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Copy of Organizational Change at Starbucks

Organizations, Innovation & Change (EDUC-6105)

Sunisa Chae-Uan

on 1 June 2013

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Transcript of Copy of Organizational Change at Starbucks

Organizational Change at Starbucks
By: Amy J. Hall Culture 1971 2010 1987
Starbucks Coffee Company opens in Seattle, Washington
1982 Howard Schultz is hired as head of marketing 1983 After discovering coffee bars in Milan, Schultz unsuccessfully
tries to bring the expresso bars into Starbucks. 1985 Schultz leaves Starbucks & starts Il Giornale
Coffee Company the following year. Starbucks is bought out by Schultz & investors. 2000
Schultz steps down as CEO. 2008 After leaked memo from Schultz on the web criticizing
the leadership team, Schultz returns to the position of
president & CEO, as profits fell 97% during the 4th
qurater of 2008. In December 2010, Starbucks' stock was up almost
400 percent compared to December 2008. Company History A Time of Growth A Time of Transformation ONWARD "What I'm most proud of is the fact that we've returned it to record revenue and profitability, and at the same time, we've preserved, without question, the culture and values of the company."
~Howard Schultz (Rodale Books, 2011) Culture Short Tall Venti Trenta Grande 3-pump, nonfat, half-caff... Personal
Coffee & Exceptional
Service Hiring & retaining highly-motivated, passionate partners through extensive training, stock options, and health insurance, even for part-time partners.
(Schultz, 2011)
Open communication with partners, including open forums to discuss concerns & ideas.
Social Conscience
Responsibility (Starbucks, 2011) In 2007, Schultz began to see negative changes taking place in both the internal and external environments of the company (Beach, 2006). The economy was slowing, but quality was suffering due to poorly trained partners, and the smell of coffee was replaced by the smell of hot breakfast items that were introduced in order to increase sales (Schultz, 2011). Changes Transformation
When Schultz returned as CEO, three initiatives were introduced and focused on improving the retail business in all U.S. stores, re-establishing the emotional experience with customers, and looking closely at the structure of the organization in order to make long-term operational changes (Schultz, 2011). Based on these initiatives, two decisions were made. Retrain 135,000 baristas by closing all stores for half a day. Host a leadership conference for 8,000 store managers and 2,000 partners. The Transformational Agenda was introduced as a “sound navigational tool with tangible objectives that could deliver measureable results” (Schultz, 2011, p. 106). This included a strategic vision with seven goals to support the vision. More importantly, it was written in a language that could be understood by anyone in the company (McAllaster, 2004). The Plan 7 Goals of the Transformation Agenda Be the undisputed coffee authority Engage and inspire our partners. Ignite the emotional attachment with our customers. Expand our global presence. Be a leader in ethical sourcing and environmental impact. Create innovative growth platforms worthy of our coffee. Deliver a sustainable economic model. (Schultz, 2011) (Starbucks, 2008) The leaders at Starbucks planned their organizational changes only after studying the issues at-hand. They demonstrated a high level of communication with all stakeholders. When something didn't work, they changed and learned from the mistake. Howard Schultz and his leadership team demonstrated effective leadership practices thoughout the company's transformation. Reflection (Starbucks, 2011) (Starbucks, 2010) (Starbucks, 2010) Anderson, D. L. (2010). Organizational development: The process of
leading organizational change. Thousand Oaks, CA: Sage Publication.
Beach, L. R. (2006). Leadership and the art of change: A practical guide to
organizational transformation. Thousand Oaks, CA: Sage Publication.
McAllaster, C.M. (2004). The 5 P’s of change: Leading change by effectively
utilizing leverage points within an organization. Organizational
dynamics. 33(3), 318-328
Rodale Books (2011, February 17). Onward: How Starbucks fought for its
life without losing its soul. [Video file]. Retrieved from http:www.
Schultz, H. (2011). Onward: How Starbucks fought for its life without losing
its soul. New York, NY: Rodale Press.
Starbucks (2011, March 21). A behind the scenes look at Starbucks Retail
Operations. [Video file]. Retrieved from http://www.youtube
Starbucks (2008, October 9). Starbucks: In the beginning. [Video file].
Retrieved from http://www.youtube.com/user/starbucks
Starbucks: An illustrated History [Photograph]. (2011). Retrieved from
Starbucks Cup [Image]. (2010). Retrieved from http://www.icon
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