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Fixing Starbucks

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Fortune has a lengthy interview with former-turned-current CEO Howard Schultz on how he plans to revive suddenly struggling Starbucks. The meaty information starts about halfway through the interview when Scultz begins talking about concrete steps the firm plans to make to win back costumers.
Q: In your letter to employees, you said the company must shift its focus away from "bureaucracy" and back to customers. How do you plan on doing that?

A: In the week since announcement we have completely realigned the organization to reflect a laser focus on customers. We have incredible, dedicated partners, but as an organization we were not organized properly over the past few years. We need to put ourselves in the shoes of our customers. That is my new battle cry. Live and breathe Starbucks the way our customers do.

In the past, the U.S. and international operations leadership have also been responsible for not only the business, but also integration and the authority over real estate, marketing and merchandising. But we are too big for that. Those three businesses employ many people. Now real estate, marketing and merchandising will report directly to me. That means that for the heads of the U.S. and international operations, Launi Skinner and Jim Alling, their sole responsibility is customers. And the partners who work with them will be able to focus on customers at every level - from here at our corporate headquarters to our stores.

Q: So what are you going to do?

A: First, this is a healthy company, with more than $9 billion in revenues, more than $1 billion in operating income and 50 million customers in our stores per week. We have vast opportunities in our international business, where we have just scratched the surface. This is not a broken company. Having said that, we need to fix certain critical things, particularly here in the U.S. Yes we became less passionate about customer relationships and the coffee experience. We spent time on efficiency rather than the experience. We never wanted to be transaction driven.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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