Coffee break with Scott Bedbury — “accepting talent on its terms”

A conversation about the culture of Starbucks, about definition of success, about coaching and sources of inspiration. This Interview is part of my series of interviews with achievers. This will be published in my book Achievers — A Thousand Ways To Success And Fulfillment. I keep you updated via Twitter @achieverscoach or on my blog www.achieverscoach.blogspot.ch

Scott Bedbury is father, husband, and CEO of Brandstream, an independent brand development consultancy. In his corporate career he helped as marketing executive to position two companies — Starbucks and Nike — as global brands. Since leaving Starbucks, Scott has advised major corporations and Silicon Valley startups. He is also author of A New Brand World; 8 Principles for Achieving Brand Leadership in the 21st Century.

Who are you and what is your vocation?

I consider myself a father, husband, son and a CEO — in that order. I think that many people don’t get that one right. They are asked what they do and they answer with a job or work purpose 99% of the time. Your role as a parent, husband or lover is far more important. In my perspective, that is just part of unlocking the human potential, enabling people to be at ease. People shouldn’t feel conflicted or torn. In many places they don’t ask for that combination, people just work really hard and suddenly life falls apart.

When I was at Starbucks I encouraged one of my writers to go to a coffee house if he didn’t feel inspired to write at the office. He hesitated “Well, the nearest Starbucks is two miles away.” I convinced him “You don’t have to go to Starbucks, but any coffee house. Just go somewhere, wherever you need to write”. I think that is accepting talent on its terms.

I once spoke to Shelly Lazarus, at the time CEO of Ogilvy and Mather Worldwide about the creative process. She said that her best writer lived on a ranch in Texas. He would come to New York once a month for two or three days. That’s about all he could handle — he was not a big city guy. Thanks to the Internet a lot of work could be done remotely. In terms of coaching, you just have to figure out what makes people tick. If you take away the things that make them human, you really haven’t done anyone a favor.

My mission in the business world has always been to make companies better, not just bigger. I try to make them more valuable and better global citizens; treat their employees fairly and treat the communities that sustain them well.

I met Howard Schultz twenty-one years ago — if you haven’t studied Howard, I would read his first book Pour your Heart into it. He bought Starbucks from the three founders in 1986 roughly $3 million dollars. At that time it was a very small business and had a small number of stores. He wanted to put espresso machines into the stores and begin serving drinks, something Starbucks had not done in its first 16 years. It had sold coffee beans, spices and coffee machines. They didn’t actually sell Cappuccinos or Lattes. Howard had been to Milan — his first trip outside the country, where he experienced the coffee culture. He returned from Italy and said that he had seen the future and it would be selling ‘Cappuccinos’ and ‘Café au laits’.

The founders said that it complicated their business model, would require lots of capital to buy refrigerators for milk, someone would have to train baristas etc. Howard quit. He had no money, his wife was pregnant with their first child, he didn’t own a house yet. He borrowed 500 dollars here and 1000 dollars there — from friends he had made in Seattle — and started his own coffee shop. He called it “Il Giornale”. He ended up building three stores in the first 18 months. This was in the year 1986. He went back to the Starbucks founders, showed them his financials, and told them that Americans would indeed pay $2 for a coffee, which no one had ever thought possible. Back then a cup of coffee was 75 cents. But a handcrafted espresso drink was worth more.

“Good for you, Howard.” they said, “But we don’t want to do that. If you want to buy the company it will $2.8 million dollars He took his spreadsheets and made more than 200 presentations to raise the money. Only twelve people invested while the rest of them laughed at him for wanting to give full health care coverage to employees who only worked half-time. No one had ever done that in the United States at the time. Less of 5% of the McDonalds employees had healthcare. That was reserved for managers.

Howard also told prospective investors that he wanted to give company stock to every employee, no matter how much money they made, no matter their job and no matter their positions. He would pay bonuses with stock rather than cash. Few baristas had any idea what Starbucks would become. Within a few years, many of those them were able to pay the down payment for their house with stock.

Howard believed in treating his employees with dignity and respect, something father had never felt from his employers. His family was very poor and lived in housing projects in New York. His dad never employment benefits, working part-time jobs most of his life. This forever changed Howard. He was inspired to never leave his employees behind.

In 1991 Howard took the company public and in 1995 he brought me in. At that time Starbucks had stores in 15 US markets. In the first year there, we went from opening one store per week to opening one store per day. 24 months later we were opening three per day. Nine months after I joined we opened our first international store in Japan. We also launched Frappuccino in the summer of 1995. It was a big year.

Howard’s love for his employees is reflected in the fact he seldom if ever used that term. Her preferred to call them all “partners”. If you just started a week ago, you were considered a partner at Starbucks.

We called the corporate headquarters Partner Support Center. We never wanted to make corporate more important than the front line. We were all there to serve each other, especially our store partners. We ended up attracting and retaining great people. The turnover for Burger King or McDonalds is between 200–300% per year. At Starbucks the turnover for college kids was only 55%. The turnover for retail store manager at a place like the Gap was 100% — once a year you had a new store manager. At Starbucks our manager attrition was only 12%.

We ended up with a team that knew the customers. They may not have known their customer’s names, but they remembered their drinks. The very thing that seemed ridiculous to 200 potential investors had made Starbucks so successful. Howard was the first to see that.

I admire Howard for his passion, his values and his commitment. Howard wasn’t perfect. He was often self-critical despite our success. We were succeeding by any measure, but if we didn’t hit our store growth targets he would become troubled, thinking that this was the beginning of the end. It took Howard a number of years before he fully “owned” his success. His father died one year before Starbucks became a success.

I think that everyone takes inspiration from somewhere — for me, I took most of the inspiration from my mother. She passed long time ago. Always when I try to do something I think of the way she would respond, what she would say when stressed. Never a bad word. Early in my career, when I would have to speak before a large room full of hundred of people, I would imagine her standing in the back beaming with pride. 35 years later I still do that sometimes when I am feeling a little uncertain.