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Starbucks' Howard Schultz on Responsibility and Leadership

The company's chairman, president and ceo spoke to help celebrate the Harvard Business Review’s 90th anniversary.

Howard Schultz
Angela Ahrendts

Angela Ahrendts

Photo By Dave Di Iulio

NEW YORK — Fairly early on in a Q&A session at Jazz at Lincoln Center to help celebrate the Harvard Business Review’s 90th anniversary, Starbucks Corp. chairman, president and chief executive officer Howard Schultz told the crowd, “I didn’t come here to depress you, but I came here to speak the truth.”

He wasn’t kidding. The need for bipartisanship, fiscal stability, leadership, job creation and a greater social consciousness were among the issues at which he hammered away in a talk with Harvard Business School professor Nancy Koehn. With the fiscal cliff looming, he said, “Why are we just 34 days away, when a year-and-a-half ago we all witnessed such a debacle and fracturing of leadership with the deficit ceiling? The S&P lowered the debt rating of the U.S. not because of the balance sheet of America, but because of the lack of confidence in leadership of America to solve America’s problems.”

Save German Chancellor Angela Merkel, Schultz didn’t call out specific leaders, though his displeasure with Beltway politics was clear. Asked afterward if he had heard from the White House in regard to his public outcry, the 59-year-old Schultz told WWD, “I don’t comment about that. Those conversations are private.”

Here is a recap of some of Schultz’s key points on Tuesday night.

ON TAKING A PUBLIC ROLE
“I have been fairly outspoken for the past 18 months, somewhat unorthodox and unprecedented for a ceo of a public company to, in a sense, criticize the government of the United States. I try to do it in a very civil and respectful way, asking and pleading for compromise and bipartisanship to try to realize that not only are the stakes high, but this is a significant crucible for the U.S. Never before in the history of the world has there been such a domino effect and as much connective tissue. We can be talking about how if Greece doesn’t maintain its position in the euro zone, if [Angela] Merkel doesn’t have the political courage to do in a sense what’s right because it will hurt her election, what will happen to the euro and what will happen to the rest of the world. We can spin around the globe and talk about the problems between Japan and China, the situation in Syria or Libya — we can go on and on. The fact is that every pinpoint has a significant downward spiral.”

ON THE FISCAL CLIFF
“It would be catastrophic if two things happened — one, if the problem isn’t solved. I don’t think that will happen. [Two,] if there is a Band-Aid solution — if I had to make a bet, I would say that is probably what is going to happen. I think that is equally irresponsible for us to be sitting in a situation where we are facing $16 trillion in debt, 14 million people unemployed, 42 out of 50 states in America in a budget deficit, municipalities declaring bankruptcy — I could go on and on. I mean, right now we’re all dressed up sitting in New York City getting ready for the holiday season, but America is not the America our parents fought for and promised us. The issue in front of us as citizens, as businesses, as leaders is to understand we cannot embrace the status quo.”

ON WARREN BUFFETT’S RECENT OP-ED
“Whether you agree with that or not, at least there is a basis for honest, transparent dialogue and debate. That is what we need right now. We do not have the leadership of the country putting their feet in the shoes of the American people. They are in the shoes of their own party and the extremists. And that is a disaster.”

NEXT: The Missing Link, What Lies Ahead >>

THE MISSING LINK
“The difference today is there was a reservoir of trust that goes way back, even to post-WWII to people like [Winston] Churchill. We don’t have a reservoir of trust now. We don’t trust our leaders, government, businesses and banks. As a result of that [there is a] seismic change in the lack of faith and confidence. The reason the fiscal cliff is so vitally important is to restore our confidence in leadership and government and in the United States to lead.”

ON THE ROLE OF BUSINESS
“There are many people who believe the primary role of a corporation is to make a profit and build shareholder value. I don’t believe that and I think it is an irrelevant proposition for the future. Businesses must be about creating a balance between profitability and social conscious. We made a decision that we were not going to be a bystander after the debt-ceiling debacle. I started asking questions and someone said $6.5 billion was going to be spent on the presidential election cycle. I was just stunned by that. Once you are exposed to something you know is so inconsistent with what you believe the question is: Are you a bystander? Do you walk away? Even though we are a public company and we have Republicans, Democrats and Independents as customers, I took on the role of contacting every ceo I know to sign a pledge to tell the world that 200 ceo’s are not going to give any money to any incumbent until we see that people are playing nice and most importantly moving the country forward for the benefit of the people, not for the benefit of the party.”

