Great entrepreneurship isn’t always about driving humanity or an entire industry forward on a grand scale like Steve Jobs or Jack Ma, and innovation doesn’t always mean creating something entirely new. Howard Schultz, and other great entrepreneurs like him, are able to recognise the potential of great ideas that are already out there, adapt them, and take them to the next level. Armed with the right inspiration, and the skills to realise his vision, Schultz built a global business empire and a personal net worth of $3.1 billion on the back of the humble coffee bean.
Schultz began his career relatively innocuously as a salesman for the Xerox corporation. After some success there, he moved on to take a position as the general manager of the US offices of the Swedish coffee maker manufacturer, Hammerplast. Through his position there, a small coffee business called Starbucks Coffee Company of Seattle caught his eye, and eventually he joined them as their new Director of Marketing. This experience, first in sales, and then in administrative roles, provided him with a different skill set than many of the entrepreneurs we’ve written about in the past. Rather than starting his entrepreneurial life with unique technical talents and a passion for a particular idea or industry, Schultz did so primarily with the solid foundation of his business experience.
Seeing the potential in old ideas
During his initial stint at Starbucks, Schultz went on a business trip to Italy, and discovered something revolutionary: Italy’s coffee culture. Millions of Americans visited Italy and experienced it before Schultz, but he was the first to realise the business potential that it represented back home. Coffee shops in Italy are integrated into daily life. They’re located on every street corner, and people sit and socialise over their drinks. Seeing this, Schultz knew that there was no reason a similar culture couldn’t be introduced to the US.
While Starbucks entertained the idea, they ultimately rejected Schultz’s vision, prompting him to leave the company in 1985. With the help of a few investors, he launched his own business, Il Giornale, to pursue his idea. Two years later, in 1987, he returned to purchase Starbucks for $3.7 million.
The key lay in understanding inspiration for the pure potential that it is, and using it to fuel his own creativity. Under Schultz’s eventual leadership, Starbucks did not introduce Italian coffee culture to the US. Instead, it used Italy as an inspiration to create a new and uniquely American coffee culture that has come to represent the US to the world as effectively as Hollywood movies or McDonalds.
Schultz’s management philosophy
Unlike most similar global businesses, Starbucks directly owns the vast majority of its own locations. Independently owned Starbucks franchises only exist in EMEA markets, or operated through specific partnerships with other larger businesses such as airports. To Schultz, this was a deliberate choice that enabled him to maintain a more unified vision for the business, and to help him shape the company’s culture.
Starbucks applies what it calls an “Employee First” philosophy, meaning that the interests of its employees are prioritised and pursued by the business as a whole, and that it works to develop a strong trust relationship with its workers. Schultz believes strongly that employees who are treated well will, in turn, treat both customers and their employer in kind. In practice, this means providing full healthcare benefits to both full and part-time employees, which is rare in the US, as well as stock options and discounted stock purchase plans.
Schultz’s philosophy in regard to building employee trust also extends to his leadership team. Fighting a personal inclination to micromanage, he works to hire competent and independent leaders, who often bring forth and defend their own ideas to help move the company forward. This willingness to listen and make changes on Schultz’s part has helped to shape the company’s development over time, and gives Starbucks an innovative depth that large businesses often lack.
What we can learn
For other entrepreneurs, Howard Schultz represents an important lesson. Success isn’t purely built on personal genius and innovative passion. Instead, it also comes from a willingness to accept inspiration from any source, and to work with others to collaboratively create something new and better than what came before. Lastly, it means developing the humility to accept the knowledge and insight of subordinates, not just to grow and develop, but also to correct previous mistakes for the sake of a more successful future.