to respectfully nominate Mr. Howard Schultz for President of the United States.”

There’s no doubt that Schultz’s rhetoric is on par with congressional standards. But he differs from the archetype of a current Washington bureaucrat in one significant way: Schultz is actually doing something to change America.

Last year, Starbucks started its “Create Jobs for USA” initiative. The program leverages the company’s vast network of stores and customers to raise money and support small businesses in underprivileged communities — like the one in which Schultz was raised. The initiative has garnered $15 million in donations and created or sustained over 5,000 American jobs.

Starbucks also unveiled a new line of “Made in the USA” merchandise this past June. Dubbed “Indivisible,” these products — ground coffee, coffee mugs, etc. — are “made or roasted” in American manufacturing plants.

In addition to these progressive efforts helping spur the American economy, Starbucks has also taken a stand on more controversial issues — issues in which the “path forward” for America is still heatedly debated.

“Our [Starbucks’] website says we’re not political,” said one longtime shareholder during the conference’s Q&A. He was referring to the company’s decision to support gay marriage in Washington State, where it was recently made legal. “Is it prudent to risk the economic prospects of all the shareholders for something that may affect the private lives of a very small percentage of our employees?”

“I don’t want to answer the question in any way that would be viewed disrespectful to your point of view,” Schultz answered, in fine political fashion. “The success that we’ve enjoyed, which is linked to shareholder value, has a great deal to do with whether or not our people are proud of the company they work for…We made a decision that we believe is right for our company. And we believe it’s defensible.”

If you agree with his values, you probably find Howard Schultz’s recent gusto to be courageous. An inspiring glimpse of some new model of businessman: The Socially-Conscious American Business Leader of Tomorrow. If you disagree with him, you probably feel a bit uneasy; uncomfortable with the idea of a public company’s CEO using his position as a bully pulpit.

Schultz recently spoke at the Harvard Business Review’s (HBR) 90th Anniversary Gala at Lincoln Center in Manhattan — just across the bridge, yet a world away from his old neighborhood in Canarsie. His talk was just as urgent and discerning as his keynote at the shareholder’s meeting.

“We all know that something is wrong. We absolutely know it. Yet we’re sitting here as if everything is fine.”

Schultz spoke with his characteristically cool demeanor. He condemned the selfish partisan gridlock plaguing Washington. Then he directly addressed the audience of media and business executives.

“The question is this: Are. You. A. Bystander?”

HBR published a blog post reflecting on the Gala and — in particular — Schultz’s speech. Its tone was conflicted, somewhere between inspired and uncomfortable. It posited the astute question: Why do we often feel uncomfortable when CEOs get involved in politics?

My hypothesis is that it hints at an unraveling dynamic.

Agree or disagree with his values, you have to accept that Schultz is not a bystander. As Washington remains mired in prolonged gridlock, CEOs seem to be the only ones getting things done in America.

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