Onward, a short reviewJuly 16, 2017
Ever since I heard Howard Schultz speak at Northwestern four years ago, I wanted to read his books. As a coffee snob who regularly complains about Starbucks’s quality, I went to the event with low expectations, and interested mostly in the cult of personality. Even though I hate their product, he did a good job and got me interested in his company. Now, years later, having finally read one out of two, I have to say I feel conflicted about Onward. The book lays out the reasons for Starbucks outsized role in the industry, and its influence in American coffee culture, but it does so with a self-indulgent tone that’s hard to take seriously.
The narrative is entertaining: a classic “second round as CEO” tale where a retired founder comes back to rescue his beloved company in distress. However, the PR speak is strong with this one. I know that when reading a book like this, you need to be prepared to separate the wheat from the chaff (the beans from the parchment?), but I did not expect Onward to be so over the top. If the ghostwriter’s self-promoting tone was not enough of a clue, the book consistently makes its optimistic angle clear. Every problem the company faces is magically solved by the new executive team. Everything is about coffee, and everything about coffee is good. Its pages are peppered with cutesy coffee related phrases that no one would use in real life, like descriptions of partners who are “steeped in the coffee business,” and recurring appearances of Schultz’s favorite french press. Nevertheless, once you get past the publicity, there are a few wortwhile nuggets on culture1 and growth2.
The bulk of the book talks about Starbucks’s fall from grace and its return to the top. The book frames the company’s decline mainly as a consequence of hubris and aimless growth, paired with the double whammy of increased competition and the financial crisis of 2007/2008. After opening thousands of unprofitable stores, and going into orthogonal businesses, the brand had been diluted, and the user experience had deteriorated. This is when Schultz comes in to save the day. Schultz credits the turnaround to his “transformational agenda,” which can be summarized in six points:
- Optimizing Stores: Cutting back on growth and closing underperforming stores. They discuss the implications not just on the people who work there but also on the communities built around the people who go to their stores every day3. The company had to choose between cutting benefits and cutting jobs, and ultimately chose to close ~600 stores in 2008. While they make a big deal out of holding on to their generous benefits, it seems like they’re not as positive as the book makes them seem.
- Re-enabling the workforce: Two recurring themes are empowering managers with tools and technology, and retraining baristas to improve the quality of the product. A startling example is a deal with HP, through which every store would get its own computer for the first time.
- Developing new products: There are plenty of examples in the book of product line diversification: innovations like Pike Place Roast and Via Instant Coffee, the successful acquisition of Clover, and the failed experiments of Sorbetto and Vivano, to name a few. Especially interesting was the section on its new high-end stores, which focused on using design and architecture to compete with small local roasters.
- Tightening the supply chain: At the macro scale, this meant improving sourcing via closer partnerships with farmers and developing farmer support centers. At the micro scale, each store employed concepts from lean manufacturing to reduce waste4.
- Expanding brand loyalty: Through creative strategies, the company drove consumers to build a deeper connection with the Starbucks brand. This was the beginning of the Starbucks card.
- Focusing on long term value: At Schultz’s request, the company eliminated public disclosure of comps, which allowed individual store managers to think beyond the quarter to quarter metrics. Wall Street was not happy.
Schultz likes to emphasize minutiae, such as the “honey pouring off a spoon” consistency of the espresso, and the importance of avoiding the smell of melting cheese, which overpowers the aroma of the coffee ground in-house, but in the end what it really took to revive Starbucks were better business practices, and paying attention to day to day operations.
Onward is light on analysis, and it is best described as a very one-sided history book. The most interesting part ended up being about the company’s origin story, and its connection to Starbucks’s undeniable cultural impact. Until I read it, I did not know anything about Starbucks’s history. I also didn’t know that they had made coffee shops a thing in the United States5.
The book devotes a full chapter to the company’s beginnings, but here is a short summary: A business trip to Italy led Schultz to quit his job as Director of Marketing at a small coffee roaster called Starbucks to start his own coffee shop. While in Italy, Schultz was surprised by the ubiquity of the cafés, and their role as “a third place” where people could meet - away from home, and away from work. He became obsessed with the country’s coffee culture, where ordering an espresso “was so much more than a coffee break. This was theater; an experience in and of itself.” He wanted to replicate it back in Seattle. Upon his return, he opened Il Giornale, the precursor to today’s Starbucks. Eventually, Schultz bought the Starbucks brand from its owners, renamed his coffee shop, and focused on growing the business into what we know today.
The modern coffee shop is so ingrained in our collective consciousness that it is hard to comprehend that this image was not the norm just over thirty years ago. Onward makes a convincing argument that Starbucks played a big role in popularizing the model, and in kicking off the third wave of coffee.
Onward offers a well defined window into Starbucks, its corporate values, and the image it wants to project onto the market. If that sounds exciting, by all means go read it, but otherwise, you can probably take this review as your TL;DR. It has been nearly 10 years since the book was written, and Starbucks has grown from 16k stores worldwide to 25k. The book might overplay it, but it seems like they did something right.
Photo: by me, not at a Starbucks, previously posted on Portlanding
“Every enterprise and organization has a memory, and those memories create a path for people to follow […] memory of collective lessons will inform our future.” ↩
“Ironically, the toughest challenges were not technical. They were human, like convincing leaders throughout the company to dedicate resources” ↩
When explaining these communities, there was a striking comparison with church that reminded me of Chris Arnade’s essay about McDonalds: “stores are like secular chapels. No sign on the wall says you must be quiet, polite or contemplative, but people are. Ritual abounds.” ↩
In fact my supply chain modeling professor mentioned the Starbucks example in class, touching on the implications of higher efficiency at the expense of a worse user experience. ↩
An interesting thought I had on this shift was the transition from Seinfeld’s Monk’s Café, which really is a diner, to Friends’ Central Perk. ↩
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