TRYING TO HELP STRENGTHEN EMPLOYMENT
“That was followed up with an initiative to try to create jobs in America, after I heard banks were not lending to small businesses and small businesses account for 65 percent of the growth of job creation in America. Our people were so proud to be part of a company standing up for what we believed in. Everyone in this room — Independent, Republican or Democrat — I know will agree with this statement. We all know that something is wrong. We absolutely know that and feel it. And yet we’re sitting here like everything is going around like a merry-go-round and everything is fine.”

THE UPSIDE OF SPEAKING UP
“When we took on these positions, which were bipartisan in nature, our business went up. Now this was not done as marketing. This was no p.r. We had a couple of board members who were very troubled by it. They were saying, ‘Howard, you’re using corporate assets to take a political position.’ I said, ‘No, I am not taking a political position. I am taking an American position.’”

WHY MORE CEO’S DON’T GET INVOLVED
“I’m in a different position than most ceo’s. I’m a founder. I’m not a hired ceo. Now, I can be fired by the board, but most ceo’s are hired by the board. Everyone I talked to had a sense of understanding and sensitivity about the issue, but they were afraid. It’s not that I feel alone. I feel as though people just do not have the courage to step out there.”

LEADERS WHO INSPIRE HIM
“Go home and YouTube R.F.K.’s [Robert F. Kennedy’s] ‘Ripple of Hope’ speech that he gave in 1966 in South Africa. Every word, every paragraph, everything he said is more relevant today than it was in ’66. He went there with such courage and conviction. Then in ’68 he hears about M.L.K.’s [Martin Luther King’s] assassination. There was a moment in America where we were about to have a civil war of racial riots. And he gets out of the car and says, ‘I’ve got to go talk to the people.’ He walks into a very tough black crowd and he stands up — no speech, no teleprompter — and he talks from his heart about what he experienced, about what it means to accept something like this versus hatred and violence. Those two speeches define leadership, courage, conviction and what it means to believe in something.”

THE NEED FOR HEROES
“I think what we’re lacking in society, not only in the U.S. but also around the world, is to find heroes once again and to celebrate these kind of people. I was in India two weeks ago and I spent four hours with Ratan Tata, the 74-year-old, fourth-generation chairman of an extraordinary company who basically gives the majority of the profits of a $100 billion company away philanthropically in a country where unfortunately there is very little of that.”

WHAT LIES AHEAD
“I don’t think we fully realize how high the stakes are and how we are allowing the greatest nation in the history of the world to drift toward mediocrity. I just don’t understand why we are here. We have such greatness. We have such possibilities. We have such optimism and we are allowing this to take place.”

LOOKING OUT FOR THE LITTLE GUY
“There has to be moments of celebrations to celebrate the behavior of people who are in the back row and never get the spotlight. Success is best when it’s shared. We live in a world where there are celebrities and bling and hype. That is not a sustainable level of behavior to build an enterprise. Enterprises are built because people believe in themselves and one another. Business is a team sport and you have got to build teams. And teams have to feel as if they are part of something larger than themselves.”

TAKING THE LEAD
“Leadership does not stop when you win or you’re victorious. Leadership continues. We had 11 stores and 100 employees in 1987. We [now] have 18,000 stores and 220,000 employees in 61 countries. We have to communicate and behave differently, but the value system, the sense of humanity in the company that has been deeply imprinted for 40 years, is exactly the same. An organization today that is a for-profit business, in my view, cannot exceed if you are not exceeding the expectations of your people because you’re asking them to exceed the expectations of their customers. In order to do that you have to ask the question in the affirmative, ‘What’s in it for them?’ People think it’s always money and, of course, there has to be financial rewards but it’s not always the money. More than ever before, young people today have very passionate beliefs and they want to be part of something, and it sounds trite, that is larger than themselves. But more than anything they want to go home at night and be proud and talk to their families, friends and spouses about what they did and why. It’s not the what. It’s the why.”