Transformational leadership and Starbucks

Over the next few weeks, I am going to be writing a series on transformational leadership. In my next post, I will define the concept as well as an alternate style called transactional leadership. To kick off the series, I wanted to illustrate the hallmarks of transformational leadership through the story of one of my favorite transformational leaders: Howard Schultz, the founder of Starbucks.

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Howard Schultz is a transformational leader because of the way he developed a vision and then made it into a reality in partnership with Starbucks’ other employees. His vision was for Starbucks to be a “third place” between home and work and that Americans would pay $3-5 for a cup of coffee. Schultz used his charismatic personality and values to develop a transformational work environment at Starbucks that built a coffee empire. He uses motivation, influence and referent power to overcome business obstacles and achieve shared success.

Evidence of Howard Schultz transformational leadership qualities are a key component of the Starbucks operation. In the most obvious example, Starbucks refers to all its employees as, “partners” and offers them stock options and health care benefits (for both full and part-time employees) . He writes, “From the beginning of my management of Starbucks, I wanted it to be the employer of choice, the company everybody wanted to work for.” Schultz realized that leadership was about the people at the front lines doing the work to bring his vision to reality. He focused on the employees and used his strong motivation and influence skills to achieve his vision.

Schultz has also demonstrated the ability to motivate his employees both in terms of direction and emotional intelligence. On the first day Starbucks was in business, Schultz went to address the other Starbucks partners. He had three points written down on a 5-by-7 note card that read, “1. Speak from my heart. 2. Put myself in their shoes and 3. Share the Big Dream with them.”

When the response to Schultz’s first speech was a combination of skepticism and guarded optimism, he recognized what he needed to do. Schultz knew he had to develop referent, expert and position power in addition to his legitimate power role as the CEO of Starbucks. He used the tactics of shared benefits, consultation and collaboration, emotional calibration and consistency to motivate his new employees. He writes, “The only way to win the confidence of Starbucks’ employees was to be honest with them, to share my plans and excitement with them and then follow through and keep my word, delivering exactly what I promised – if not more.”

Schultz focused on outcomes, satisfaction and trust to build employee commitment to Starbucks, which minimized turnover and retained employees who were aligned to the vision and brand for Starbucks. He writes, “A business plan is only a piece of paper, and even implemented properly [is not complete] unless the people are committed to it with the same heartfelt urgency as their leader.” When Starbucks lost its way, in Schultz’s eyes, he closed all Starbucks locations temporarily for mandatory training, including lessons on how to make the perfect espresso shots.

Schultz has impacted not only the Starbucks partners who have grown and thrived with the company, but also the patrons of Starbucks. In his book Onward: How Starbucks Fought for Its Life without Losing its Soul, Schultz describes the reactions of patrons when they learn that their neighborhood Starbucks was closing due to the suffering performance of the company, when, at one point, it was nearly at the brink of bankruptcy. They felt the loss on a deep emotional level because of what the store meant to the community. Schultz describes stories where people reacted emotionally to the announcement that the store they frequent was closing. One woman in Minnesota wrote, “I can’t believe that ‘my’ Starbucks is closing. You never know how important a place is until you are about to lose it.”

The impact of the Starbucks that Schultz created has also impacted me personally. In fact, I have written portions of this post from a Starbucks. It is incredible to me to witness what Schultz visioned coming to life in front of me. I was recently in one of the first Starbucks locations on the East Coast in Friendship Heights. The layout, the service, and the atmosphere was exactly how Schultz would have described it to a potential investor, partner or customer. There was a romance to the coffee service, and sitting there doing work at a table and drinking from my own personalized cup of coffee was surely a small but meaningful luxury. Knowing how much work it took Schultz to achieve that vision, including overcoming many skeptics and frequent trips to Italy, made the taste of my peppermint mocha even sweeter.

KEY TAKEAWAY: Transformational leaders pursue an important vision by empowering people to be a part of something larger than themselves. Leaders like Howard Schultz lead through respect and empowerment.